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Analyst Coverage of InterDigital [Thanks to Poststyle and Jim Lurgio, moderators of IHub's InterDigital message board, for helping make these full reports available]
Updated November 16, 2011
November 9, 2011 M Partners Ron Shuttleworth Analyst Report "Morning Note" We Can't Seem to Shake Our Takeout Target. Rating: BUY Target $118. "So here is the wildcard--InterDigita;'s price range may be much higher that our target, which casts new light on complaints by poential interested parties regarding price. ..... The 'walkaway'' (entire enterprise) price range may be much higher than the market believes. The good news is that interested parties still appear to be above the "walkaway" price, otherwise the Company would have concluded the process by now." October 27, 2011 M Partners' Ron Shuttleworth Analyst Morning Note Q3'11 Earnings Results Exceed Expectations.BUY rating and target price of $118 continues. Regardless of the status of the process currently being managed by Evercore and Barclays , management continues to operate business as usual and is creating incremental value that interested parties should notice. The company has highlighted faster than expected adoption of LTE technology, while re-iterating its “leading position” in LTE.
October 4,, 2011 M Partners' Ron Shuttleworth Analyst Morning Note Why LG Has Suddenly Been Added to the IPR Litigation. IDCC's actions here reinforce that the process continues and Company is willing to take steps to satisfy potential acquirers.
October 3, 2011 M Partners' Ron Shuttleworth Analyst Morning Note InterDigital Undervalued Relative to Other Patent Portfolios
September 27, 2011 M Partners' Ron Shuttleworth Analyst Morning Note Process Continues. Stock Fundamentally Undervalued The company continues to explore multiple strategic options, which include the sale of the entire company or select assets, to a single buyer or a consortium. We believe that a transaction will occur soon. September 26, 2011 M Partners Ron Shuttleworth Intra-Day Analyst Report DealReporter Rumour Company Says Process Continues Essence of the rumor report is described. IDCC indicates it would not put its patents up for sale unless it felt they were worth substantially more than fundamental value of the Company. MPartners puts that worth at $65 a share. This is buying opportunity. Target remains at $118.
September 23, 2011 M Partners Ron Shuttleworth Analyst Report "Morning Note" IDCC Announces Technology Conference Participation. Its still "business as usual" Event has no bearing on Evercore/Barclay acquisition process.
September 22, 2011 M Partners Ron Shuttleworth Analyst Report "Morning Note" BOD Declares Regular Quarterly Dividend. Dividend declaration does not impact acquisition process.
M Partners Ron Shuttleworth Analyst Report "Morning Note" Google may have been forced to buy Motorola. Rating: BUY Target $118. New proxy statement indicates that MMI was acquired for neither its operating capabilities, nor its patents, but to prevent it from “going rogue” and damaging the Android ecosystem. Google still needs patents.
M Partners: Ron Shuttleworth Analyst Report "Morning Note" ITC Initiates Investigation From the "Morning Note" of August 26, 2011 Rating: BUY 12 month target share price: $118 (raised from $65 in July) International Trade Commission (ITC) agrees to investigate IDCC patent infringement complaint seeking to block Nokia, ZTE and Hauwei from importing phones into U.S.
M Partners: Ron Shuttleworth Analyst Report "Intra-Day Note" August 19, 2011 From the Intra-day note of Aug 19:Samsung Declines to Participate in the Bidding Process " We think that the statements attributed to Samsung suggest that: o It believes that the InterDigital patents are pretty important and o InterDigital could get expensive BUY $118 target M Partners: Ron Shuttleworth Analyst Report "Morning Note" From the note of August 18, 2011 : IP Continues To Be Hot
From the "Intra-Day Note" of August 15, 2011 Rating: BUY 12 month target share price: $118 Investors discounted InterDigital shares following Aug 15th news thatr Google was buying Motorola Mobility.This is a significant buying opportunity for investors because InterDigital management has disclosed that the "Strategic Alternatives" process is " moving along as planned and that there are multiple bidders" according to the analyst. "The InteDigital share price reaction.to the Google acquisition od MMI is misplaced and disconnected from the value of the poirtfolio.... To an acquirer using IntewrDigital IP as a weapon, the portfolio is worth between $118 and $167. We have a BUY recommendation and a $118 share price target." From the "Morning Note" of August 12, 2011 Rating: BUY 12 month target share price: $118 (raised from $65 in July) Rumors resulted in significant volatility on August 11th
M Partners: Ron Shuttleworth Analyst Report "Intra-Day Note" Samsung Enters the Process From the "Intra-Day Note" of August 3, 2011 Rating: BUY 12 month target share price: $118 (was earlier raised from $65 last week) Last night Bloomberg news speculated that Samsung is currently evaluating InterDigital's patent portolio with possible intent to become involved in the acquisition process. Analyst gives reasons why Samsunbg's possible interest is highly probable. Analyst also describes an added value in Samsung's possible acquiring of InterDigital: the highly capable and experienced cadre of 180 engineers and scientists working on cutting edge wireless technology. M Partners: Ron Shuttleworth Analyst Report "Morning Note" IDCC Cancels Conference Call and Guidance From the "Morning Note" of July 28, 2011 Rating: BUY 12 month target share price: $118 (raised from $65 earlier in week) Last night InterDigital reported Q2 2011 earnings, which were slightly ahead of our expectations. More interestingly, Company reported that it is suspending regular conference calls. We believe the Company's silence levates the likelihood that it is engaged with one or more parties seeking to acquire all or part of the Company. -$167 MORE: See "Morning Note" Report of July 25, 2011 Analyst raises share price target from $65 to $118 citing Company's ability to monetize its assets, which have become substantially more valuable in the light of the recent Nortel auction of its intellectual propertry (patents). MORE: September 30, 2010 M Partners, a full service investment bank, INITIATES CIOVERAGE with a BUY recommendationand a $48.00 target price based on a sum of parts approach to valuation. MPartners report: Striking While the Iron is Hot (7/20/11) MPartners report: Taking Advantage of Nokia's Collapse (6/2/11) MPartners report: Q1'11 Earnings Preview (4/25/11) MPartners report: Patent Update FY 2010 (4/19/11) MPartners report: War Chest Expected To Be Increased By At Least $183.9M (3/31/11)
October 27, 2011 F3Q Results Beat on One Time Items; Potential Buyout Process Ongoing Overweight continuees but target lowered from $55 to $45.
July 28, 2011 Analysts Amir Rozwadowski et. al. In-line 2Q Results; Earnings Call Suspended Target share price remains under review. Analyst notes in this report that "Barclays Capital is providing investment banking services to the Board of Directors of InterDigital as the company explores potential strategic alternatives."
Barclays Capital report: Exploring Strategic Options (7/20/11) Barclays Capital report: Nortel Auction Highlights Value (7/1/11) Barclays Capital report: Disappointing Near-Term Guidance (5/12/11) Barclays Capital report: Broadly In-Line 1Q (4/28/11) Barclays Capital initial coverage report (4/27/11, 46 pages)
October 27, 2011 Core Business Declines While Sale Process Continues Rating continues "neutral." Target n/a Sale process drags on as consortiums are given time to form. Portfolio encumbrancies limit upside
Rating: neutral. Target price n/a.
Davenport & Co. report: Good Quarter...Cash Balance Keeps Us On The Sidelines (7/29/10)
Jefferies & Company report: Patent Wars / "the InterDigital auction" (7/21/11)
April 27, 2011 Analysts Amir Rozwadowski et. al. initiate coverage of InterDigital with the title: "Monetizing Wireless Innovation" with a share price target of $56.
From the "Morning Note" of FEBRUARY 1, 2011 Rating: BUY 12 month target share price: raised from $54.00 to $57.00 Second largest PC maker in the world becomes global IDCC licensee InterDigital announced on January 31st that it had entered into a worldwide patent licensing agreement with ACER (the world's #2 PC vendor) for 2G, 3G and 4G essential patents. This marks the second deal (after Pantech) that includes licensing InterDigital's 4G patents. MORE: See full two page "Morning Note" Report of Feb. 1, 2011
From the "Morning Note" of DECEMBER 21, 2010 Rating: BUY 12 month target share price: now $54.00 Despite considerable price appreciation ($42.63) of shares, MPartners believes "we are still in the early stages of potential gains for investors. "We believe InterDigital continues to be attractively priced. "Factors that could facilitate further upward near term revisions to our target price include: Nokia settlement LG license renewal that includes 4G/LTE More rapid proliferation of M2M devices Faster than anticipated adoption of 4G/LTE devices and more (see report) See full two page "Morning Note" Report of Dec. 21, 2010
From the "Morning Note" of DECEMBER 15, 2010 MPartners previous earnings estimates were based on projected shipments og 10 million 3G units in 2011. Digitimes Telecom reports that HTC suppliers are now preparing for 60 million 3G un its in 2011. MPartners is increasing its 2011 forecast for per unit InterDigital licenses from 10 million 3G units to 40 million 3G units from HTC. This significant uptick in planned shipments representsan incremental $6.00 in value to the current sum-of-the parts valuation of the stock. As a result, MPartners maintains its BUY recommendation and increases its 12 month share price target to $54 from $46. MPartners reminds investors that their current sum-of-the-parts analysis EXCLUDES a potential licensing deal expected from Nokia at some point in the future. See full two page "Morning Note" Report of Dec. 15, 2010
From the "Morning Note" of NOVEMBER 15, 2010 Rating: BUY 12 month target share price: $48.00 Revenue guidance was ahead of expectations. There is a strong possibility of new licensee signings during the quarter. Analyst accompanied management on two days of marketing with 18 institutional investors and learned: *LG must and will renew 3G licenses. Inclusion of 4G/LTE may result in small delay of renewal. *There is no dispute that Nokia is in violation of IDCC patents. The current litigation track is intended to establish timelines and scope of infringement for negotiations to close gap in what each side claims is reasonable *M2M licensing becomes larger contributor to revenue *IDCC expects to get 100% of 3G licensed *With consortium of interested parties, IDCC has submitted a bid for certain Nortel LTE patents *The typical dividend range for technology companies is between 2% and 3% Recommendation: Despite recent runup in share price M Partners believes IDCC continues to be undervalued and reiterates BUY and $48 price target. Nokia settlement not included in price target altho M Partners believes that it is "almost a certainty that Nokia and InterDigital will come to an agreement on 3G and possibly some 4G licensing." See full two page "Morning Note" Report of Nov. 15, 2010
From the "Morning Notes" Rating: BUY 12 month target share price: $48.00 CEO Bill Merritt expressed confidence in the Company's furyre performance, stating that the Company's prospects have never been better. This confifdence is reflected in the initiation of a quarterly dividend and also supported by data points: Nokia: Company very optimistic about chances in court, ongoing discussions about possible settlement with Nokia are are positive and Complany hopes to conclude an out of court settlement with Nokia proior to Dec 9th hearing. 3G licensing: Company expects 20% Y/Y in 3G handset sales for next 4 years. IDCC has 55% of handset sales worldwide licenses now and continues to target 100%. A settlement with Nokia woukld add an addition 34%. LG Renewal: Curreently licensing negotiations are very "productive" See full two page "Morning Notes" Report of Oct 29, 2010
M Partners: Ron Shuttleworth Analyst Report Initiating Coverage issued September 30, 2010 From the report: "InterDigital is 'under the radar and undervalued' Gets paid on every 3G enabled iPhone, iPad, Blackberry, and HTC phone sold globally....Well positioned to to participate in the exponential growth of 3G, 4G, and M2M devices via a portfolio of essential patents.... Highly profitable .... Strong balance sheet with net cash representing 46% of its market cap." This is the most comprehensive analyst report available today on InterDigital, Inc. READ THIS COMPREHENSIVE "Initiating Coverage" REPORT About M Partners M Partners is an independent full service investment bank located in Toronto, Ontario, and Vancouver, BC, Canada M Partners states that their approach to investment is anything but standardized. Rather than steering clients towards typical investment outlets, the firm says it strives to create new opportunities and ideas for its accounts. The firm offers services ranging from research, to trading as well as advisory engagements. M Partners is primarily involved with institutional clientele, but also has a portion of its business coming from retail clients. Presently, M Partners covers a number of verticals including mining, merchandising and consumer goods, real estate and non-bank financials, infrastructure and technology as well as environmental technologies About Analyst Ron Shuttleworth With 20 years of experience in software, payment systems, and capital markets, Ronald Edward Shuttleworth is Technology Analyst at M Partners. He is also a Managing Partner at Razor Capital Partners and President, RES Group Inc. , a strategic consulting firm for business development, commercialization, and financing for small-cap and early stage technology companies. Previously, Ron was an equity analyst for the Canadian technology space.
Davenport and Company : Jonathon Skeels ANALYST REPORT issued July 29, 2010
Remaining neutral “Expiring license agreements and intended uses for cash balance keep us on the sidelines. IDCC reported better than expected 2Q10 results with upside driven by revenues from new licensees and past infringement sales. While our 2010/2011 estimates move higher to reflect this improving performance, we remain cautious on the shares due to concerns over expiring license agreements and the intended uses for the cash balance.”
Hilliard Lyons: Tom Carpenter April 29, 2010 Reiterate BUY Target $34 share price IDCC --- Nasdaq –- Buy -4
ARCHIVED REPORTS Hilliard Lyons: Tom Carpenter August 20, 2009 Reiterate BUY Target $36 share price "Nokia wins round at International Trade Commission. InterDigital intends to appeal in attempt to overturn ruling on at least one of sixteen claims. Judge rules Nokia does not infringe on four of InterDigitals patents. He ruled that four patents (covering sixteen claims in the patent infringement case) are valid but that Nokia's 3G handsets do not infringe.... Claims construction is an increasingly appealable and winable issue at the ITC.... If Nokia and InterDigital settle, we believe a deal could be worth over $30 million for 3G..... We believe there is value to be unlocked at InterDigital, given its $6 per share cash positioon (no debt) $3 net cash due from Samsung in 2010, 3G and 4G licenses still to be signed". READ THE FULL AUG 20th REPORT MORE: Hilliard Lyons: Tom Carpenter report of July 29, 2009
The Street.com Rating (July 31, 2009) BUY Target: $39.13 share price WirelessLedger.com comment of this report: This is the the first of what we expect to be a number of computer driven analyses (vs analysis by a human) of InterDigital based on its rapid increase in earnings, largely from the licensing of Samsung. This computer driven report does not recognize that there will be a judgment August 14th by the U.S. Intl Trade Commission that could lead to as much as $400 million in extra revenues for InterDigital. The target share value of $39 would not seem to recognize that potential revenue/earnings event either). This report: "We rate InterDigital (IDCC) a BUY. This is driven by a few notable strengths. which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The Company's strengths can be seen in multiple areas such as its revenue growth, notable return on equity, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel that these stengths outweigh the fact that the Company is trading at a premium valuation based on our review of current price compared to such things as earnings and book value. Davenport & Company: Bennett Notman, CFA ( March 30, 2009) Upgrades recommendation from neutral to buy, with a 12 month price target of $30. Target is based on multiple of 13 times their EPS estimate for 2010 of $2.40. "With the fate of the SlimChip business now determined, we believe that one of the primary risks to the IDCC story has been removed. In our opinion, IDCC shares offer investors a compelling risk/reward profile. Were the company to successfully negotiate an agreement with NOK, our current estimates would need to move materially higher. Finally, with the Samsung agreement, IDCC has reached the point where more than 60% of revenue is contractually guaranteed, providing the company with much greater visibility than other "technology players. Trantum Investment Management: Thomas A. Trantun, CFA (March 18 ,2009) "InterDigital has graduated to a new level/visibility in cellular technology. Approximately 50% of industry suppliers of 3G handsets pay IDCC a royalty, leaving out only Nokia and SonyEricsson which will likely join the ranks by year end. Beyond 2009, core earnings should be in the $3.00 per share level which should support a $45 stock price. A premium above this level depends on the successful uses and deployment of excess cash. Despite the world’s economic travails, people-to-people/people-to-device/device-to-device wireless communications demand is expanding exponentially and InterDigital owns substantial intellectually property that will be at the forefront of network development as far as the eye can see. " Hilliard Lyons: Tom Carpenter (March 16, 2009) We are raising our rating to Buy from Neutral. "We rate the shares Buy with a $35 price target. We believe the 32% share price reversal since early February 2009 is overdone. InterDigital’s 3G patent infringement case is moving towards a scheduled ruling by year-end..InterDigital could generate over $500 million in new revenue from 3G licenses with Nokia and Sony Ericsson.....We project that InterDigital will generate $312 million of revenue and $2.01 of EPS in 2009. This includes Samsung, but does not include Nokia and Sony Ericsson. Our 2010 estimate is $410 million of revenue and $3.51 of EPS, and includes revenue from Nokia and Sony Ericsson. Boenning & Scattergood: Michael F. Ciarmoli and Kevin Ciabattoni (January 16, 2009) Issued last January, there may be a more recent report that has not become public. "Samsung Licensing Agreement Finalized — 2G/3G Deal Valued at $400m |
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