Why ParkerVision, Meritor, and Hercules Offshore Tumbled Today

On a little-changed day for the markets, these stocks posted big declines. Find out why.

Jun 23, 2014 at 8:33PM

Monday gave stock market investors a break from last week's run of record highs, as major market benchmarks closed the day with very small declines. With the broader market lacking any substantial catalysts to drive it in one direction or the other until earnings season starts in the next few weeks, investors are instead concentrating on what's happening with individual companies. Today, ParkerVision (NASDAQ:PRKR), Meritor (NYSE:MTOR), and Hercules Offshore (NASDAQ:HERO) were among those stocks coming in toward the bottom of the charts.

Image source: Brian Turner.

ParkerVision plunged 63% as the company lost a key court decision in its lawsuit against tech giant Qualcomm (NASDAQ:QCOM). ParkerVision had won a $173 million verdict in its case against Qualcomm, in which it had alleged that the larger company had infringed on patents related to its wireless frequency-conversion technology. The Florida federal judge chose to overturn the jury verdict, but ParkerVision intends to appeal the decision and seek to enforce the jury award. ParkerVision has other outstanding cases against Qualcomm, but it's clear that investors were counting on a favorable decision at the district-court level on which to base future litigation or a potential settlement.


Photo: Kjetil Ree. via Wikimedia Commons

Meritor dropped 13% as investors dealt with a litigation-related disappointment of their own Monday. The company, which sells various systems, components, and related products for commercial vehicles, had sought antitrust damages against Eaton (NYSE:ETN), with the potential for a $2.4 billion claim stemming from allegations that Eaton unfairly used anticompetitive practices in order to gain a commanding market share in the key truck-transmission market. A jury had found five years ago that Eaton was liable for damages, but investors saw the $500 million settlement before the damage-setting phase of the trial as being far less beneficial for Meritor than expected. Meritor expects to return the roughly $210 million in proceeds from the settlement after costs and taxes to shareholders through a stock buyback, but clearly, investors had hoped to see a figure closer to the maximum allowed.

Hercules Offshore fell another 7%, adding to its losses from last week. The loss of a single contract was enough to send the offshore driller down double-digit percentages last Friday, and today, Hercules gave up ground even as more deepwater-focused rivals posted modest gains. Piling on today were investment banking analysts, who downgraded the stock citing potential negative catalysts, including the beginning of hurricane season and further deterioration in the drilling market. With oil prices near multi-year highs, it's hard to see drilling demand slacken, but after years of suffering underperformance from Hercules Offshore compared to other companies in the drilling industry, investors appear not to be taking any chances going forward.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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