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

Second-quarter revenues for MOSAID Technologies Inc. (TSX:MSD) grew by a healthy 19.7 per cent, but the patent licensing firm also saw red ink on its bottom line, mostly because of foreign exchange losses.

The Ottawa-based company said revenues for the quarter jumped to $13.8 million from $11.5 million, reaching the high end of its previous guidance of $13 million to $14 million. The gain was augmented by the company's milestone signing of electronics giant Panasonic Corp. as the first licensee for its microcomponent patents, which were acquired in May 2007.

Panasonic had in October inked a 10-year licence for a portfolio of patents covering microcomponents ranging from digital signal processors to application-specific integrated circuits, including products already being sold globally under Panasonic's brand name.

Pro forma earnings, which exclude stock-based compensation, patent amortization and imputed interest, foreign exchange gains and losses and other non-recurring items, also exceeded expectations at $4.1 million or 40 cents per diluted share, an 8.7-per-cent increase from a year earlier. MOSAID had predicted pro forma earnings of between $3 million and $3.5 million, or 29 cents to 33 cents per diluted share.

However, the company's positive results were dampened by a second-quarter slide into a loss of $3.4 million or 33 cents per share, compared a net profit of $4.7 million or 43 cents a year earlier. The company said the loss was mainly because of the revaluation of U.S. dollar-denominated liabilities related to acquired patents, resulting in an unrealized foreign exchange loss of $6 million.

Despite the loss, MOSAID chief executive John Lindgren expressed positiveness about the company's performance for the full fiscal 2009 year, and even raised the outlook for revenues to between $61 million and $63 million, from the previous guidance of $59 million to $61 million.

"Based on our growing deal pipeline and the solid financial and operational performance we delivered in the first half of the year, I am confident that the company will meet its new revenue target for fiscal 2009," said Mr. Lindgren in a statement. "We are increasingly seeing the benefits of our business model and growth strategy, which is based on licensing patents into multiple technology markets."

However, licensing and litigation expenses are also expected to increase to between $19 million and $20 million, compared to the previous guidance of $15 million to $18 million. The increase indicates a ramping up of MOSAID's legal activity inside and outside the courts, especially considering its recent settlement with Taiwanese chip maker Powerchip Semiconductor Corp., leaving Idaho-based Micron Technology as the final holdout in a two-year patent infringement case involving four defendants.

MOSAID has maintained its previous full-year expectation for pro forma income at $20 million to $21 million, or $1.90 to $2 per share.

For the third quarter alone, revenues are expected to be $16 million to $17 million, while pro forma income is anticipated to be between $3.8 million and $4.2 million, or 37 cents to 41 cents per diluted share.