Patent licenser Acacia Research Corp. (Nasdaq: ACTG) has lost nearly all of its big gains from investments in Costa Mesa-based startup Veritone Inc., which trades wildly from week to week as it seeks a foothold in the booming artificial intelligence segment.
Acacia, based in Newport Beach, reported a $41 million loss in the first quarter related to its Veritone holdings consisting of 4.1 million shares of common stock and 1.1 million common stock warrants.
The investment losses fueled an overall operating loss of $26 million, or 51 cents a share, widely missing Wall Street expectations.
Stock analysts aggregated on Yahoo Finance forecasted a loss of 3 cents per share, or roughly $1.5 million.
Excluding the Veritone impact, the company had a $15.1 million operating loss, or 30 cents per share.
Acacia is Veritone’s largest shareholder, with about 31% of capital stock. Its ties to the company and new investment strategy have drawn the ire of activist investors, New York-based hedge fund manager Sidus Investment Management LLC and BLR Partners LP in Houston, which waged a proxy battle to remove Acacia’s chairman and another director up for re-election.
The two own a combined 4.1% of outstanding Acacia shares.
Acacia shifted its business model in the third quarter of 2016, when it made two convertible $10 million loans and took an equity stake in Veritone. The investment ballooned to $54 million when Veritone unlocked nearly $30 million in warrants held by Acacia after its May initial public offering.
The Veritone investment looked great out of the gate, leading to a profit of $159 million in the third quarter.
Much of that was erased in the fourth quarter, though, as Acacia reported a $110 million loss.
Veritone shares have skyrocketed and plummeted for the better part of a year, trading at $22.76 as of press time with a market value of $369.2 million—miles from its intraday high of $74.92 and a $1.1 billion market value on Sept. 27.
Acacia’s first-quarter financials did carry some good news—revenue hit $62 million, up 601% year-over-year. One licensee accounted for 96% of revenue.
Analysts had forecasted revenue of only $10 million.
Aerospace Appointment
Ducommun Inc. (NYSE: DCO) Chief Executive Stephen Oswald has been appointed chairman of the Santa Ana-based aerospace manufacturer.
Oswald, who joined the company in January 2017, replaces Tony Reardon, who retired after holding the top board position for six years and serving as a director for two decades.
Ducommun relocated its headquarters last year from Los Angeles to Santa Ana.
The company was established in 1849 and carries the distinction of being California’s oldest continuously running company and the oldest manufacturer in L.A. It’s worked on Boeing 737s since their inception in the 1960s. Ducommun’s aerostructures unit has had a milling facility in Orange since 1981.
The company had a recent market cap of about $364 million, shares trading at $32.11.
Realistic VR
The long-awaited release of an affordable, quality and detached virtual reality headset may have finally arrived.
Oculus Go, the latest VR device launch from Facebook Inc., is drawing positive reviews from mainstream media outlets and trade pubs alike. Perhaps the biggest draw is its $200 price tag, which makes it accessible to the masses, unlike previous products released by the Menlo Park-based company or its competitors that cost hundreds of dollars more and required connections to high-end PCs or specific-model Android smartphones.
The Go is a stand-alone device, essentially goggles loaded with more than 1,000 apps, games and experiences. Users can access content from the likes of Discovery, Hulu, Netflix, Lionsgate and Major League Baseball.
Oculus, which got its start in Irvine, also has a partnership with Newport Beach-based NextVR Inc., which specializes in live professional sports and concert broadcasts in virtual reality.
Facebook acquired Oculus in 2012 for $2 billion.
