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3rdgen, not a good idea.
The company has Janet there to handle the calls for a reason. Do you think that management's time should be spent answering the nattering nabobs of negativism or chatting with the cheerleaders? Management's job is to make the company successful, not hold the hands of nervous investors.
To avoid any misunderstanding, I appreciate Ron's asking pertinent questions of Janet and sharing them with the board. However if he were to start badgering management to answer questions about confidential information then I'd have a quite different view.
My opinion for you, Nokiashill
Double "L" is pronounced with the "T" sound in your handle.
Yup, a typo.
It was supposed to be a rhetorical question with a question marks at the end, as shown below.
He is supposed to push stocks on the most optimistic assumptions??
Glad you understood my poor writing. Somehow I knew you would like that post.
What did Amit Kapur do wrong?
So many folks having fun mocking Amit Kapur by messing with his name. I'm sure he's mature enough not to let adolescent barbs on an internet message board bother him, but they bother me. It reflects poorly on this board because Mr. Kapur did nothing wrong. On the contrary, he did his job very well. He saw the price run up 40% on no news and downgraded to market underperform based on valuation. The market proved him right. He is an analyst whose job is to assess stocks. He is supposed to push stocks on the most optimistic assumptions. That was tried, remember the internet bubble? He did nothing dishonest or unethical. He gave his honest opinion.
If anyone can dispute any of his analysis, go ahead. But it is silly to criticize him just because he doesn't tell you what you want to hear. If you go to the doctor and he tells you not to eat foods you like does he become a quack? Personally I believe that he is too conservative regarding IDCC. His income projection seems low and his price target does not include any upside potential from new licenses. While I disagree with him it doesn't mean I have to disrespect him. Nor should the company give him the cold shoulder because he's not jumping up and down pumping the stock. It will be a nice boost when IDCC signs the next big contract and he jumps on the bandwagon. When skeptical investors who watch this stock see the skeptical analyst become a believer, then they become buyers. There is such a misguide expectation of loyalty in regards to IDCC stock. It is such a puzzling concept to me.
Does anyone really believe price declines can be stopped by "strong hands"? What we need for a run up without a fall back is real news that changes the fundamentals going forward. Remember LG? We were trading in the 15-19 range. Gapped up to 22.44. We haven't fallen back to the old range because the fundamentals changed. Since then the range has been 24-28. Only new income streams will permanently lift us above that. Not the strength of the hands nor the loyalty of the shareholders.
Frank
Mschere, what is your EPS multiple? TIA
Currently IDCC's Trailing earnings are $1.20/$1.21 per share..on August 3, the Financial Services will change that figure to no less than $4.04..Every one is free to provide their own EPS multiple for IDCC stock at that point in time..
If you believe the market is going to, or even should, place a multiple on the total earnings instead of the expected recurring earnings, then there are scores of stocks out there that are quite a bargain. However if you understand that investors buy the stock based on their expectations for the future, then you know that IDCC will be priced at a multiple of the expected recurring earnings (primarily 3G).
It's wonderful to have a positive outlook on life, but it can be detrimental when the positive spin might cause someone lacking market savvy to believe the stock is undervalued due to it's low PE based on GAAP earnings that include large "one off" revenues. I believe IDCC is undervalued because they will sign other large producers to 3G contracts to bring their recurring earnings up. If they don't, then that $4 a share earnings will not support a PE of 6 a year from now.
Whisseresq - Great post.
I was having the same thoughts but you put it into words better than I could. I agree almost completely. I think you are a bit optimistic on the time frame for the Houston 100, but I still believe it will happen this decade.
Great buying opportunity. Selling opportunities come around as well, just ask management.
Red Angus, you are in the majority,
which is why I complained yesterday.
Maybe I’m in the minority here, but I don’t see a problem with people griping when the stock takes a 20% hit in one day on virtually “no news”.
What’s the point? It’s like griping when it rains on the weekend. You might be unhappy, but no one can fix it nor prevent it in the future. As you observed, there was NO NEWS.
Most of us cheered wildly when we won the NOK suit and when LG was signed, and we gave credit to management for accomplishing same. But (as someone who has been in business many years can attest) management is sometimes fallible, too.
I completely agree that management actions should be looked at critically, but what happened here has nothing to do with management’s performance. It’s like a college football team that has a bye week and someone on ESPN says the team is overrated. The next poll comes out and they drop 8 places in the rankings. Does that mean that the coach and team should be criticized?
I for one think that the grant of stock options to insiders is a bad practice (now evidently being abandoned as a practice by most companies, including IDCC). As Business Week and the great majority of economists now point out, the purpose of issuing stock options in the past was supposedly to “align the interests” of management and shareholders. However, when options are exercised and the stock sold immediately by insiders, just the opposite happens. This is diametrically opposed to “alignment” of executive and stockholder interests. Stock options are NOT intended as ordinary pay supplement for insiders. Incentive bonuses work just fine for that, as most companies are now coming to realize.
Amen. It was an exorbitant gravy train that is finally being derailed. Stock based incentives are similar gold mines for those that get them.
I think it’s a totally bad business practice for insiders to sell shares during an announced buyback. Such practice dilutes the purpose of the buyback; it tricks shareholders into believing that the company’s outstanding shares will be reduced, when in fact they won’t be, to the extent of the option exercise/sales; it raises all sorts of questions that are debilitative to stock price; the timing can never be right for exercise/sale, etc.
What is the purpose of the buyback? I thought it was to acquire stock so that all the shareholders would increase their equity in the company. I don’t see how who they buy the shares from affects that.
IDCC management has done well on several counts, and we’ve given credit when due. I think it has screwed up on insider sales, though. Bigtime. I’m long on the stock, and just bought some more, but let’s face it: Even though IDCC insider sales were not the major reason for the recent price decline, they have definitely hurt the stock to some undetermined percent and they’ve definitely caused tremendous stockholder turmoil.
I agree that they’ve been given way too much stock way too cheap, but once they have it, it is theirs to sell. Preplanned sales would be a better way to go, but as long as they are not violating the letter or spirit of the insider trading laws they are doing nothing wrong. Do you really think the stock price in two months would be any different if these sales had not taken place? The affect is short term.
I don’t think there’s any problem with discussing the subject.
Discussion is fine. You’re post was well thought out and presented well, as usual. While I disagree with some of your points, it is a useful discussion. It’s the “I wuz robbed” and I’m going to blame management, shorts, Amit, someone other than me for my investment loss posts that I find a waste of space. The folks that can’t or won’t look at the facts and analyze, they just see the price drop and have to blame someone.
Random thoughts about recent price movements
Why is it that whenever the stock has a decline without obvious cause it is a conspiracy of shorts and other evil doers, yet when it goes up for no apparent reason no one ever accuses anyone of manipulating the price up? If there was manipulation of IDCC’s price, this time it was to push it up so they could sell or short it over 30, and then let it fall back and buy back. But you’ll never hear anybody consider that. No, when the price goes up the market is finally catching on to our little secret. News flash, IDCC needs to execute additional 3G licenses to significantly and permanently raise the price.
Analyst puts out a report months ago showing IDCC with a target price of 25 (when the stock is at that level) and a market perform rating. The price of the stock goes rather quickly to 35 on no news. He downgrades to market underperform citing valuation. What a load of consistency and logic. Yes, let's all vilify him because he isn't willing to “bet on the come” on this stock. Oh, but his downgrade cost IDCC hundreds of millions in market cap. Too funny. PJ can cause 20% of the shares to trade? If you believe that then get rich just jumping on their upgrades/downgrades. The stock had run up on who knows what and people were waiting for the top to sell. When there was a break in the stock price there was a selling frenzy. The price is now about 10% higher than when the run started - not bad for two months. Here's a crazy prediction, Amit upgrades to market perform because the valuation has come back into line with where he thinks it should be. To an unbiased observer it would be some astute analysis on his part, but here he will be a moronic unethical stumblebum until he is the most optimistic analyst, at which time he will be a brilliant man with a shrewd insight into IDCC.
Evil management sells their shares at high prices. Oh horrors. I'm glad we have management that is smart enough to sell on the upswings. No, that can't be it... let's consider legal action and contact the SEC. They sold because they had insider knowledge that bad news was coming to hurt the share price so they got out. But wait, there was no news to cause the drop. Fk it, my portfolio took a hit and I KNOW it ain't my fault. Screw the facts, sue somebody - this IS America after all. Somebody (other than me) has to pay for my failure to sell at the top. I do believe each of us can sell whenever we want to, can't we?
Once again IDCC runs up on significant volume with no real news to support such a move. Someone knows something, there’s a leak, big news coming. Wrong again. It happens every year or two. IDCC news has been preceded by very normal trading in almost every instance. If there ever is a leak, it will be from the other company that is about to enter into a contract with us.
"Mister", you sound like an illiterate spurned lover. You appear to be very angry about IDCC. I suggest you forget all about it because it only makes you miserable. But then some people just like to bitch. I just wish you’d find some where else to do it.
Here’s hoping Mr. Merritt has a nice 3G contract to announce in the near future so everyone can enjoy life.
No, I don't think so.
At the very least, I think investors should be able to get as good a share price as the insiders who sold, don't you?
If you want to get what the insiders got, sell today, you've achieved that. Investors have to make there own decisions on when to buy and sell. If they make good decisions they profit, if they don't, they lose. That is not the company's responsibility.
There is no rational reason for IDCC to try to support the share price at $35 through a buy back. Management's job is to support the price by creating revenues and profits that make the stock worth $35 and more. They are also trying to increase value by buying back shares. The cheaper they can get them, the more shares they get. Seems pretty straightforward to me. At some point the $200 mil will be spent and there will be some weakness in the stock. I'd rather have IDCC be a buyer during some dips rather than bidding the price up temporarily since I'm not looking to sell. If you are ready to sell, then it would make sense to wish for the price to get pushed artificially high so you can cash out, otherwise it is counterproductive.
I know this is heresy, but...
If FACT is buying for IDCC and there is a concerted effort to push the price lower, FACT should take a few days off. Let the price fall until it shows some resistance, then start buying at lower levels. Their purpose is not to support the price until the $200 mil is gone, it is to acquire shares at the best price possible in a reasonable time frame.
This will create the best long term result for the shareholders. I love the current price action, but I am far more concerned in how IDCC can achieve continuing and lasting gains.
When should management be allowed to sell?
Not when the price is rising... kills momentum
Not when the price is falling... accelerates the decline
Not when the price is trading in a range... will cause a negative breakout
Not after good news... shows management doesn't think it's that good
Not after bad news... shows management thinks it's really bad
To sell stock, management must show a compelling personal need, such as taxes or medical bills. Improving the house, taking vacation, buying a car for their kid should be subject to shareholder approval.
Management should only sell after I've sold my stock because now it won't hurt me and that's what is important.
If you've read the above and do not find it ridiculous to imagine any of those restrictions please consider how you would feel if you had the same restictions placed on your stock sales.
The fact is that this is their stock to sell for their personal benefit, as long as they comply with the spirit and the letter of the law when it comes to insider trading.
When has there been an insider open market purchase?
If you work at a shoe factory and get 15 pair a year free or at a discount how often would you go out and buy shoes in a store at retail? (okay, bad example for some women... ooops, now I'm in trouble for being sexist!) You might even sell a few extra pairs - doesn't mean you think they are poor quality.
Management should (and I expect do) ignore option dates as they go about their business. If they were to adjust the timing for options, THEN that would be an issue. Because then they would be helping one segment of investors at the direct expense of the others, and as some on this board demonstrate, those that they hurt would blame management and probably take action to recover their losses. Management's job is to do what is best for the company and for their financial situation. They have no responsibility to the option players, even the "good (betting on price increase)" ones.
Automatic trade of in the money options
If the options are in the money they are NOT exercised they are sold (or bought to close).
OT - The Count
I changed my handle on the boards to "The Count" after teecee called me "Count", jabbing at me and my CPA views refering to me as a bean counter or comparing me to The Count on Sesame Street or both. I'm a Giant fan that went to the Stick frequently in the 70s. I remember watching John "The Count" Montefusco's first game on TV against hated Dodgers. He came in in the first or second inning with the Giants down a few runs, bases juiced, nobody out and retired the side only letting one runner score. HOF broadcaster Lon Simmons immediately dubs him "The Count". He comes up for his first at bat and hits it out. The Giants come back and he gets the win. So I called myself "The Count" in reference to my accounting background and as a reminder of that great game and my days out at the Stick.
Thanks for your post - good memories.
Insider selling is not ominous or evil
Shay should have been canned long ago for a lack of common sense
Mr. Shay is an attorney. His job is to tell his client what they are legally allowed to do. He is not paid to make value judgments for his clients. If I was paying a lawyer I’d want him to provide me with all my options and the LEGAL ramifications of them. I’m not going to pay him his hourly rate to tell me how to manage my finances – would you? Nothing about the insider sales indicates any job performance deficiencies.
Why would insiders sell now? To use the funds for living and to diversify. The stock options are part of their compensation. There is no reason for them to not spend their money. Secondly, it is imprudent and very risky to have your investments concentrated in one investment. That is compounded when the investment is also your employment and possibly your retirement fund. Taking money off the table is a conservative and rational thing to do. If IDCC goes to 100 next month, they are all exceptionally wealthy and the “loss” of potential gains will not affect their life at all, except for their estate. However if IDCC goes to 10 and they get laid off the money they left on the table would make a huge difference in how they live. This has nothing to do with IDCC in particular – there is risk in any stock. A disaster wipes out IDCC’s building and staff. A new technology is developed that makes all of IDCC’s IP obsolete. Likelihood is very remote, but looking at the risk/reward it is prudent. Add to that IDCC is trading at an all time high (bubble excluded), seems like a good time to diversify.
Management’s stock is for them to use for their financial benefit. They have no obligation, fiduciary or otherwise, to send signals to the market to benefit the share price. I think that options and stock based compensation is excessive at IDCC and in the corporate world in general, but once they are granted I’m not going to expect it to be managed for my (the shareholder's) benefit.
Will the stock go down following this news? Yup, I think so. Part of it is self fulfilling prophecy. Many people use this as a sell signal. Also on the heals of a run-up with no news, a pull back in price should not be a surprise. This will not affect the long term price, which will be based on results.
scooby5 - regarding resistance and support...
Resistance is futile. Support IDCC.
Someone please send me the official I-Hub IDCC pom-poms so I can join the official cheerleaders squad. Better send them FedEx though, as these flashes of giddy optimism don't last long for those of us with personality deficit disorder.
Thanks xdx, that's what I wanted to hear.
Question on the $800 million revenues in 2010
that was mentioned as an attainable goal at the ASM. Was that 3G licensing revenue, which seems possible based on the slide projection, or was that total revenues including product sales? If anyone has any clarification I'd appreciate it.
Thanks,
Frank
Spencer, When I said the next 3G license
I meant the next 3G license with one of the top 5. The others are helpful, but it's the biggies that we need to really move the price.
8K - raise for William Merritt
A well deserved, reasonable and proportional pay increase to our CEO. I'm very happy with his leadership and I'm glad that his performance is being properly rewarded.
Why all the volume and strong price action? IMO, it is due to IDCC aggressively buying after the ASM. It appears they were staying out of the market prior to the meeting and now they are buying with both hands. I think it is a great sign that they are willing to bid the price up to accumulate quickly because it indicates to me that they are expecting the share price to be at a higher level in the not to distant future. I love that IDCC is trading at these levels before we get the next 3G license - makes the jump to the next level that much easier. It may be months away, but I don't think it will be more than a year.
2010 revenue projections from the ASM
4. Our 2010 revenue projections are reasonably in the 800-850 million area. It could be higher. From the discussions, I don't think management would make these statements/projections if they didn't think they could solidly deliver.
From the chart used in the presentation, it appears the the $800MM projected revenue is just for licensing of 3G. Is that accurate, or does it include sales of products as well? While still very positive, the gross profit percentage on sales will be far less than the great return from the IP.
Much ado about nothing
I did not vote on the classified board proposal because it was non-binding and management is clearly going to ignore it regardless of the outcome. You've made your points, let's move on.
IDCC is pennies off of it's all-time high (bubble excluded). The valuation is reasonable and there are still a number of catalysts out there to propel the price higher. Don't worry, be happy! Some are saying the stock is due for a pull back, causing some angst amongst the "loyal longs". I will say I sold my June 30 calls last Wed and Thursday because I didn't want to be on the clock for news. Sammy should come soon, but lacking that, history shows that a pull back should not be a surprise. It also should not be a source of concern to long term holders, just another opportunity to buy if it occurs. My wish? IDCC announces settlement with Sammy that includes a 3G license Monday. But I am keeping my expectations reasonable so if no license comes this month and the price falls to 25 I won't be upset or think the sky is falling. Look at the long term chart. When we are worried about falling to 25 that is a good thing.
I have a great deal of respect for Mr. Merritt. He's shown good leadership and excellent communication skills. He knows the industry and he knows the company. I do believe he will get the job done in time. I feel very good about my investment in IDCC. I do think it would be best if Mr. Campanga moved on. My third hand impression (from a very great distance) is that this isn't business with him, it's personal. He has some very strong opinions about how things should be and he is not open to much compromise. I think he feels he is "owed" a great deal from IDCC for his past contributions and no one, other than him and his circle of management, has any right to comment. If someone saves my life, I owe them everything, but does that mean for the rest of my life I have to give him anything he asks for? Some say yes, but I don't agree. I think he's been repaid for his contributions, including an appropriate multiplier for taking on great risk. I think retirement would be a good thing for IDCC and give Mr. Merritt some more room to get things done.
I think IDCC is in the strongest position in its history and do believe in 2010 the price will be much higher than it is today. So lower the expectations of quick news while maintaining optimism for big news.
Finally, thanks to all those that contribute so much to this board. It is an amazing resource. I am grateful for it. Thanks to everyone I am able to keep up on pertinent industry news, get almost instant analysis of IDCC news and am able to virtually attend the shareholder meetings and courtroom proceedings. There is no way I'd be invested in IDCC like I am without it. It's taking too long for me to think I'm a genius when IDCC finally reaches its full potential, but thanks to this board I will feel pretty smart, and there ain't no way I'm an idiot.
Kajo,
Great stuff. Thanks for sharing.
IDCC licensing / cross-licensing
I've never been a fan of IDCC producing chips. I love the IP tax collector model - fixed costs, so incremental revenue drops right down to the bottom line. Getting that additional revenue has proved tough, but I think it is the best way to go.
Chips involve costs to produce, market competition, obselesence risks... just a lot of things that can result in a big top line but a smaller bottom line. In addition, we now have to license other companies IP. I fear cross licensing agreements where we "trade" IP, since IDCC sales would be tiny compared to our potential licensees.
Why is it you think it may be good for IDCC to move in this direction? Do you think it will help IDCC to get licenses? Do you believe chip sales will be a profitable market for IDCC? I respect your opinion and hope you can enlighten me on the pros and cons of IDCC entering into the chip business.
Thanks,
Frank
I gotta hunch Samsung is coming soon.
Maybe I'm reading the tea leaves all wrong, but I've got a gut feeling that we are going to get news on Sammy by next week. These are guesses and suppositions, so no one should think I've got "inside info", it's all guesswork on my part. Disclosure - being fully invested in IDCC and not willing to use margin, Friday I bought 100 June 30 calls. Haven't played the margin game for about 5 years, but risking $1,600 to control 10,000 shares gives me a risk/reward that works for me. In the past I've been very unsuccessful trying to time things so no one should follow my lead on this. The fact is that there is a high probability (maybe 90% or more) that this calls will expire worthless. It is a pure gamble.
Here's what I'm seeing that's lead me to my opinion:
Based on the Nokia timetable the results of the Samsung arbitration are due. Given that the same issues have already been arbitrated I don't expect that there would be a delay like there was for Nokia. I would expect that IDCC would be awarded $50-$60 million. I think that would jump the price about 10% for the short term, although I think it is already priced into the stock.
Samsung may be willing to sign a 3G agreement to get a break on the 2G award. That would add forward predictable revenues and give additional support to IDCC's 3G IP value, raising expectations for other licenses. I'd expect this to boost the price over $30 - by how much would depend on the terms.
I do not see evidence that IDCC is buying shares right now. I would think (hope) the $25 level would be very attractive to the company, so they may be out of the market because of pending news.
The ASM is coming up soon, and I imagine Mr. Merritt and the rest of management would love to have some good news to discuss, so to the extent possible I think they would do their best to finalize any negotiations. Whether they do or not, Mr. Merritt is an excellent communicator and I feel that he will do a good job of presenting a positive future for the company at the ASM.
For these reasons I am hopeful that there may be news in the next two weeks that will cause the stock price to jump. The one negative indicator I see is the Jagfn rumor posted. They tend to be planted by someone looking to unload shares.
Nice work Ronnie. Thanks.
IDCC buyback WAG
I think IDCC was steadily buying in the 24-25 range. When they got very close to finalizing the Nokia settlement they stopped the buyback, which resulted in the shares falling. I'm guessing they've bought 1 million shares for $24.64 million.
I don't expect any big surprises tomorrow, but I do have my fingers crossed that Uncle Billy will bring us something extra. If not, we'll have to continue to be patient waiting for the right deals.
Wow, investing advice and free psycho analysis too.
I hope you know now that my comments were directed at the very real dangers of anyone, not just you, betting the farm on one stock.
Had me fooled, seemed very specific to me. Since I don't advocate the position, I don't see the need to protect others, but it is thoughtful.
Did you read what I wrote? I SOLD. I did take money off the table ...
Frank it is your money and your retirement and you can do anything you want with it. You don't need to defend your investing style to anyone but yourself. IMO, all of what you have posted to me is just that; trying to convince yourself that it is not VERY risky to be doing something that you and Chris would NEVER recommend that your clients do.
I did read that you sold and you believed (dare I say rationalized) that meant you took money off the table and it was part of your "exit plan" and you were waiting on NOK good news to sell most of your position, etc., etc. First of all, you didn't really take the money off the table. You put it right back into the only stock you own .. the one you are betting on to make your retirement dreams come true. Also, although you didn't state so explicitly you implied that you would look for another "strongly" positive risk/reward ratio to bet the farm again. Every investor looks for stocks with strongly positive risk reward ratios. The difference is that they don't invest all of their money in one of them. You can claim that your hedge against suffering the fate you unequivocally and forcefully warn your clients about is your "rational and open-minded" DD but methinks you are having a tough time convincing your inner-self of that.
Yesterday John Daly admitted that he has a gambling addiction that has caused him to lose $60 million and will likely take him down for good. Here are some of his comments about his other problems" .. "I don't drink Jack Daniels anymore" (John, switching your choice of alcoholic beverage does not mean that you are now clean and sober.) "I don't trash hotel rooms as much anymore." (John, trashing even one hotel room means that you still have anger management problems.) "If I didn't have this gambling problem I would have everything else under control." (No comment necessary.) I certainly am not suggesting you are anything like John Daly but you MIGHT just be in denial as he clearly has been for years.
I'm sorry, but the fact is I did take money off the table. Period. You are reading so much into this and delving into my mind and motivations when you know almost nothing about me that I will just restate the fact - I sold.
I am responding not to convince myself, but to defend myself from being painted as a wild compulsive gambler. Your posts may be to open my eyes to the real me, but that could be accomplished through a PM. Or it could be to discredit me and my opinion. I hope that was not your conscience intent, but maybe subconsciously you are trying to discredit me to “win” the debate. (Yeah, my pseudo psycho analysis is pretty lame too.)
I thought we had cleared up your misunderstanding of how I view analysts and institutions but apparently not. NO analyst is worthy of respect by default. They need to earn respect like every other person in the world. In the end if they don't get respect they don't get a paycheck at least for being an analyst.
You say you do not assume all analysts are superior, yet short of not longer getting a paycheck what would bring you to ever openly criticize an analyst’s opinion? Tell me one analyst you think does a poor job.
DDs comment: Investing is not an art but it sure isn't a science either. Those who believe that they know how to make it one and are willing to put themselves in a position where they can't afford to be wrong will end up being wrong on a percentage basis that correlates quite well with the losing percentages of gamblers.
Count's response: Interesting, but I find it hard to believe there is actual research on this. If you are talking about speculators who day trade or play options you are right. If you talk about one who invests disproportionately in one stock and holds it, I would be surprised by those results.
Wow, you really do believe everything MUST be supported by audited numbers LOL. Not for one second did I think you would take my comment as anything but a guess and assertion. Who in their right mind would ever take the time to conduct such "actual research" leaving aside the difficulty of doing so. To prove what? That addiction comes in many flavors. FWIW the above assertion comes from someone who spent 25 years rubbing elbows with investors of all types and who knows all to well how risky an imprudent investment style it can be. As I said it is your money and you sure don't owe me an explanation about how you invest it. But I've seen way too many lives ruined by folks who bet the farm on one stock and held it for me to worry too much about pinpointing whether they or traditional gamblers have a higher percentage that suffer such a fate.
The bolded comment does not sound like an opinion, sounds pretty darn factual to me. Glad you clarified that it is your opinion. Yes, I like facts, tangibles and fundamentals. I'll leave the trusting, intangibles and gut feelings to you.
I'll conclude with these thoughts.
You are right, having money invested in a diversified portfolio is the prudent choice and will have the superior return given equal risk when comparing a large sample. Anyone still reading these long winded (and boring to anyone but me and you) posts should understand that you are right that putting a highly concentrated amount of your investments in one stock is not prudent.
I also agree that you are quite wise to have your money managed professionally. You will likely generate a good return and almost absolutely avoid any loss that would materially hurt you financially. Good for you.
You are successful, financially secure and very smart. I wish you all the best, especially with the one stock that you've selected for you portfolio.
Frank
Danny,
Count .. I can't afford to be wrong.
Therein lies the rub. I have been taught that when you can't afford to be wrong you are not investing, you are gambling. IMO, no one that puts that kind of pressure on their DD can possibly be "rational and open minded", at least not all of the time or even most of the time. The emotions have to take over at times and that has been demonstrated repeatedly on this board by the more than a few folks here who it appears to me are in the same position as you and Chris.
Since you are talking to and about me specifically, show me where I've been irrational or close minded. I am taking a calculated risk. I feel that the IDCC should generate at least $2 a share of recurring revenue from 3G and a multiple of at least 20, so I am willing to risk my capital on them achieving that and probably more.
I try hard not to be overly optimistic. You may recall that I have been an unwavering supporter of Marsala since he began coverage of IDCC and that is not a popular position on this board. He is my personal antidote for over optimism.
At first I thought, good point, Marsala is the most conservative analyst... and then it hit me, he IS an analyst, and therefore by default worthy of respect, even though he put a ludicrous $13 or some such price target on the stock when it was significantly higher, apparently in a snit. There is IDCC ticking off Wall Street. Did that cripple the price? Of course not. Short term, probably hurt. Long term - he has to look at results or continue to look stupid.
If you can't afford to be wrong that means that your analysis must always be right and when it comes to investing that is a VERY tall order. First of all, what you are analyzing is only a partial picture of the given event that has been made public. There is no way you can reduce to numbers how it fits into the overall strategy. Perhaps more importantly, there are a myriad of events taking place at the company at any given time that have not been made public that could easily negate anyone's pro or con conclusions about the past event that has been submitted to microscopic analysis.
No, I don't have to be always right, I just need the price to go up even if I'm wrong about some things, or that I exit before it crashes, which is the reason for my constant analysis.
The most important determinants of a company's success are intangibles .. like "vision", "leadership", "strategic thinking" , "teamwork", "corporate culture", etc. and they defy quantification.
I disagree. I'll take a company with solid tangibles and weak intangibles over the reverse every time.
If you can't afford to be wrong you better start analyzing those factors external to IDCC that could conceivably have a significant impact on the stock price like the Market, the Economy, Iraq war, Iran situation, gas crisis, etc, etc. And here is the real clincher about the dangers of putting yourself in a position where you can't afford to be wrong: unpredictable cataclysmic events that lead to panic selling. What do you think would happen to the stock price if, God forbid, WM dies in a plane crash or is hired away or fraud (ala Enron) is uncovered at IDCC or there is another 9/11? You would be trampled by the institutions before you could push the sell button.
You are 100% correct here. It is a risk I'm taking. I understand it and accept it.
Investing is not an art but it sure isn't a science either. Those who believe that they know how to make it one and are willing to put themselves in a position where they can't afford to be wrong will end up being wrong on a percentage basis that correlates quite well with the losing percentages of gamblers.
Interesting, but I find it hard to believe there is actual research on this. If you are talking about speculators who day trade or play options you are right. If you talk about one who invests disproportionately in one stock and holds it, I would be surprised by those results.
There have been times I've felt IDCC was snowy white and others when it got fairly gray. In fact, a week before the LG license I sold about 30% and bought back the full amount (dollars, not shares) on the open after the announcement. Those addicted to gambling don't take their winnings off the table either. They are not happy unless they are gambling it all at all times.
Did you read what I wrote? I SOLD. I did take money off the table because I could see the risk of not getting a significant 3G license and the expiration of 2G licenses as a potential price killer, so I began my exit and was planning on using the run up from some final good news on the 2G front to sell most of my position. When we got a real 3G license I went back in because I now had convincing evidence that IDCCs 3G patents were going to be monetized. It again had a very positive risk/reward ratio in my estimation.
I stay informed, analyze, and when I see a strongly positive risk/reward ratio I invest all I have. When I see the relative risk rise I begin to pull out. That was the only instance I've sold (other than some short term trades to play the channels) since I bought in 1999, but if I sense that we cannot get further 3G licenses done I will exit too early rather than too late. I can handle missing potential profits much better than losing my capital.
Think about it Frank. At least Chris admitted he is addicted to IDCC and it has caused him from time to time to color his otherwise professional judgment and behaviour.
I do admit I am addicted to IDCC, but with good reason. It is my future. I strive to be conservative in my expectations and to carefully analyze the potential pitfalls. I do occasionally lose my normal politeness when those who do discuss those potential trouble areas are shouted down and ridiculed in an attempt to silence their thoughts. That can compel me to fire back. So I apologize for the barbs I put in about you and your investment style. You are a good man, I just disagree with some of your premises and some of your reasoning. That should be debated without the other stuff.
Frank
Roger, you're welcome.
But to jump, as some here have, from the opinion that we made a bad settlement and didn't get anywhere near what some think we should have to inferring that Merritt is misleading shareholders and management doesn't care about shareholders and is only trying to fill their own pockets is a leap that I cannot make; and I think it is unfair, misinformed, and serves no purpose on this board.
I agree - as stated above, it is unfair, misinformed and useless.
I don't think Merritt is misleading anyone. He is putting the best spin on the settlement, as he should. It's his job to put out IDCCs side. He does it very well. He damn well better be an advocate and posture to make IDCCs public image as strong as possible. We, as investors, need to unwind the spin to get to the unvarnished truth.
I don't think management cares how shareholders do on their investment, nor should they. They need to care about long term share price. There is no reason for them to care about me - I decide when to buy or sell. If they "help" me sell at a higher price, then they are "hurting" the person I sell to. Those who think management should rush announcements to help before option expiration have a serious misunderstanding of how management should build shareholder value.
I do believe that everyone has there own interests at or near the top of their priority list. One tends to view their own contributions and efforts very positively. Therefore given the chance, people give themselves a favorable deal. It is our duty as shareholders to make sure they justify their compensation as fair and reasonable based on the work done and results achieved. I'll leave it there as it is pointless to start up the compensation debate again.
Frank
DannyDetail, to answer your questions
1. Please explain the logic of how that makes you more objective about IDCC than someone who has 1% (actually more like 5% now since I have cashed in a good bit of my portfolio).
It means I can't afford to wish. I have to be rational and open minded. I can't hold my investment to make a point. It's not a gesture, it's my future, so I have be objective. You can hold for appearances sake and if you turn out to be overly optimistic you can apologize and truthfully say "I lost too, sorry." Your life will not change one bit. Being wrong is an intellectual loss. I can't afford to be wrong.
2. Please explain why you still have 100% of your investments in IDCC given your negative conclusions that result from asking "logical questions" and closely examining "substantive issues" in light of these comments in your post: Every day I decide if I want to invest in IDCC. To do that I need to analyze the current information. I read and ask questions on the board to get opinions from others. Those that state their premises and explain their thought process help me shape my opinion. Who has more blind trust and loyalty in IDCC, you or me?
I have negative and positive conclusions. It is only the negative thoughts that are questioned and debated by others. The LG license gave me evidence that IDCC can monetize a significant portion of 3G at a decent rate. I still think it is probable, however the Nokia settlement makes me less optimistic than I was before. I see this settlement as a negative and that is what is under discussion now. Overall I still think IDCC is undervalued at current market prices.
I think it is obvious from my comment that I don't have blind trust - I analyze and assess. Those of us that are objective see positives AND negatives. Maybe if one believes you are either "for or against", then making a negative comment means you are negative. I still see more upside probability than downside. Things are rarely black and white. There have been times I've felt IDCC was snowy white and others when it got fairly gray. In fact, a week before the LG license I sold about 30% and bought back the full amount (dollars, not shares) on the open after the announcement. My plan was to sell most of my holding next good news from Nokia or Samsung, as without 3G revenues 2007 looked bleak. The LG license thrilled me. Yes, I wish I hadn't sold, but I was thrilled because the 70% of IDCC I still held just went up over 25%.
3. If I understand you, you believe that Wall Street and institutional investors are far superior to any other group, including Jim’s IDCC board, when it comes to investing. So what ever they think is right and everyone else is naively fooling themselves. No, you don't understand me, not even a little bit. I never said Institutions are far superior. All I have ever said is that they have by far the most money to invest and pretty much march to the same drummer. That means it is highly unlikely that any stock will come close to reaching its potential without meaningful institutional ownership. I have tried to make the point that the opinions and analysis on this board come almost exclusively from individual investors. As we have seen they can carry the stock price only so far and are highly volatile to both the upside and downside. I have been trying to make the point that that no matter how accurate our analysis, the stock price going forward will be primarily driven by the analysis of the sell-side analysts and institutions, not ours. I have stated that IMO everyone's DD is incomplete without a close and continuing monitoring of what this driving force is thinking. If that makes me arrogant and suffering from "Ivory Tower syndrome" then so be it.
You are right, I did misstate your position and I apologize. I do agree that when IDCC is an investment consideration of the institutions is when it will reach full value. It is important to make us as visible as possible so we can reach it as soon as possible. However I feel it is more important to achieve the results. The company doesn't have to choose between one or the other, they are working on both. My opinion is that if we build it, they will come. Institutions are in the business to make money. When we can provide visibility for recurring earnings and growth rates they will come. It will be quicker with good relations. However if we don't create the results, they can watch IDCC as closely as I do and it won't help because they won't buy.
4. Sorry you took my "CPA syndrome" post so personally since it wasn't meant for you. I was trying to take a somewhat lighthearted approach to letting Chris know he had crossed the line BIG TIME. If I had stated how I really felt I probably would have wound up in I-Hub jail.
I was not diplomatic in my response. I've been a bit irked at how the IHUB guard dogs were snipping and sniping at anyone who questioned the settlement. The barb directed towards a man I consider a valuable poster those of us who share his profession inspired me to respond. Sometimes things in cyberspace are perceived differently than intended. I apologize for taking your lighthearted comment as pointed insult intended to trivialize content. However as I re-read this before posting, the last sentence of your comment makes me wonder if I wasn't right the first time.
John,
Sorry, I'm not trying to manage the company, I'm trying to analyze what they do.
My opinion is that IDCC would have been better off by continuing the action with Nokia and not recinding the 3G license and the trigger mechanism that I believe (as guided by management) was moving to a successful (if very slow) conclusion for 2G. I believe they gave up value and got next to nothing they would not have received in time anyway. I now feel it is much more likely that 3G licensing with Nokia will be protracted struggle as we have no leverage to compel them to license.
I hope this helps you.
Songioan and other defenders of all things IDCC
There's nothing you can say on this board that can influence the managment business decisions.
EXACTLY - This board's purpose is not to manage the company. It is for investors to gain knowledge about IDCC so they can make informed decisions about their investment. So in response to the old favorite "sell and move on", why don't you stop reading and posting on the board because you don't want to think about your investment, you just want to dream about never ending successes. Go over to atomic boobs - it's just what you want. Some of us bought IDCC with the intention of selling it for a profit, not leaving it to our grandkids. We want to understand the pros AND cons so we can make rational decisions about our investment.
Bulldzr, thanks for your thoughts
I don't have precise information, which I guess to some invalidates my comments. In my unresearched opinion, I put an expected value of $240 - $260 million, including interest, from Nokia. Apparently most investors had a similar number as the share price after the announcement is in the middle of the post LG range, meaning the news was built into the stock price. You, or anyone else, fill in the numbers and tell me how much we earned from the settlement. Or is it if you can't prove it, then no estimate should be used? Ditto with the $100 mil. I'm just taking Data's numbers. I'm sure some will estimate lower numbers, and I'm just as sure those very same people would have estimated much higher numbers than Data's a week ago when they thought IDCC would collect it. Again, use your own numbers and see what you think we netted out from UNlicensing Nokia and let me know if you think it was a good deal.
I'm just saying that there may be some credence to the idea that as important as CPA's are in maintaining a strong and growing business; and acknowledging that consultation and input from the accounting and finance people is critical; in the real world it may be better if marketing and business focus "big picture" type decisions are best left to others.
Umm, interesting, but not anything that I was debating. My point was that investors, including CPAs, should question and discuss management decisions on this board. The assumptions and premises should be stated and the logical conclusions from those be discussed, whether positive or negative. I want to understand reality, not what we hope will happen. Being told that because there is uncertainty we should assume the best does not bring us closer to the truth.
Please help this poor sick investor understand
I apparently am suffering from a new (to me) malady, CPA syndrome. I've always known CPAs are dull and boring - everyone who knows me will attest to that. I didn't realize that we are, as a group, woefully ignorant of business and should refrain from raising concerns about our investment. Unfortunately I am so far in the grip of this disease that I can't stop myself. Logical questions have to be addressed. I have to look at facts and draw conclusions from them. What I see is IDCC UNlicensing a 3G license, getting rid of the trigger that was the only way we were able to get the scofflaw company Nokia to pay 2G royalties. We also gave away all royalties on 3G to date, which could be as much as $100 million. That’s almost $2 on each of my shares. What did we get? They paid what they owed us per the arbitration agreement and what we were in the process of collecting through the courts. So what is Danny Detail’s (Brad's) response to those substantive issues?
For me it is all about changing WS's perception. On WS perception IS reality more often than not. WM has been a true change agent regarding perception since the day he took over. In spite of all of the clearly correct board attorney opinions here it is difficult to change WS's deeply ingrained perception of NOK as a winner and IDCC as a loser. Not sure even this will do it, but IMO it is a very significant step in that direction .. perhaps of watershed magnitude for the stock price, analyst coverage, and institutional acceptance/ownership even though those on this board who follow the company 24/7 may feel that it falls well short of a watershed event for the future 3G business of the company. I submit to you that if NOK had not filed for arbitration after ERICY settled, then that would have been a watershed event for WS. No reason it can't be one a couple years removed, particularly if SAM falls in line.
It is also funny how a rapidly rising stock price can bring business success all on its own, which results in further price improvement which leads to more business success, etc. Happens more often than you may realize.
First, perception. In the end, Wall Street perceives financial results. You can put on all the dog and pony shows you want, but long term it comes down to the bottom line. If you don’t have visibility on ongoing revenue streams the stock price will not reach the levels it can. While a buffoon can prevent a company from getting value from Wall Street, no management can create LONG TERM value unless it gives its myopic accountants some results that they can use to produce strong financial statements. I think Mr. Merritt is a huge improvement, his presentations are very good, the LG license is a great accomplishment. If he gets 3G licensed then I will agree that this was a good move. But right now I don't see it helping.
Second, how can a rising stock price bring a business success. Please enlighten me, because I cannot see how a rising stock price can help a company unless it is selling stock or borrowing with stock as collateral. Help teach this ignorant CPA so I can understand. If that were the case is seems that there are hundreds of bubble stocks that would still be around.
Brad, way back when you prepared what I thought was a brilliant document outlining steps IDCC could take to improve the company. I was impressed with your work and wish the company would have implemented at least some of them. However I find your thoughts on investing in IDCC to be rather pointless. The reason is that you start with a couple of basic premises that eliminate any rational analysis. If I understand you, you believe that Wall Street and institutional investors are far superior to any other group, including Jim’s IDCC board, when it comes to investing. So what ever they think is right and everyone else is naively fooling themselves. This band of obsessed investors with areas of expertise from legal, technical and even accounting focused on one investment have no chance to understand IDCC better than the pros who cover thousands of stocks. The second assumption is that since management has more knowledge of the company operations, we as ignorant shareholders cannot question anything they do because they know things we don’t, so whatever they do should be supported. You are like a religous fundamentalist. You start with the conclusion (whatever management does and institutions support is right) and decry as heresy anyone who questions them. You were a big supporter of HG and RT, until the BOD dumped them. Then you said they were not right for the job. You don’t think or analyze based on information, just what the all-knowing board says. You were stridently in favor of the additional options on the proxy because management supported them, ignoring the obvious fact that they were the primary beneficiaries. However when the even more omnipotent institutions voted them down, this too became the right thing. Whatever happens is good and positive in your view. I think blind acceptance leads to abuse and corruption.
Those of us with CPA syndrome aren’t loyal to a stock. Loyalty to any stock is a truly incomprehensible concept to me. I invest in a stock to make money. If it goes up, I made a good investment. If it goes down, I made a bad investment. The split second I don’t think IDCC risk/reward ratio justifies a higher price than it’s trading at, I’m selling. The stock is an inanimate object. The company regards investors as a necessary nuisance – they don’t give a damn whether or not I make money on the stock, nor should they. It just that there is no relationship that I can see that would merit any sort of loyalty. CPAs question authority and have a professional skepticism. Every day I decide if I want to invest in IDCC. To do that I need to analyze the current information. I read and ask questions on the board to get opinions from others. Those that state their premises and explain their thought process help me shape my opinion. Those that begin with the premise that anything that happens is good (or bad) and then points to anything that supports their side and ignores anything contradictory is useless.
While I may suffer from CPA syndrome, I don’t suffer from Ivory Tower Syndrome, where one speaks with great passion and confidence in their opinion, yet does not put their money where their mouth is. Kind of like a gambler bragging about all the picks he’s made, winning some incredible percentage of bets, then you ask him for his bookie’s number and he says he just bets on paper, no real money. To me, to have Wall Street Cred for your opinions you need to invest in what you promote. I, like Chris, have gone against any advice we would ever give our clients and put close to 100% of our investment into one investment, IDCC. We can’t afford to “trust” and “be loyal”. We have our futures tied up in this stock. You, on the other hand, believe so strongly in IDCC that you have what, 1% of you portfolio in it? If IDCCs technology became obsolete tomorrow your lifestyle would not change one bit now or in the future. I, however, would be looking at delaying retirement 10 years or more. You can afford to trust, to give away excessive amounts of stock options and the like, because it is just an intellectual game for you. Like putting a $5 bet on the Super Bowl. Gives you a rooting interest and you can say you’ve got money on the line, but it really doesn’t matter. For this CPA it does matter, so I will continue to raise questions about the company and its management on this board. That’s what the board is for. The only reason I would stop is if Jim asked me to. I am loyal to Mr. Lurgio because he has given so much to me and all the investors that use this forum. He spends time and effort to enable us to have a place to exchange ideas about our investment. He does this for us. That earns my loyalty.
So those that want to belong to the see no evil, hear no evil, speak no evil rose colored glass wearing loyal longs, please feel free to ignore me. I am going to continue to question. I’m going to say the emperor has no clothes if that’s what I see. If you can show me where I’m wrong, thank you. If you just want to pontificate, ridicule or complain about my loyalties that’s your right, but it is pointless. I’m sorry Brad, but you touched a nerve. I tried to refrain from responding but I needed to get this off my chest.
Frank
Ronnie, you're right, as usual
Well IDCC does have NEC, Sharp, HTC, Sanyo, Kyocera, Toshiba, and Sierra, as well as LG, all licensed and paying recurring royalty to IDCC for 3G. Panasonic/Matsushita paid $19.5m for 3G, and IDCC should get the remaining 3G issues with them to trigger more 3G payments resolved fairly soon.
I am focused on the big boys because that's were the money is. All the above are nice, but without the top 6 we are struggling to break even. So while you are correct, for me, without the LG 3G license I would be quickly reducing my "all in" investment in IDCC when Sammy's arb/settlement is finalized. However with LG I am hopeful that others are on the way. But I've got too much of my future tied up in this stock to be blindly optimistic. Lost potential profits are much easier to absorb than actual losses.
A quarter BILLION is nice, but...
I don't see what we "won" here. If the board attorneys and common sense are correct, the $250 million from the arb was a near lock. So in exchange for not having to litigate another year or two we gave up interest on the award and any royalties on our 3G patents to date, and no longer have the trigger that got us our 2G revenues. Frankly to me it looks like IDCC blinked. We set a precedent for other infringers to not pay for 3G through today as well. The good news is that we should be able to collect additional 2G monies from others, starting with Sam, but 2G revenues will only affect current earnings and will not give us future earnings for a multiple. I believe that for IDCC to achieve its potential appreciation it must monetize its 3G patents. If we did not have LG signed I would be selling on this news because aside from LGs license we have no tangible indication of the value of IDCCs 3G patents. Right now NOK and that other company of integrity, ERICY have settled for 2G and agreed to negotiate for 3G. I am not optimistic about their commitment to negotiating a fair and reasonable rate.
Am I happy that my portfolio is up 20% today? Damn right I am. Do I think this is a watershed event? No more than the ERICY settlement was. I see no incentive for the other big OEMs to license. I'm hoping UB is close on some new 3G contracts because after 2006 IDCC's revenue stream is more like a creek. I want it to be the Mississippi.
My apologies for dwelling on the negative, but it just seems that everyone is popping the champagne corks and I don't see the same good news, so maybe someone can address my concerns above and let us curmudgeons get hyped up too.
Frank
Data, very funny.
Shows our age.
Hi, my name is Larry....this is my brother Daryl... and this is my other brother Darrell.
Splits
Why does anybody care about splits? Does somebody think you get something for nothing?
I understand that the great unwashed will bid a stock up when it splits - in the mistaken belief that there is a benefit - but outside of hoping for the foolish to bid it up, why would anybody care?
Splits are done when a stock price has climbed and the company feels it will have more buyers with a lower trading price, as many individuals shy away from stocks that have a high cost per share (the great unwashed masses you refered to). Splits are a sign that a stock has done well, so I'm hoping for future split(s) because it will mean the stock value is much higher than it is today.
Dear Master of International Finance
How stupid must one be to hold US Dollar denominated investments such as stocks when the dollar is going to fall by 25%-30% over the next 6 months. An investment in the US will have to appreciate by that amount just to break even. Seems like one could do quite well selling the dollar short.
Odd how the market doesn't seem to be as convinced of this. Typically when a currency is facing devaluation interest rates in that country skyrocket. Why would one invest for a 5% return when the currency will be falling at a 50% or more annual rate. Smart investors will buy and sell (arbitrage) which tends to equalize the expected return on all similar risk investments, regardless of currency.
Oh Mister Wizard of International finance please, please, please sell the US dollar short, and leverage it to the hilt. The futures market is filled with fools who don't see this obvious trend. (Who can ever remember the last time the US ran a trade deficit? Unprecedented!) Then you can take all your profits, buy out IDCC and run it properly.
IMO No way the buyback is completed.
Look at IDCC's average volume and look at the volume since the buyback was announced. Can you see an additional four million of volume?
I'm guessing they are currently buying 200,000 - 250,000 shares a week and will complete the buyback in 3-6 months. I will give 2:1 to anyone that the buyback will not be completed in March. I hope they are buying aggressively at these levels. Anything under 25 is great. I hope the 100,000 share trade this morning was IDCC on the buy.
My guess for completion of buyback - August 1.