CIBC - March 6, 2013

Wi-LAN Inc.

Trials Scheduled In 2013 Should Lead To Material Upside In Our NAV


Wi-LAN reported in-line Q4 results, while guiding to a lower Q1. The lower
baseline is likely partially due to v-chip seasonality, but does show a definite
decay in contract structure. Contrasting this is the fact 2013 is set to become
the largest dollar-figure settlement period since the start of 2011.

Q4 sales were $21.2MM (Baseline guidance $20.7MM, consensus $21.7MM) and
adjusted EPS were $0.06 (implied guidance $0.05 to $0.065). Litigation expense
was $0.8MM higher than expected as quickly moving timelines in Florida have
allowed four cases filled in 2012 to go to trial in 2013.

We now expect Q1 sales of $19MM (baseline guidance $18.1MM, cons. $22.2MM) and
flat adjusted EPS (guidance flat to -$0.02, cons. $0.08). Litigation expense
guidance of $13MM to $14.4MM is similar to the $12MM reported in Q4/10 leading
up to the wireless deals signed in 2011.

Our SO rating, $8 PT and NAV of ~$4.00+ signings remain. No value is being
given to WIN's licensing pipeline and due to this we believe the shares should
be bought now. Major catalysts include 1) Base station trial on April 8, 2013
and 2) Handset case scheduled for October 7, 2013.

Numerous Catalysts in 2013

The 2012 Waiting Game Is Over: Major Settlements Likely In 2013 –

In addition to the well published 3GPP base station and handset trials that
could result in settlements worth $250 million or $2 to our NAV, four other
trials brought forth in the Southern District of Florida in 2012 are already
scheduled to go to trial in 2013.

Positive News on a Number of Other Fronts

• Excellent capital allocation pays investors while they wait: In 2012, WIN had
earnings of $41 million, cash flow of $34 million and paid out $30 million in
dividends and common share buybacks. This trend continues with a 14% increase in
the dividend from $0.14 to $0.16. WIN's yield is 3.7% and its payout ratio is
47% of 2012 EPS. WIN also announced a 10% stock buyback for ~12 million shares.

• The 10% NCIB is for up to 11.85 million shares. Daily purchases will be
limited to 62K. Current 60-day average volumes are 250K. Over the last 12 months
Wi-LAN has repurchased only 950,000 shares at an average price of $5.18.

• New licensing agreement is small to medium in size: We estimate the signing of
MediaTek to be worth over $10 million.

Updated NAV Model

With the lower baseline sales given, we have slightly reduced our signed NAV to
$4.32 (from $4.50). The market appears to have anticipated the decline and
currently trades at our updated NAV value.
Our value of the opportunity is conservative and does not take into account any
Gladios, renewals of major deals coming due after 2014, renewals from minor
deals or any value after 2016 despite many key wireless patents running until
2019. We have also discounted the opportunities by 15%. We continue to include
v-chip in the future NAV as the opportunity exists with the new claims granted
by the USPTO (but again not in our PT).
Our estimates are based on a mix of longer term (6-year) and medium term (4-
year) deals which we expect Wi-LAN will begin to focus on given its much
stronger and broader wireless patent portfolio. The objective of shorter
agreements is to bring OEMs to the table on areas such as 3G now, leaving the
less mature 4G LTE infringements to deal with in follow-on renewal agreements.