InterDigital Communications (IDCC): Bill, Here are the links and text for those

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Listed & Nasdaq | Telecommunications Hardware | InterDigital Communications (IDCC)

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Posted by: Alaska_gk	Date: Friday, December 29, 2006 1:46:37 PM
In reply to: Bill Dalglish who wrote msg# 173996	Post # of 294838

Bill,
Here are the links and text for those 3 you listed.

http://www.fool.com/news/mft/2006/mft06121108.htm

InterDigital Dives, Revives
By Rich Smith (TMFDitty)
December 11, 2006

Hey, buddy, have you heard the one about the efficient market theory? Yeah, it seems that the stock market instantly absorbs all news, and reacts immediately to find the appropriate stock price for the companies the news affects. Har!

To proponents of the efficient market theory, I proffer as rebuttal evidence the example of Motley Fool Stock Advisor selection InterDigital Communications (Nasdaq: IDCC), a little Pennsylvanian IP shop that helps make your cell phones go "ring." On Tuesday after close of trading, the company released its revenue guidance for the fourth quarter. On Wednesday, when the market reopened, the stock fell 7%. On Thursday it got nearly half that loss back; and Friday, rose yet again. Now tell me: Which of those prices, on which of those days, was the "appropriate" one in response to the news?

Guidance delayed is guidance denied?
In its third-quarter earnings release last month, management declined to give precise revenue guidance, promising instead to provide this "following the receipt and review of applicable royalty reports." Lacking a company-provided cheat sheet, Wall Street just guessed: $105.6 million. So imagine the shock when InterDigital finally confirmed last week that it thinks the real number will be closer to $63 million (with the possibility of additional revenues from "new agreements that may be signed during the quarter, or additional royalties").

Note that caveat, by the way, because it's important. Commenting on our Stock Advisor discussion boards, Fool member idccjoe advised that: "The nature of [InterDigital's] income from IP means that there will be quarterly variances which will result in these spikes, both up and down. IDCC's performance must be measured over years, not quarters."

"New agreements" and "additional royalties," if they appear this quarter, would yield a revenue spike up. If they don't, then a spike down. In contrast to those spikes, my Foolish colleague Thomas Engle (TMF1000) chooses to focus on the firm's recurring revenues from royalties paid by existing licensees. In another comment on our boards, he points out that "patent license royalties from existing licenses will come in between $48 million and $48.5 million. Last year, the fourth quarter produced only $36.2 million in recurring royalty revenue. Even if they come in at the low end of guidance the company will have grown this important source of revenue over 32%. So, they are starting to accumulate a reliable source of revenue."

So really, depending on how you choose to look at the company -- one with lumpy revenues or one with a growing, recurring business underlying those lumps -- last week's announcement qualifies at worst as "no news," and at best as "good news." The only wrong way to look at this, it seems to me, is the view Wall Street is taking: that failure to hit an arbitrary number dreamed up by analysts, and unendorsed by the company, is a bad thing.

Interested in more Stock Advisor recommendations? Start here.

Fool contributor Rich Smith does not own shares of any company named above.

http://www.fool.com/investing/general/2006/11/08/dialing-interdigital.aspx

Dialing InterDigital
By Rich Smith
November 8, 2006
The Motley Fool's Rich Smith had the opportunity to dish with William Merritt, CEO of Stock Advisor recommendation InterDigitalCommunications (Nasdaq: IDCC). The company might not be a household name, but if you've used a cell phone, you've used InterDigital's technology. Check out what this behind-the-scenes company has planned for its patents as the high-tech arena faces increased convergence.

Rich Smith: Many of InterDigital's clients -- Ericsson (Nasdaq: ERIC), Sony (NYSE: SNE), Research In Motion (Nasdaq: RIMM), and I understand Nokia (NYSE: NOK) is on board now -- are famous, "brand name" companies. But InterDigital isn't exactly a household name. Introduce your company and, if you could, tell us how the ordinary consumer might first encounter your products.

William Merritt: The easiest way to think about InterDigital is that we develop and sell the technology that allows users of cell phones or other terminal unit devices to send and receive signals. We have a saying that when you press the "send" button, we take over. While not being a known consumer brand name, InterDigital is well known in the wireless industry for our pioneering legacy and ongoing innovations, contributions to the wireless standards, and large patent portfolio. InterDigital's patent portfolio consists of thousands of U.S. and foreign patents and patent applications. Our successful patent licensing program has generated close to $1.5 billion to date.

To our customers, which are typically original equipment, design, or semiconductor manufacturers, we offer -- or plan to offer -- our technology in three different forms. First, we offer rights under our patents, which cover some of the key inventions used in cell phones, to manufacture equipment that incorporates our inventions. Second, we offer a form of technology we call "know-how," which typically encompasses detailed designs, software, and other information allowing manufacturers to create the integrated circuits used in cell phones. Manufacturers use this information to build ASICs (commonly referred to as chips) and cell phones. Third, we are exploring embedding all that software and innovation into a "fabless" component or a chip that we would have manufactured and then sell to customers.

While it is difficult to describe in a few sentences the types of inventions and technology we have created, many of our inventions are used when your cell phone receives and sends information. So, whether it is controlling the transmitting power of your phone, handing off your phone's signal from one base station to another, or adapting the data flow between voice and, for instance, a web page, InterDigital's technology is there.

RS: Another company licensing IP to major telecom players has become very well known. How does a "back office" company like InterDigital become prominent in the way that Qualcomm (Nasdaq: QCOM) did?

WM: I understand your reference to being a "back office." However, we would like you to think of InterDigital as being a "front office" company. As a digital wireless pioneer, we are always developing solutions far ahead of the market, often 10 to 15 years ahead, before the products reach broad adoption and commercialization. Our capabilities in system knowledge and our focus on the development of air interface and modem technologies that go into the inner workings of every mobile device sets us apart in our ability to define a wireless system.

As far as prominence is concerned, achieving that is based on a combination of technology leadership and strong financial performance. As I mentioned earlier, we have long been a technology leader for wireless. More recently, we have dramatically improved the financial performance of the company. Five years ago, our annual revenues were nearly $53 million; this year, all quarters to date have topped that figure. We ended 2001 with a market capitalization of about $500 million and as we approach the end of August 2006 we are around $1.5 billion. Over the past year, we have set out a goal of deriving revenue from every 3G terminal unit sold. We are executing against this goal and if we continue on this track the InterDigital name should become much more prominent.

RS: Ballpark figure, when I buy a cell phone for $100, how much money would InterDigital make off that purchase?

WM: Many of our patent licensing deals are tailored to the particular licensee. For example, certain licensees have running royalty deals where the licensee pays a royalty on each product sold. Some of these deals allow for volume and/or pre-payment discounts, royalty caps and the like. Other licensees have fixed payment deals where the licensee pre-pays royalties covering a certain amount of products to be sold, taking on the performance risk that it may not sell the amount of products for which it has pre-paid royalties.

Nokia paid a fixed amount of $253 million based upon royalty rates determined after a lengthy arbitration process. That payment covered Nokia's sales of single mode 2G products for the period 2002 through 2006 and for 3G products sold through April 2006.

RS: Is InterDigital a company that can essentially rest on its laurels and collect royalties on past engineering achievements from now to eternity?

Current Stock Advisor subscribers can access the full text of Rich's interview with William Merritt byclicking here. Not yet a member? Come check out the service with a 30-day trial -- it's free, and a trial gives you access to our library of CEO interviews and our stock recommendations, which are beating the market by more than 40 percentage points on average.

Rich Smith does not own shares of any company mentioned. Fool rules are here.

http://www.fool.com/investing/high-growth/2006/07/31/growth-on-sale.aspx

Growth on Sale
By Shruti Basavaraj (TMF Bell)
July 31, 2006
You probably don't need any more proof that the market's down than simply looking at the wild swings your portfolio has taken. Mine shows that blue chips are down, small caps are down, and growth stocks are all over the place.

The S&P 500 is down 2% this year, and 29 of its constituent companies are trading at their lowest price-to-earnings (P/E) multiples in five years. These include well-known firms such as ExxonMobil (NYSE: XOM), Wrigley (NYSE: WWY), Coach (NYSE: COH), and Johnson & Johnson (NYSE: JNJ).

Growth alert
It's well-documented that many value investors are getting excited about this large-cap sale, but it's not just blue chips that value investors should be hunting for. Growth stocks, too, have been pummeled over the past couple of months. You remember growth stocks, right? They're the small, high-on-potential firms like FormFactor (Nasdaq: FORM) and InterDigitalCommunications (Nasdaq: IDCC) that have helped the Russell 2000 Growth Index return more than 16% annually for the past three years.

Now, while the Russell 2000 Growth Index has been great, the team at Motley Fool Rule Breakers is even more excited about some of its individual constituents. And given the market's recent downturn, a few of them are now available for 50% off. And that's in spite of the fact that when it comes to their businesses, very little has changed.

Find the best with the most
One of the Russell 2000 Growth Index's holdings is Rule Breakers-recommended EncysivePharmaceuticals (Nasdaq: ENCY). The company makes a new drug called Thelin, which has vast potential in the pulmonary arterial hypertension market. Although there are other drugs that treat this, Thelin has the ability to gain huge market share due to its dosing advantages, safety, and efficacy in treating the disease.

The potential for Encysive to be the best in its class in the world of pharmaceuticals is what led Charly Travers to recommend the stock to Rule Breakers members. As Charly said, "Encysive didn't invent the mousetrap, it built a better one."

That's Encysive's huge potential -- and it remains unchanged. The market, however, has reacted to news of a delay in the launch. Apparently, the FDA still sees one remaining issue. Although that delay could be problematic if Encysive is required to conduct new clinical trials, the CEO has stated that he believes it can be resolved without "new data collection or new analyses" (read Brian Lawler's in-depth analysis of Encysive's situation here). And although the U.S. launch is facing delay, Thelin is still expected to be approved by the EU next month -- what Charly called a "big value-driving event."

The uncertainty surrounding Thelin has caused Encysive to trade 60% below where it was in March. And yes, there are risks. But are you willing to pass on that much potential at 60% off? If you say yes, I'll gladly take those shares (and in fact, I already have).

A breaking opportunity
Encysive's not the only Rule Breakers recommendation that's seen its price slashed in recent months, even as the growth stories remain intact. If you'd like to see what other great growth companies Fool co-founder David Gardner and his team are recommending, consider a free trial to Rule Breakers. You'll have access to all of the picks and research without any obligation to subscribe.

Sales aren't just for large caps. You can also get great growth potential for a low, low price. Follow the link for more information.

Fool sector head Shruti Basavaraj owns shares of Johnson & Johnson and Encysive. Johnson & Johnson and Wrigley are Income Investor picks. InterDigital Communications is a Stock Advisor pick. FormFactor is a Hidden Gems pick. The Fool's disclosure policy isn't for sale ... it's free.

Bill, here's a link to a query that will show all of the Fool's articles on IDCC. Some require membership.

http://www.fool.com/search/search.htm?query=interdigital&go=1&mbbid=BoardID&mbmid=Messag....

Thanks for all you do with your website.
GK

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