Tessera Technologies Announces Refocused DigitalOptics Business Strategy and Restructuring

  Tessera Technologies Announces Refocused DigitalOptics Business Strategy and
  Restructuring

  DOC Will Concentrate on its Differentiated Technology and Leverage Partner
                                Relationships

 Company Operating Expenses in DOC and Corporate Overhead Are Expected to be
        Reduced by $78 Million or Approximately 45%, Excluding Charges

Business Wire

SAN JOSE, Calif. -- March 21, 2013

Tessera Technologies, Inc. (NASDAQ:TSRA) (the "Company") today announced that
it is refocusing its DigitalOptics Corporation (“DOC”) business strategy to
achieve the full potential of its differentiated imaging technology while
reducing costs. The Company expects to reduce operating expenses in
DigitalOptics Corporation (“DOC”) and Corporate Overhead by approximately $78
million, or 45%, on an annualized basis exiting 2013, as compared to 2012.

The Company has determined that it is no longer necessary for DOC to be a
vertically integrated camera module supplier. DOC will instead focus its
strategy on the differentiated MEMS-related technologies, where it has
proprietary assembly technology and expertise, and will partner with
third-party manufacturers to produce other components of the full camera
module. DOC will continue to productize the mems|cam technology throughout the
rest of the year, and expects to ship small production volumes of its
technology in 2013.

The refocused DOC strategy and restructuring resulted from a business strategy
review directed by a committee of independent directors (the “Committee”), led
by Richard S. Hill, former chairman and CEO of Novellus Systems. The Committee
worked with management to evaluate the Company’s overall business opportunity,
strategy and operating model. The Committee and the Board of Directors will
continue to monitor the DOC business closely to ensure that its strategy and
business model are appropriate for the market opportunity.

“Our Board is taking action to deliver value for our stockholders in both the
near and long term,” said Hill. “DOC’s recently launched mems|cam technology
is a disruptive technology that will be an inflection point in – and the
future of – imaging solutions in the smartphone, tablet and other mobile
imaging segments. Given the emerging acceptance of the mems|cam technology in
the marketplace, we can now shift our strategy to focus on the areas of
manufacturing where we have a defensible, differentiated advantage and better
leverage our manufacturing partners. Our goal is to accelerate the success of
DOC while reducing costs, which we expect to improve the overall financial
performance of the Company.”

“These actions will result in a less capital-intensive approach for our DOC
business, which will enable us to continue to innovate and develop the product
and manufacturing capabilities that are critical to our success while
maximizing the leverage of our partners and imaging ecosystem,” said John S.
Thode, who was named president of DOC in February 2013. “Our mems|cam module
has demonstrated significantly faster autofocus and lower power consumption
than the current voice coil motor autofocus technology. We continue to
productize our technology and ship sample quantities of camera modules to
mobile phone makers for evaluation and qualification. In addition, we have the
capability to deliver unique software driven imaging solutions when combining
mems|cam with our Embedded Image Processing solutions now primarily present in
digital cameras. The actions we are taking today will help to ensure our
long-term competitive viability and a meaningful success in our business in
2014 and beyond.”

The Company’s restructuring will reduce spending in DOC and Corporate
Overhead, but not in the Company’s Intellectual Property business. As a result
of DOC’s refocused business strategy and previously announced cost reductions,
the Company expects its reported Corporate Overhead to be at an annual run
rate of approximately $29 million exiting 2013, compared to $47 million in
2012; and DOC operating expenses, excluding cost of revenues and
restructuring, impairment and other charges, to be at an annual run rate of
approximately $53 million exiting 2013, compared to $88 million in 2012. These
reductions will occur throughout the rest of this calendar year. DOC also
expects cost of revenues to decline from $40 million in 2012 to approximately
$15 million in 2013 as a result of the change in estimated production volumes
and previously announced actions.

DOC’s refocused strategy includes initiatives across multiple fronts:

  *DOC will accelerate the use of partner manufacturers for the production of
    camera modules and will focus its own manufacturing on the lens barrel
    assembly, which is a higher-margin component for which DOC has unique
    proprietary technology. This approach will cut DOC’s expected capital
    spending in 2013 by roughly half – to a range of between $5 million and $7
    million, as compared to the Company’s previous estimate of $10 million to
    $15 million.
  *DOC is consolidating its manufacturing capabilities into its Taiwan
    facility and expects to cease all operations at its leased facility in
    Zhuhai, China. DOC will transfer a portion of the manufacturing equipment
    located there to Taiwan.
  *DOC will terminate its current lens manufacturing program and instead will
    focus on designing lenses that its partners can produce for use in DOC’s
    proprietary assembly technology.

The Company expects to take a total charge of between $17 million and $23
million, which includes restructuring, impairment of assets and other related
exit costs, with the majority taken in the first quarter of 2013 and the
remainder in the second quarter of 2013.

Safe Harbor Statement

This press release contains forward-looking statements, which are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements involve risks and uncertainties
that could cause actual results to differ significantly from those projected,
particularly with respect to DOC’s refocused business strategy, including the
use of partner manufacturers and manufacturing of lens barrels; the amount and
timing of the Company’s restructuring and reductions in expenses in DOC and
Corporate Overhead; DOC’s ability to leverage partner relationships; expected
shipments of DOC’s products; characteristics, features, benefits and
disruptive qualities of DOC products and technology, including mems|cam and
Embedded Image Processing solutions; the Company’s future financial
performance; DOC’s anticipated capital expenses; the innovation and
development of DOC’s manufacturing capabilities; DOC’s ability to leverage
partners; DOC’s long-term competitive viability and success; the timing and
impact of the consolidation of DOC’s manufacturing capabilities and
termination of its lens manufacturing program; and the total expected charges
from and timing of the restructuring. Material factors that may cause results
to differ from the statements made include the plans or operations relating to
the Company's businesses; market or industry conditions; changes in patent
laws, regulation or enforcement, or other factors that might affect the
Company’s ability to protect or realize the value of its intellectual
property; the expiration of license agreements and the cessation of related
royalty income; the failure, inability or refusal of licensees to pay
royalties; initiation, delays, setbacks or losses relating to the Company’s
intellectual property or intellectual property litigations, or invalidation or
limitation of key patents; the timing and results, which are not predictable
and may vary in any individual proceeding, of any ICC ruling or award,
including in the Amkor arbitration; fluctuations in operating results due to
the timing of new license agreements and royalties, or due to legal costs; the
risk of a decline in demand for semiconductor and DOC products; failure by the
industry to use technologies covered by the Company’s patents; the expiration
of the Company's patents; the Company's ability to successfully complete and
integrate acquisitions of businesses; the risk of loss of, or decreases in
production orders from, customers of acquired businesses; financial and
regulatory risks associated with the international nature of the Company’s
businesses; failure of the Company’s products to achieve technological
feasibility or profitability; failure to successfully commercialize the
Company's products; changes in demand for the products of the Company’s
customers; limited opportunities to license technologies and sell products due
to high concentration in the markets for semiconductors and related products
and camera modules products; the impact of competing technologies on the
demand for the Company’s technologies and products; the failure by DOC to
successfully engage third-party partners in the production of camera modules;
and the reliance on a limited number of suppliers for the components used in
the manufacture of DOC products. You are cautioned not to place undue reliance
on the forward-looking statements, which speak only as of the date of this
release. The Company’s filings with the Securities and Exchange Commission,
including its Annual Report on Form 10-K for the year ended Dec. 31, 2012,
include more information about factors that could affect the Company’s
financial results. The Company assumes no obligation to update information
contained in this press release. Although this release may remain available on
the Company’s website or elsewhere, its continued availability does not
indicate that the Company is reaffirming or confirming any of the information
contained herein.

About Tessera Technologies

Tessera Technologies, Inc. is a holding company with operating subsidiaries in
two segments: Intellectual Property and DigitalOptics. Our Intellectual
Property segment, managed by Tessera Intellectual Property Corp., generates
revenue from manufacturers and other implementers that use our technology. Our
DigitalOptics business delivers innovation in imaging systems for smartphones.
For more information call 1.408.321.6000 or visit www.tessera.com.

Tessera, the Tessera logo, DOC, the DOC logo, and Invensas Corporation are
trademarks or registered trademarks of affiliated companies of Tessera
Technologies, Inc. in the United States and other countries. All other
company, brand and product names may be trademarks or registered trademarks of
their respective companies.

Additional Information and Where to Find It

Tessera Technologies, Inc. (the “Company”), its directors and certain
executive officers and employees may become participants in the solicitation
of proxies from stockholders in connection with the Company’s 2013 Annual
Meeting of Stockholders (the “Annual Meeting”). The Company plans to file a
proxy statement with the Securities and Exchange Commission (the “SEC”) in
connection with the solicitation of proxies for the Annual Meeting (the “2013
Proxy Statement”).

Robert J. Boehlke, Richard S. Hill, David C. Nagel, Timothy J. Stultz, Anthony
J. Tether, and Robert A. Young, all of whom are members of the Company’s Board
of Directors, and C. Richard Neely, Jr., Executive Vice President and Chief
Financial Officer, Bernard J. Cassidy, Executive Vice President, General
Counsel and Secretary and Moriah C. Shilton, Senior Director, Investor
Relations, may become participants in the Company’s solicitation. Information
regarding the Company’s directors’ and executive officers’ respective
interests in the Company by security holdings or otherwise is set forth in the
Company’s proxy statement relating to the 2012 annual meeting of stockholders.
No other participants own in excess of 1% of the Company’s common stock.
Additional information regarding the interests of such participants will be
included in the 2013 Proxy Statement and other relevant documents to be filed
with the SEC in connection with the Annual Meeting.

Promptly after filing its definitive 2013 Proxy Statement with the SEC, the
Company will mail the definitive 2013 Proxy Statement and a proxy card to each
stockholder entitled to vote at the Annual Meeting. STOCKHOLDERS ARE URGED TO
READ THE 2013 PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS
THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT THE COMPANY WILL FILE WITH THE
SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. Stockholders may obtain, free of charge, copies of the definitive
2013 Proxy Statement and any other documents filed by the Company with the SEC
in connection with the Annual Meeting at the SEC’s website
(http://www.sec.gov), at the Company’s website (http://ir.tessera.com/sec.cfm)
or by writing to the Secretary, Tessera Technologies, Inc., 3025 Orchard
Parkway, San Jose, California 95134.

Contact:

Tessera Technologies, Inc.
Rick Neely, 408-321-6756
Chief Financial Officer
or
The Abernathy MacGregor Group
Chuck Burgess, 212-371-5999
 
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