MOSAID chief executive John Lindgren. (Photo by Darren Brown, OBJ)

MOSAID Technologies Inc. (TSX:MSD) saw flat sales and sharply lower earnings in its first quarter, but the company did hit the high end of previous financial targets during the period.

The Ottawa-based company, which recently switched its focus from being a chip maker to patent licensing, said first-quarter revenues edged up to $12.7 million from $12.6 million, while net income plummeted to $1.4 million or 13 cents per diluted share, from $9.5 million or 85 cents per share a year earlier.

MOSAID noted that Q1 2008's earnings included $5.8 million from discontinued operations, compared to only $168,000 in the most recent quarter. Since the first quarter of its fiscal 2008, MOSAID has sold off several patents and wrapped up the $15-million sale of its semiconductor intellectual property business.

Pro forma earnings also declined, to $4 million or 37 cents per share, from $4.9 million or 44 cents per share a year earlier.

However, the company's financials were on target with its guidance, as it had previously expected revenues of between $12 million and $13 million and pro forma earnings of between $3.2 million and $4 million, or 29 cents to 36 cents per diluted share.

MOSAID chief executive John Lindgren pointed to the company's progress in its transition into becoming a patent licensing company, highlighting its first wireless licensing agreement with Matsushita and adding that the company had signed "important agreements" with a U.S.-based fabless semiconductor memory company and received cash, patents and exclusive sublicensing rights as part of the Q1 deal.

"The company continues to guide for revenue growth and a substantial level of profitability in fiscal 2009," said Mr. Lindgren in a statement. "MOSAID's financial strength and profitability is enabling us, on an ongoing basis, to return significant amounts of cash to our shareholders while investing in R&D activities that are generating both patents and technology licensing opportunities."

MOSAID said second-quarter revenues would be between $13 million and $14 million, while pro forma income was expected to be $3 million to $3.5 million, or 29 cent to 33 cents per diluted share.

The company maintained its previous full-year guidance of $59 million to $61 million in sales, with pro forma income expected to be between $20 million and $21 million, or $1.90 to $2 per share.

Shares of MOSAID gained four cents on the Toronto Exchange Friday morning, reaching $15.89 at 9:30 a.m.