Notable   posts and threads related to

Risks and Reward

Investing in InterDigital

Updated  July 25, 2009

Posts here are by: magillagorilla, Data Rox, mickeybritt, rmarchma, revlis, JeffreyHF, olddog967, dclarke, triangle, JimLur, nessco, quartzman0, KAJO7710, loophole73, imalurker 2, and lastchoice.

What these "best posts" on InterDigital's RISKS and REWARD Investment Potential below are about:

What are the potential risks an investor in InterDigital today faces? How much risk is there that InterDigitals current share price will fall --  and by how much (modest fall, precipitous fall)? What would it take to bring shares down to the teens? Or the low twenties?

How is InterDigital doing on cost-containment, legal expenses? Will acquisitions help or hurt InterDital's bottom line? Will InterDigital declare dividends? r buy back shares? What would happen if a bidding war ensued by the likes of Cisco or Microsoft or Qualcomm to buy out InterDigital for its rich patent portfolio?

What is the upward potential for the InterDigital share price? If another 3G license is signed? If another top-six 3G license is signed? If Nokia, with 35% market share is signed? If InterDigital reaches its goal of ALL 3G wireless terminals (eg cell phones, pda's etc) are licensed? And ongoing legal fees are substantially reduced?

What about the impact of earnings from other parts of InterDigital's successful business model? How about a balance sheet with hundreds of million in cash?  Is a stock buyback or a dividend program better for shareholders?

Does InterDigital have the most favorable Risk to Reward ratio among mid-cap wireless communications firms?

There's plenty of give and take, helpful information and keen insights among the I Hub posts and threads here - on all sides of the Risk and Reward topic.

The ANALYST REPORTS on InterDigital available here on WirelessLedger generally include a section on Risk vs Reward. Check out these very helpful analyst reports here.

DO YOUR OWN ANALYSIS

Use this spread sheet tool developed for us by IHub poster dclarke

"Earnings Sensitivity Analysis" lets YOU plug in your numbers to determine a fair IDCC stock price

See also: Links to "best posts" on these topics related to InterDigital.

IHub comments by attorneys and others on the TRANSCRIPTS of last May's ITC Nok-IDCC HEARING

(How are knowledgeable posters interpreting the all important hearing in which IDCC demands that Nokia's 3G phones be banned from import into the USA because

Nokia is infringing on IDCC technologies, failing to pay licensing fees that most other cell phone manufacturers are paying to InterDigital)

What are the prospects for a Nokia-InterDigital agreement on 3G licensing?

These posts deal with InterDigital's progress in licensing cell phone market leader (40% share) Nokia for 3G. The immediate interest in the summer of 2009 is the upcoming (August 14, 2009) decision of the administrative law judge for the ITC  as to weather to bar Nokia from importing into the United States 3G cell phones which InterDigital claims violate their patent rights. 

LTE  Long Term Evolution from 3G to 4G

How will emerging technologies affect InterDigital's revenue stream? How successful is InterDigital in inserting its patented technologies in new standards for future wireless communications?

Also see these other related WirelessLedger reports

Understanding Intellectual Property

Understanding the Standards-Setting Process

"Risks and Reward: Investing in InterDigital"

Posts and Threads

(generally most recent are first below)

  Editor's note: The Investors Hub Message Board on InterDigital, moderated by Jim Lurgio, offers hundreds of helpful new posts every day on everything related to IDCC. Visit it daily! If you don’t have time to read all the fine posts there, you can catch some of the highlights here by way of these “best posts.” But there are ten or twenty times more posts worth reading at iHub than can be reproduced here.

Graphics/formatting added to many posts for clarity by WirelessLedger.com

Posted by: magillagorilla

Date: Tuesday, July 21, 2009
In reply to: magillagorilla who wrote msg# 263368

Post #263398

Editor's note: Apple pays InterDigital royalties on the iPhone. Additionally, the Infineon chip inside uses additional InterDigital technology and Infineon reportedly pays InterDigital for that.  The amounts at stake are closely held, as Apple demands of its licensors.

iPhone units Up 626% from last year.

• They were unable to meet iphone 3GS demand

• iTunes store passes 8B songs sold

• NONE OF US knows with certainty, exactly what or how much we are receiving from any of the apple products – if someone does know, please let me know.

Apple blow-out quarter surpasses on all fronts

5:26 pm ET 07/21/2009- MarketWatch Databased News

SAN FRANCISCO (MarketWatch) -- Apple Inc.'s blowout fiscal third quarter was especially impressive because it showed that even in the current economy, consumers are still buying its products, generally costlier than rival computer gear.

On top of that, this quarter is typically one of the company's slowest, as it is just ahead of the much busier back-to-school quarter, when Apple tends to launch new products. See Apple earnings story here.

The Cupertino, Calif. company reported stronger-than-expected revenue and better unit volumes for all its product lines. Wall Street had forecast sales of about 2.5 million Macs, and the company sold 2.6 million.

The popular iPhone, which had a major software upgrade along with a new, pricier model this quarter, had sales of 5.2 million units. That was up from expectations of about 5 million. The iPod also exceeded predictions, with Apple selling 10.2 million iPods, versus forecasts of 10 million. Investors now seem to be taking the company's outlook with a grain of salt. Chief Financial Officer Peter Oppenheimer said in a statement that he expects fiscal fourth quarter revenue in a range of $8.7 billion to $8.9 billion. That forecast was a bit lower than the current consensus on Wall Street of $9.11 billion, according to FactSet Research. Apple shares slipped at first, jittery about the outlook, but then came back as investors remembered that this company has a tendency to low-ball its forecasts and over-deliver. -- Therese Poletti

Posted by: Data_Rox

Date: Monday, July 20, 2009
In reply to: mickeybritt who wrote msg# 263231

Post #263235

mickey re: LTE rate

Without any guidance from the company, I'm not going to venture a guess on 4G until I see the results of 3G with Nokia, and how quickly others come to the table. 9 years ago I invested here for 3G....And while I've done pretty well while waiting for the deals, the company has disappointed me on more than a few occasions, not being able to navigate the changing market and taking product directions that have not born much fruit (AIM, W-TDD, SlimChip silicon - some fruit, yes, even for me with the conservative view).....the 4G ecosystem and rules of engagement for value creation through licensing of IP are different again than 3G....the company has lost key people in IP licensing and strategy (why?)....I need to see who is really running the show. Near term Nokia deal will provide us a nice boost, how the company takes advantage of it remains to be seen.

all JMO

Posted by: rmarchma

Date: Tuesday, July 07, 2009
In reply to: revlis who wrote msg# 261975

Post #262089

Revlis I expect (a share price of) $50 per share, IF Nokia licenses at a minimum amount of $100m per year/$25m per quarter. As you said, that should give IDCC about $4 earnings per share at a very conservative PE of 12.5 = $50 pps. However, IF Nokia wins an ITC ruling of no violation, I would expect IDCC's share price to drop down into the low teens, but not into single digits. Of course, this speculation on what IDCC's share price might go to is purely my opinion. (Note I had to edit my initial license amounts to factor in something for Income taxes on Nokia's revenues).

Posted by: JeffreyHF

Date: Tuesday, July 07, 2009
In reply to: mickeybritt who wrote msg# 262005

Post #262007

Mickey, the "computer needed licenses" you reference will be computed on the wholesale cost of the wireless module, at best, not on the cost of the computer. I think you're expecting some unreasonable bonanza.

Posted by: mickeybritt

Date: Tuesday, July 07, 2009
In reply to: olddog967 who wrote msg# 261988

Post #262005

Olddog

Mickey stands by his (eventual share price of) $100.00 claim if a decent rate is attained from Nokia. I think if you look at the numbers and what the remaining unlicensed would contribute and then add in the computer needed license and yes $100.00 should and may even look cheap. IDCC should have enough cash to retire maybe 7 million shares and a cash flow that should be beautifull as the expenses are basically built in excluding the legal license expense. Apparently the product revenue is going to increase to what degree who knows but IDCC said it is going to be a nice increase at no additional expense.

JMO
Mickey

Posted by: revlis Date: Monday, July 06, 2009 In reply to: dclarke who wrote msg# 261973 Post #261975 dclarke, The only one who mentions $100 (share price) is Mickey and he qualifies that prediction. After Mickey, I probably have the most optimistic outlook. I see over $40 by the end of the year with a Nokia settlement and that is a conservative prediction. With a Nokia settlement, I see approximately $4.00 eps. Your spreadsheet also shows about the same estimate. With a conservative p/e of about 10, that would give a stock price of $40. If anybody thinks a 10 p/e is a "pie in the sky" p/e then it shows how negative that person is. mo

Posted by: olddog967

Date: Monday, July 06, 2009
In reply to: triangle who wrote msg# 261938

Post #261946

triangle: The 100+PE is based on IDCC's trailing 12 month's (1April 2008 - 31March 2009) earnings of a little over $10 million. As I have often said, depending on the data used you can come up with all kinds of statistics.

http://finance.yahoo.com/q/is?s=IDCC

in reply to:
THE iphone has idcc's P/E at 104.52,
I don't know what their source is...

Posted by: olddog967

Date: Thursday, July 02, 2009
In reply to: rmarchma who wrote msg# 261771

Post #261775

ron: Considering a settlement as favorable to IDCC, your "gut feeling" of an 80% chance of a positive outcome for IDCC is almost identical to that for overall ITC actions. I previously posted the results of a study on the outcome of ITC filings. The study contained the following figures; Settlement...211.....52% Violation......109.....27% No violation...85.....21% Total...........405....100% http://investorshub.advfn.com/boards/read_msg.aspx?Message_id=36992281&txt2find=respondent

Posted by: rmarchma

Date: Thursday, July 02, 2009
In reply to: JimLur who wrote msg# 261764

Post #261771

Jimlur re accessing probability of settlement you said:

...."Rmarchma, I'm one of the people that feels absolutely certain there will be no decision by the ALJ but if by some miracle it did I feel certain it would be in IDCC's favor. I would say there's about a 3% chance of it going to a decision."

Jim thanks for sharing your opinion. If I felt the same as you that there is a 97% chance of a settlement and only a 3% chance of going to a decision, I would be back in this stock PRONTO. However, my gut feeling is not anywhere near yours. I subjectively feel that the probabilty of settlement before the ALJ ruling is about 60%. Of the remaining 40%, I give a 20% chance of a favorable ruling to IDCC and a 20% chance of a favorable ruling to Nokia. Therefore at this point, I subjectively assign an overall 80% chance of a positive outcome to IDCC and a 20% chance of a positive outcome to Nokia.

Jim you also said: ...."IMO the ALJ played a big part on bringing IDCC/Samsung to settle. I think in these courtroom sessions that we don't know anything about the ALJ must have made comments to both parties as to how he felt on certain issues and the bottom line is the parties settled." I just don't think that a judge can tip their hand that much before a ruling. A judge might give the parties a little indication about how they might rule, but nothing concrete or definitive IMO. I think a main part of the reason Samsung settled was because they had already clearly lost at least $160m to IDCC for 2G. Therefore 3G was only going to cost Samsung a total of $240m for 4 years. IDCC does not have a 2G amount to roll into a 3G license with Nokia. Therefore, Nokia's incentive to settle is not quite as great as Samsung IMO.

Plus I think Nokia's resolve is much greater than Samsung, due to their unbelievable arrogance and enmity toward IDCC. BTW in the post you responded to, I did make an omission error. The last couple of sentences should have read as follows:

...."It has been reported that Merritt will let this thing go to a decision, if Nokia does not offer a certain amount to settle. I think Nokia may feel the same way, if IDCC does not accept a certain amount that they are willing to pay. There is an awful lot of enmity between these two companies that just adds to the risk."

I had omitted the word "not" in my initial post, which greatly distorts the meaning.

Posted by: nessco

Date: Thursday, July 02, 2009
In reply to: rmarchma who wrote msg# 261728

Post #261731

Since you say you are a potential IDCC investor, could you please tell us what trigger or triggers would convince you to invest your money in IDCC?
Ness

Posted by: revlis Date: Wednesday, July 01, 2009 In reply to: quartzman0 who wrote msg# 261653 Post #261657 quartzman, Greed and Fear. When you have both at the same time, that is when you can not sleep. Make sure you are doing the right thing for yourself. mo

Posted by: quartzman0

Date: Wednesday, July 01, 2009
In reply to: revlis who wrote msg# 261649

Post #261653

Revlis,

I have almost done that. At one time I held 17,500 shares. Now I have 3,000. I think that I am like many here, that is, I don't want to lose at lot of money on an adverse ruling but at the same time I don't want to be completely out of the stock in case the ruling (if it goes to that) or settlement is favorable.

I've been here 6 years - a short time compared to some of you; but a long time to be waiting for the financial reward that I expected years ago.

Fortunately, overall, my position in IDCC is very profitable, but I cannot afford to lose it now that I am retired.

Regards and I missed seeing and speaking with you at this year's ASM. I just couldn't make it.

Q

Posted by: quartzman0

Date: Wednesday, July 01, 2009
In reply to: revlis who wrote msg# 261657

Post #

Revlis, Absolutely correct - Greed and Fear. I know one thing for sure, I would not still be in this stock were it not for the information and opinions [I really can tell the difference] that you and many other good posters bring to this board. Without that information I really would not know how to value the company's future and I would have sold out long ago. So I owe much of my current profits to you fine people who spent your time and share your intelligence with the rest of us. Q

Posted by: olddog967

Date: Wednesday, July 01, 2009
In reply to: KAJO7710 who wrote msg# 261637

Post #261640

KAJO: It is quite true that the company will survive an adverse ITC decision. Management will still get paid, and probably will come up with some new criteria to award themselves bonuses However, for myself, I am more concerned about how the share price will suffer, and how the price will probably not really recover for quite some time unless the decision is reversed upon appeal.========

Posted by: KAJO7710

Date: Wednesday, July 01, 2009 10:45:20 AM
In reply to: loophole73 who wrote msg# 261615

Post #261637 o

Posted by: rmarchma

Date: Wednesday, July 01, 2009
In reply to: imalurker_2 who wrote msg# 261593

Post #261596

imalurker re unfair questions and bad faith

Is it fair and in good faith to only ask about and discuss the best-case scenario in an extremely important litigation? However, you think it is unfair and in bad faith to ask about and discuss the possibilities if the worst-case scenario were to happen. I would think it would be important to IDCC investors and potential investors to have some awareness of all the possible outcomes, ie Rewards vs Risks. I certainly don't think there is anything unfair or in bad faith with the following question that I asked Loop's opinion on:

...."You assume Nokia settles, but suppose Nokia does not settle. Let's further assume a worst-case scenario in that the ALJ rules "no violation" and the ruling is upheld by the ITC. What then? Just curious on your take if the worst happens."

As a potential investor in IDCC, I tend to understand the Rewards of a Nokia settlement or a favorable ITC verdict. However, I'm having a difficult time assessing the Risks part of the investment equation of no settlement and an unfavorable ITC verdict. BTW I'm not trying to scare any shareholder out of their IDCC investment, as I personally think the odds very much favors a positive outcome for IDCC. However, a prudent investor needs to have some handle on the possible risks and what that would mean, even if the risk of a negative outcome is much less likely to occur.

Posted by: rmarchma Date: Wednesday, July 01, 2009 In reply to: revlis who wrote msg# 261580 Post #261594 Revlis re speculating before or after ALJ decision A lot of what is done on this message board is speculating about future events, and what it would mean to IDCC. I have seen a lot of discussion and speculation on what it would mean to IDCC in terms of share price, earnings, other licenses, etc under the best-case scenario if Nokia settles, and RIGHTFULLY SO. However, I have seen very little discussion on what it would mean to IDCC if Nokia doesn't settle and the ITC ruling is unfavorable, ie the worst-case scenario. Why is it ok to speculate and discuss potential positive outcomes (rewards) before the actual event happens, but not ok to do so about potential negative outcomes (risks) before the actual event happens?

Posted by: loophole73

Date: Tuesday, June 30, 2009
In reply to: rmarchma who wrote msg# 261553

Post #261567

Ron

If the ALJ rules "no violation", there will naturally be a drop in share price. At that time IDCC can appeal the ruling which would more than likely be related to "validity" issues regarding all patents or "claims construction issues" regarding all claims asserted under each patent. The appeal will be faster than usual because it is a 337 investigation and the Circuit Court of Appeals will hear it. IDCC will not, I repeat, will not lose any revenue during the appeal or experience any additional costs that would not fall within the norm over past several years of constant litigation. IDCC may also opt to initiate another 337 investigation with a new set of patents or move on to DE and continue the litigation previously filed and now under stay.

Nok on the other hand, risks the ban of a laundry list of its products that will continue in full force and effect during any appeal it may file. Such a situation do to timing and inability to perform under its business plan can be very costly from both an economic effect and reduced brand name result as 3g moves along and begins to take hold in America. My assessment is that IDCC has far less to lose with respect to status quo and business plan interruption than Nok. A temporary setback for IDCC is nothing new and pretty much follows the difficult struggle it has endured in the war with MENS  (Motorola, Sony-Ericsson, Nokia, Samsung). A loss or setback for Nok is far more stinging and much more newsworthy. MO loop

Posted by: rmarchma

Date: Tuesday, June 30, 2009
In reply to: loophole73 who wrote msg# 261539

Post #261553

Loop re Nokia last challenge to IDCC patents you said:

...."Nok is the last challenge of the IDCC patents and is the biggest handset manufacturer in the world. Once they have settled,....."

You assume Nokia settles, but suppose Nokia does not settle. Let's further assume a worst-case scenario in that the ALJ rules "no violation" and the ruling is upheld by the ITC. What then? Just curious on your take if the worst happens. As a lawyer, you are trained to envision consequences under the worst-case scenarios also, in addition to the expected and the best-case scenarios.

Posted by: lastchoice

Date: Tuesday, June 30, 2009
In reply to: None

Post #261526

fundamentals will take idcc over 40. it may not happen on day1 AN, (after nokia), but as earnings become clearer, the valuation should improve and the result will be over 40, imo.

Posted by: olddog967 Date: Thursday, June 04, 2009 In reply to: None Post #259742 A couple of more pretty detailed reports on the ASM (annual shareholders meeting) from Kajo7710 on AB (Atomic Bob's website) http://www.atomicbobs.com/index.php?mode=read&id=415091 http://www.atomicbobs.com/index.php?mode=read&id=415098 Many of the comments in Kajo's report are attributed to Harry Campagna and William Merritt (r)