Mobile-audio technology firm Audience Inc. (ADNC) said Apple
Inc. (AAPL) is unlikely to use its processor intellectual property
in its next-generation smartphone.
Shares of Audience plummeted 53% to $8.77 in after-hours
trading, as the news marked a setback for the company.
Audience, which launched its initial public offering in March,
makes technology that can be used to improve sound quality and
suppress noise in mobile devices like cellphones and tablets.
Audience had aimed to shift its revenue mix over time from
processor sales to royalties and had inked an agreement to license
intellectual property to Apple for its latest-generation
smartphones.
Audience developed and licensed its intellectual property for
use in Apple devices, in accordance with the agreement. But Apple
is not obligated to use Audience intellectual property.
Audience said that while Apple is unlikely to enable the
processor intellectual property in its latest phones, it is unaware
of any intended changes by Apple to the use of Audience processors
or intellectual property in prior-generation devices.
The company recognizes royalty revenue after the sale of the
device. As a result, it doesn't expect any impact on third-quarter
revenue and income. The impact would come on line one quarter after
Apple launches sales of its newest phones.
"While we are disappointed by this development, we are confident
in the diversification of our business and see sustainable growth
in 2012 and beyond," said Chief Executive Peter Santos. He added
that the company plans to expand into adjacent markets like smart
TVs, automotive and notebooks.
Based on the strength of hardware shipments to date, the company
raised its third-quarter guidance, now seeing total revenue of $35
million to $38 million, up from its previous view of $33 million to
$36 million.
Write to Kristin Jones at kristin.jones@dowjones.com
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