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InterDigital CEO hails Apple deal but firm not yet committed to Avanci 5G programme
William New and Angela Morris
04 November 2022
InterDigital CEO hails Apple deal but firm not yet committed to Avanci 5G programme
The close to $940 million licensing deal that InterDigital secured with Apple, which was announced last month, was hailed by the firm’s CEO Liren Chen on an earnings call yesterday. The agreement, which runs until 2029, represents a 15% increase over the previous one.
“Our new deal with Apple is a huge validation of both the quality of our innovation and the strength of our patent portfolio,” Chen stated. “I would also add that Apple is a clear leader in the roll-out of 5G, particularly in the premium tier of the smartphone market, so this deal serves as a resounding endorsement of the strength of our portfolio.”
However, while recognising the growing contribution of royalties from the auto sector via Avanci, the firm is not yet committed to the platform’s proposed 5G programme.
The Apple renewal, reached without litigation, carries no variable cost so essentially represents 100% gross margin, making it “the most valuable contract we have ever signed in our 50-year history”, Chief Financial Officer Rich Brezski said on the call. The revenue will begin to show in the fourth quarter.
The third quarter results, with 8% growth year-on-year giving it the sixth consecutive revenue increase in consumer electronics, IoT and automobiles, “once again demonstrate how our innovation is becoming more valuable in an increasingly connected world”, said Chen. During that time, it signed licence agreements with Vizio, Sony, Amazon and others. Due to confidentiality, details of scope of the licence could not be shared.
The company has signed 16 agreements over the last 18 months with a total estimated contract value of more than $1.5 billion, it reports.
Quarterly recurring revenue increased 8% to $101.0 million, compared to recurring revenue of $93.4 million in third quarter 2021, according to company release. The company increased recurring revenue in both its smartphone (up 4%) and CE, IoT/auto markets (up 60%).
There was scant mention of InterDigital’s next big renewal, which will be with Samsung, whose current deal finishes at the end of the current quarter. However, there was no indication of any problems, with Chen stating: “So far [in the] Samsung negotiation, we have been negotiating mobile opportunity renewal, as well as consumer electronics (primarily TV) in parallel.”
Automotive sector driving growth
InterDigital’s aggregate annual recurring revenue for consumer electronics and IoT/auto has risen approximately 140%, from $23 million in first quarter of 2021 to more than $54 million in the third quarter of 2022.
Including catch-up payments from past infringement, the firm has reported approximately $75 million in total revenue from these markets in the last nine months, Brezski said. By comparison, Nokia recently reported revenues of $101 million in non-traditional areas such as automotive and consumer electronics.
InterDigital’s growth in the consumer electronics and automotive sectors is on track to deliver annual revenue this year of nearly $100 million. “This is excellent progress and underlines our belief that our innovations are only become more critical across a growing number of industries,” Chen said.
Chen highlighted progress in the auto sector and the licensing success that had been achieved via the firm’s membership of the Avanci platform. “In the third quarter, automobile was particularly strong with several manufacturers, including Toyota, Honda and Nissan,” he said. “All took a licence to our portfolio of 3G and 4G patents through our licensing partner. These agreements mean that more than 100 million connected vehicles are now licensed to our 3G and 4G technology, with another 30 million to 40 million forecasted to be licensed in the next year.”
However, when asked about whether InterDigital will be going it alone on 5G in the auto sector or joining Avanci’s planned programme, Chen was non-committal. “We are actually ready for either approach. But we see a lot of incremental value of 5G enabled connected cars on top of the 3G, 4G,” he said.
Looking forward
Asked by an investor about streaming opportunities, Chen replied that through its own R&D and the acquisition of Technicolor InterDigital has built a strong pipeline and has one of the strongest video patent portfolios in the industry. "We have done a lot of work designing our licensing programme in that space. We are optimistic about the opportunity, but it will take time to grow," Chen stated.
Although this is a period of significant economic uncertainty, Chen stated that InterDigital may be better situated than most in the industry to weather any storms as 80% to 90% of the firm’s licensing agreements are fixed fee and long-term (five years and above). However, he added that the firm is “not completely immune” when it has renegotiations for renewals.
Wow. Data Rox. Blast from the past. Godspeed.
Below is a comment about the IAM Media article from Joff Wild on Linkedin. His comments potentially explain why Liren Chen is not fully committed to Avanci for 5G technology. Joff Wild is the Former editor-in-chief of IAM and World Trademark Review, now focusing on IP consultancy work with an emphasis on policy, strategy, business development, communications and marketing. The same article is linked below his comments but still cannot access without creating a login.
My bolded red text added.
Avanci has had a great year, but it could be facing a challenge. As smartphone sales fall and other sectors become more important to big ticket mobile licensors, going it alone in auto 5G to maximise royalty revenues, rather than pooling resources via Avanci's new programme, could start to get more tempting for some. I think that would be a shame and potentially a mistake on several levels, not least from a regulatory perspective, but I can see how it might happen - especially if boardrooms get seriously involved. It strikes me that what Qualcomm decides to do here may be pivotal.
vegas....i would think some of this short activity is definitely tied to the converts at this point
Does anyone have access to this article?
InterDigital CEO hails Apple deal but firm not yet committed to Avanci 5G programme
William New and Angela Morris
04 November 2022
https://www.iam-media.com/article/interdigital-q3-2022-earnings-apple-avanci
Loop here is hoping Tesla gets booted by the court. Which results in the company paying an appropriate royalty rate.
This is an Avanci lawsuit based on patents we have allowed it to use in providing a one stop solution for licensing necessary to create niche products. Musk believes he is entitled to free subsidies from government and free use of the technology of others.
MO
loop
Didn't realize the link had been posted. Admin, please delete my prior post.
Patents assigned to IDAC holding.
https://patents.justia.com/assignee/idac-holding-inc
I’m in Aruba on vacation, someone else is going to have to do some work 🤔
Paullee - IDAC Holding Inc appears to be relatively recent patent endeavors by InterDigital. IN MY OPINION ONLY, these involve device to device communication as would be used by self driving vehicles and drones. I don't know if the link posted below is a complete list of patents that InterDigital has assigned to IDAC Holding Inc.
https://patents.justia.com/assignee/idac-holding-inc
Tesla Inc. and another v. IDAC Holdings Inc. and others
Tesla has brought patent proceedings against wireless and video technology company InterDigital and InterDigital's licensing partners Avanci LLC and IDAC Holdings in a claim filed on Dec. 5.
Tesla was accused of willfully infringing five patents relating to ways to increase the efficiency in electric vehicles by the patent holder iQar Inc. in Texas federal court in June.
In August, Tesla faced more patent infringement allegations from Graphite Charging Co. when developing its Tesla charging stations, app and autonomous control system.
Tesla is represented by Powell Gilbert LLP.
Counsel information for the defendants was not immediately available.
The case is Tesla Inc. and another v. IDAC Holdings Inc. and others, case number HP-2023-000042, in the High Court of Justice of England and Wales.
Read more at: https://www.law360.com/articles/1775106/uk-litigation-roundup-here-s-what-you-missed-in-london?copied=1
When the shorts finally are forced to cover, the share price is going to climb like a rocket.
SHOWING ON THE YAHOO WEBSITE FOR IDCC
Upgrade B of A Securities: Underperform to Buy 5/10/2023
Initiated Jefferies: to Buy 12/9/2022
Initiated B of A Securities: to Underperform 7/25/2022
Reiterates B. Riley: to Buy 1/15/2020
Maintains B. Riley FBR: to Buy 8/2/2019
Upgrade Dougherty: Neutral to Buy 2/23/2018
Upgrade Sidoti & Co.: Neutral to Buy 8/8/2017
Upgrade B. Riley FBR: Neutral to Buy 4/24/2017
Downgrade Dougherty & Co.: Buy to Neutral 10/5/2016
Downgrade B. Riley FBR: Buy to Neutral 9/26/2016
Maintains Barclays: to Equal-Weight 9/23/2016
Scooby5 - Try this link, however it appears to not yet been updated with B of A new target.
http://finviz.com/quote.ashx?t=IDCC
Over the years from what I could find on yahoo, it seems that Tesla has been involved in litigation before, as has IDCC.
Maybe someone with a Law360 subscription will post or comment on the complete article.
no idea, what I wrote is all I have
New short interest 3.75M . Good luck shorties
Paullee why would Tesla drive a patent case against IDCC? Is it possible they are using IDCC patent(s) without license.
No idea of what this means
UK Litigation Roundup: Here's What You Missed In London
By Tabitha Burbidge ·
Law360, London (December 8, 2023, 6:14 PM GMT) -- The past week in London has seen Tesla drive patent proceedings against technology company InterDigital,
Where can I find a list of analysts and their targets?
From a poet who didn’t know it!
In the market's wild, speculative game,
Short sellers of IDCC faced shame.
Their bets turned awry,
As the stock soared high,
A costly lesson in fortune's fickle fame.
getting interesting now
https://stockcharts.com/freecharts/pnf.php?c=IDCC,PWTADANRBO[PA][D][F1!3!!!2!20]
Mgmt had a virtual meeting with investment bank RothMKM yesterday. Anyone care to start a rumor?
Mr Chen strong statements on past 2 conference calls.
" our frand rate proven to be highly defensible in court"
"no acquisitions, we feel we have best of breed already in house"
I am paraphrasing, but that is the gist.
That takedown to 97 recently didn't last long, there is a new investor sentiment, I believe.
Cheers
Data_Rox - Nice to see you here! Merry Christmas to you and yours.
Rock on!
A very Merry Christmas to all!!!
R-out
I am surprised that IDCC didn't increase its authorization for share repurhase back at the end of October, 2023 when the price dropped down to the $75'-$80 level.
So close to year-end, the recent dividend increase, and now the buy back increase, something must be cooking!
Just think --- if IDCC decided to do a new Dutch Auction at or near the recent upgraded target of $125 from B of A,m this price could easily surpass that mark
Just 18 months ago, B of A initiated coverage with an overpriced rating. Since then, they have upgraded their rating twice to the current high of $125.
What a turn-around for the Analyst, unless he was canned and someone ellse took over for him.
When will the shorts decide to cover?
I can't really remember the exact years I bought IDCC stock, but I learned about IDCC back prior to the MOT decision and lost a few thousand on calls after the decision. I bought bits and pieces of IDCC stock from the 90s into the early 2000s and still have them.
As was stated by others, I will be here until the cows come home. I have no when to be after all of these years except here.
Vegas and Cat market maker or whoever is caught toying with the price, may they burn in fiscal bell.
my3sons87, it is the market maker. I think he got caught offsides yesterday. He needs to cover his shorts. I also believe he will be caught again when the company starts a new Dutch Auction.
My3sons87,
As we say here in the south ...
"Bless their Hearts!!"
Tomcat
Someone is battling to keep the price down.
scooby5, they should be able to purchase as it came from a December 1 board meeting
Is interdigital allowed to purchase today?
Vegas Options - Thank you for posting the B of A update.
I have been texted that B of A raised price target to $125
Am I correct that IDCC can't buy for a few days due to yesterday's announcement?
I have been here since 1995!
Tomcat
More info about IDCC HVEC tech from old posts. I too am excited about IDCC HVEC streaming revenue comments in the last conference call. I think IDCC mgmt. pegged streaming revenue to begin around 2027 during that call. Sooner is better though.
IDCC signed Alps Alpine to a license for its High Efficiency Video Coding (HEVC) technology on 5/15/2023. IMO, the Alps Alpine license may be a very big license win if IDCC’s HVEC software technology is also included in Meta’s MSVP chip.
IDCC Alps Alpine HVEC license
Gamco's post about Meta's Meta Scalable Video Processor (MSVP)
I’ve been here since 1985 and the old Rauscher-Pierce days. In all likelihood I’ll be included in those 10 retail investors if I’m still alive.
If you read through the lines of the new buyback IDCC added $235M to make the new amount $300M. On the November conference call they said they had about $80M left. That means that they bought $15M in November or about 150K shares. That should make the new share count 25.25M. Since they announced the expanded buyback today that inclines me to believe that they are very comfortable buying at these levels. If I was a shorty I would be very nervous...
During the last cc then mentioned they see a large new potential revenue source from companies using their HEVC technology in streaming.
IDCC licensed its HVEC patents to Lenovo.
IDCC Lenovo license news release
I assume IDCC has HEVC Codic patents and intellectual property? They are doing research there. Imagine owning a key bit of streaming video intellectual property that gets licensed to all users & that everyone wants to use, as it is so much better than the alternatives!? That, and IDCC is small, with a market cap of only $2.7 billion. Tons of appreciation potential!!
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