InterDigital Inc (IDCC)

[BlueTower]

Greetings to all - Corrected

(Postyle, here is my post with a couple of small corrections. Would you replace the orginal post in the "sticky" section with this. Thanks!)

I am a first time poster - long of IDCC for about 5 years, lurker here for about two years. I want to thank jim, postyle (super job on the "sticky" notes!!!), loop, olddog, data, Joel, nukejohn, infinite_q, (revlis and rmarchma from the past) and many, many others for making this board a great source of information and thoughtful comments/analysis on IDCC. It is truly is like a family here - squingeqbob posting CAFC (no) news at 11, nicmar posting IDCC board "rank" at midnight, gamco posting the latest patents every week, etc.

There has been a lot of debate (here and in the media) about how IDCC's patents compare to others. As several people have commented the number of patents is not necessarily a good indication of a company strength in patents - not all patents are equal. Even the number of "essential" patents is not necessarily definitive - the "essentiality" being self declared. With that said there is still the natural desire to make comparisons - especially when, for example, a company comes up for sale - like say IDCC. While still subjective, ranking IDCC against Nortel, MMI, and other companies gives us some basis for what we might get for our company. IMO, Ron Shuttleworth, NukeJohn, rmarchma, dclarke, and others have presented some excellent analysis over time (both as a on going operation and as a takeover candidate) of IDCC's potential based on the earning, industry growth, etc. etc. I am not going to even attempt to do that kind of analysis, but I thought I would pull together some wide ranging "reports" that compare the IDCC LTE patents to other companies, and offer my two cents.

I put the following table together from seven "reports" - all of which came to my attention directly or indirectly from iHub postings. Like patents, all reports are not equal - anyone can put out a report. As you can see there are many differences in these "reports". But as an analytical person, I like to look at the "data" being offered and make some "sense" of it - seeing what the trends, averages, anomalies, etc. etc. are.

#1 -- Informa Telecoms & Media, % of LTE Patents, 5/18/10
#2 -- TechIPm, % of Essential LTE Patents, 1/1/11
#3 -- ZTE, % of Essential LTE Patents, 1/31/11
#4 -- Ocean Tomo, Quality and relevance vs Nortel Patents, 4/7/11
#5 -- Cowen Group, % of LTE Patents, 8/31/11
#6 -- Peter Misek (Jefferies), % of Essential LTE Patents, 7/21/11
#7 -- Peter Misek (Jefferies), % of Essential LTE Patents, 9/21/11

 
           #1    #2    #3     #4    #5    #6    #7		 
  
 LG         7    27     6      ?     9     8    23 
 QCOM      19    25    13    High   14    29    21 
 IDCC      21    11    24    High    9    16     9 
 Nokia      7    10     9    Low    11    13     9 
 Samsung    8    10     9    Low     9     9     9 
  		 					 
 Intel      ?     ?     ?    High    ?     ?     ? 
 ATT        ?     ?     ?    High    ?     ?     ? 
 Ericson    7     1     8    Low    13     3     2 
 Huawei     9     1     8      ?     9     9     1 
 							 
 MMI        ?     3     ?    Low     ?     ?     9 
 Nortel     ?     2     ?    High    ?     3     4

I listed every company that was in anyone's "top five" (plus MMI and Nortel for obvious reasons) and then recorded how they were reported in all of the reports. A number of notes, caveats, and comments:

1. At the end of this post, I included links to these "reports". Some of the "reports" are nothing more that a chart referenced in another article.

2. These "reports" were done at different times over the last year or so. Obviously things can change.

3. Note that Informa and Cowen are reports of % of LTE patents (total - not just essential), Ocean Tomo compared companies to Nortel's patents.

4. Cowen's "report" was a pie chart without any numbers, so I had to "eyeball" it and estimate the percentages

5. While I would like the ZTE report to be accurate, the two reports that I found most compelling are the TechIPm, and the last one (September) from Jefferies.

6. TechIPm is a "professional research and consulting company specializing in technology and intellectual property mining" (their description of themselves). It is interesting that the first Jefferies "report" (July) referenced TechIPm as one of the sources for the Jefferies report.

7. The last Jefferies report (9/21/11) goes with the "conference call" held this past week. While I did not get to see the "visuals" that went with the call, I found the call to be very interesting and informative:
a. It seemed to me that their research was much more extensive than anyone else, and certainly most current. Peter described the methodology as looking at the patents and actually matching them to the LTE specifications (i.e. not relying on the "self declared" essential classification listed in ETSI database). He said they used PHDs, engineers, former patent officials, and lawyers to do this review. This is what impressed me as being more thorough than any of the other reports (which primary seemed to be based on searches on the patent databases).
b. While the focus was on LTE, Peter did talk about some "reservations" about the IDCC 2G/3G patents - not that they weren't valuable, but that they were not as "mature" as the LTE patents, and under somewhat of a cloud with the difficulty getting them licensed (and getting court decisions when going that route). This is nothing we didn't know, but it was a little "stark" to me when presented by an analyst discussing the difficulty of putting a value on IDCC at the time of a possible buyout.
c. He did say that he thought Apple (and others) would benefit greatly with an acquisition of IDCC
d. He commented that his biggest surprise was the "rise of the East" (meaning Asia - LG, Samsung, Huawei, and ZTE)
e. In the call, Peter listed Nokia/NSN (Nokia Siemens Networks, a joint venture between Nokia and Siemens) as #3 with 11%. I listed Nokia (separately) as tied for third with IDCC and Samsung with 9% as he did in the written report.

8. Several anomalies:
a. Ericson and Huawei were all over the place - biggest deviations between the various reports
b. Between the 7/21 and 9/21 Jefferies "reports", LG went up from 8% to 23%, Huawei went down from 9% to 1%, and MMI went up from unmentioned to 9% (the MMI is particular odd as most people seem to be suggesting that MMI patents were of "questionable" value)

9. Conclusions IMO:
a. there seems to be a strong suggestion that LG and QUALCOMM are the front runners for LTE essential (that must give LG some "pain" in having to pay a license to IDCC, with no help from their patents in a "cross-license" deal - I am assuming that it is just when, not if they pay)
b. there seems to be a strong suggestion that the rest of the "top five" are IDCC, Nokia, and Samsung
c. all of this seems to further the idea that IDCC is the "crown jewel" of available companies with minimum "encumbrances" ( the only other one in the top five that, due to weakness, may remotely be a takeover candidate is Nokia - which I don't think is likely, and certainly would have a lot of "baggage")
d. FWIW - I think IDCC is in the perfect place at the perfect time. I think the industry (not necessarily the "market") knows the value of IDCC (which of course is MUCH more that LTE), and there is significant "competition" to drive up the price beyond what the more "traditional" buyout price might have been. While we can only speculate who is actually bidding, and how aggressively, we KNOW there are a number of big players who would like to have IDCC (and/or keep us away from their competitors) - Google, Intel, Samsung, LG, HTC, ZTE, Huawei, Apple, Microsoft, Nokia , Ericson, Qualcomm, etc. etc. It only take two companies (or consortiums) who really want IDCC (and/or don't want someone else to get us) to give us a incredible price.

Good luck to us all (except the shorts)…

just thinking… (Joel, if you think this is infringing on your "just sayin…" tag line, will you offer me a frandly license?)

BlueTower


Links to the various report mentioned above:

Informa Telecoms & Media (United Kingdom) -- 5/18/2010
…. business information and services
http://blogs.informatandm.com/1466/press-release-lte-is-changing-the-landscape-of-ipr-wealth/

TechIPm (Boston, MA) -- 1/1/2011
…. professional research and consulting company specializing in technology and intellectual property mining.
http://techipm-innovationfrontline.blogspot.com/2011/01/lte-patents-essential-for-ran-products.html

ZTE (China) -- 1/31/2011:
…. provider of telecommunications equipment and network solutions
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=59384384

Ocean Tomo (Chicago, IL) -- 4/7/2011:
…. merchant banc and financial services
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=61811048

Cowen Group (New York, NY) -- 8/31/2011
…. diversified financial services firm providing investment banking, research, and sales
http://seekingalpha.com/article/290898-virnetx-uniquely-positioned-in-heated-4g-patent-battleground

Peter Misek (Jefferies, United Kingdom)
…. global securities and investment banking group
-- 7/21/11:
http://wirelessledger.com/Jefferies_Note_7-21-11.pdf
-- 9/21/11:
http://www.forbes.com/sites/ericsavitz/2011/09/21/research-in-motion-patents-worth-just-2-5b-analyst-says/
(recorded conference call related to this at 404-537-3406 code 12188031)