Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Ronnie,
With all due respect you are a little late in the compensation issue. Past is past and you can't take shares back.
What I care about is the future.
If you want to change the compensation committee makeup now is not the time to do it. Any changes or proposals would have needed to be made last December. If you would like to draft a proposal for next years ASM thank would be fine. The only thing that could be done this year is to vote on whatever proposals are on the ballot.
Reuters
UPDATE - Sony Ericsson Q1 profit soars, gains market share
Monday April 19, 2:53 am ET
(Adds detail, background)
STOCKHOLM, April 19 (Reuters) - Swedish-Japanese mobile phone maker Sony Ericsson (Stockholm:ERICb.ST - News; Tokyo:6758.T - News) reported first-quarter profit more than twice the consensus forecast on Monday thanks to a booming market and cost cutting and said it gained market share.
The fifth-largest producer of handsets made a pre-tax profit of 97 million euros ($119.5 million) in the January-March period against expectations of 44 million euros in a Reuters poll of analysts and a 113 million loss a year earlier.
Sales were 1.34 billion euros against consensus of 1.23 billion euros and 806 million the year earlier. Sony Ericsson said it sold 8.8 million phones in the quarter, beating consensus expectations of 7.3 million. The year before it sold 5.4 million units.
"Market share is estimated to have increased during the quarter thanks to strong demand and increased operational efficiencies," the company said in a statement, but gave no figures.
The much stronger-than-expected results contrast with the first-quarter report of Finland's Nokia (NOK1V.HE), the world's biggest mobile phone maker. Nokia disappointed investors on Friday with an admission that its handset portfolio was not up to scratch and that it was losing market share.
Nokia lost market share, most likely to South Korea's Samsung (KSE:005930.KS - News), the world's third-largest mobile phone maker after Motorola (NYSE:MOT - News). Samsung posted record earnings on Friday and said it expected sales to continue rising in the second quarter.
Nokia forecast second-quarter earnings would fall and sales could also drop. Sony Ericsson gave no forecast for the second quarter, but said it now expected the market in 2004 to expand to 550 million handsets against a previous forecast of 520 million.
The Good, the Bad and the Ugly II
The Good.
The new analyst report was inspiring. The most detailed and comprehensive report that I've read on IDCC. The picture that he paints is basically that IDCC will florish with 3G. He makes it sound very much like no one can legally get around paying IDCC for 3G.
Fridays release is very positive. Smart move to make before next CC. Reducing expenditures and making declaring 2004 cash flow positive can only help the share price. This takes care of two big negatives during the last CC. The ruffling through papers that Fagan had to do when an analyst asked him if IDCC would be cash flow positive in 2004. Also it helps calm the concerns of out of control costs from last CC when the estimates were missed.
The Bad.
The share price. The market is not tech friendly right now. Nasdaq is back and forth. Wireless sector being hit, Nokia took a bath (could not happened to a better company). Without a new license that contains substantial revenue the only way IDCC rises near term is via a big NASDAQ rally. Even then we may not rise. We won't start getting Nokia money priced in until fall.
Bottomline we need a catalyst.
The Ugly.
IMO, this new compensation plan is very ugly. Just when the company was building back the shareholder and investment community trust from last years post ericsson selling and the 5 million failed option plan we get this. I very well may be overreacting and beleive we need to hear what the analysts and the institutions have to say about it.
The numbers do not make sense to me with the share price trading at these levels. With a projected $100 million dollar revenue year spending 7 Million of it for the top 100 management personel does not make sense. From my experiance when these plans are implemented the majority of the compensation goes to the top 5, CEO, CFO, COO, CTO and COB. I hope I am wrong.
Thanks Jim and easymoney.
This is actually the best report I've ever read on IDCC. It is very well researched and accurate. The detail is incredable. Almost makes you want to buy more.LOL.
Thanks again Ronnie for your accurate and detailed response.
Hopefully we get them in fold.
Anyone know if IDCC has a relationship with LG?
Of all the major vendors these guys appear to be under the radar screen. Anyone know why?
I understand the story with the rest of the top players and what the situation is but not LG. Can these guys be hiding behind QCOM?
Nokia is in arbitration for 2G waiting for a trigger for 3G.
Samsung arbitration 2G.
Motorola won 2G suit.
Ericsson 2G license.
NEC 2G/3G license.
Siemanns needs update.
"Strategy Analytics added that Nokia continued to lead handset manufacturers with its 34.8 percent share of the market, down less than half a percentage point from 2002. Motorola, in second place, saw a bigger loss of market share, dropping from 16.3 percent in 2002 to 14.5 percent in 2003. Third-place Samsung, fourth-place Siemens and fifth-place LG Electronics each registered single percentage point gains, according to the findings."
Relax AMS,
Put the rope away, we don't need a public lynch mob now. LOL.
I'm not ready to put the rope around HG's neck and slap the horse's butt, yet.
The prices you mentioned and the prices pre-march represent Nokia money factored in. July's arb filing removed the money the same way the last CC information about the 2005 date did. One way or another we will find out by next March. Nothing IDCC can do about it until arbitration is complete.
I'm waiting until Nokia before I join the crowd.
I can't count how many times that people respond to posts with the "sell your stock" theme.
I'm holding until the Nokia outcome, period. I've been holding for 4 1/2 years waiting for Nokia to come to the table and I'll hold until the resolution.
I would like IDCC to be more concerned with the stock price and less concerned with compensation plans.
The timing of the new plan which granted is probably beyond the companies control because of the ASM is bad and I believe it will hurt the stock price near term.
Without any major catalyst LG/NOK/SAM/MOT the only thing we could hope to build momentum back to the 20's was the increase in sales by both NEC and SHARP. The $7 million dollar increase in costs for this plan may very well cost the shareholders 2 to 3 points in market cap. The .03 cents a share expense per quarter can be the difference between profit can cash burn.
This is a bottom line environment. If IDCC makes .02 cents then the plan costs .03 this puts EPS at -.01.
My concern is with share value. We had it and lost it.
Last thing that gets under my skin is how they used the words "Shareholders Interest".
Monday April 5, 6:58 pm ET
Changes Are Part of a Series of Steps Taken by the Company's Board of Directors to Strengthen the Link with Shareholder Interests
If they were to start putting out press releases on patents and new licensee relations like they crafted this one we would be golden.
You can put whipped cream on crap and it is still crap.
Now I'm not selling my shares or wanting to change the board of directors or calling for the firing of the management team. I'm upset at this event because I feel it will hurt the share price in the short term and I have a right to voice my opinion which I did in a letter to the BOD.
Sonic,
My biggest disappointment is that I now feel IDCC does not care about its shareholders. To have a 10 point or 30% loss in shareholder equity then take $7 million of the remaining equity for rewards feels like a slap in the face. Kind of like losing all your cash while being mugged and calling a cop then when the cop shows up he takes your watch.
I wish I could share yopur enthusiasm. I think the reason for the delay is not discussions but because of the amount of material neccessary for the arbitrators to cover they need the time to review it. In december Nokia asked judge Lynn for access to sealed documents. A list has been prepared and the arbitrators now have a right to review any document that they deem import. On a 10 year law suit can you imagine the amount of paperwork in this case.
My gut tells me we may pop to 20 this earnings release and they drift back and forth between $20 and $17 until November.
This is starting to feel like stock jail and Nokia is parole. Every time we get up for parole we get motion denied and have to sit another year.
"that the arguments that NOK has introduced into arbitration to nullify their contract with IDCC are without merit."
I don't think Nokia wants to nullify their contract with IDCC. They want the Ericsson deal not to be the trigger. They would be perfectly happy to have a contract in place where IDCC can not obtain dollar amounts for because no triggers ever happen.
My focus right now is on short term share price action. That $7 million is going to be hard to swallow with $24 million dollar revenue quarters. The timing of this expense may very well hurt the share price in the short run. I was until this press release expecting a good quarter and a pop back over $20. Now we have .03 cents added to the expenses per quarter. This can mean the difference between profit and loss. Which will mean the difference between the stock rising or falling.
$7 million / 55 million shares = .127 cents.
Long term I'm not concerned, I think deals will come. I also think that $7 million will be a lost less costly and would have no effect whatsoever on the stock price after Nokia.
As to why would they do this at this time? They want more cookies. They can sugar coat it all they want this is a way to gain more compensation. Tell you what they can double it for all I care only if they wait until after Nokia is done.
Here is my email.
Dear Sirs,
As a long term shareholder in this company I am very concerned about the latest realignment of compensation structure. The $7 million dollar 2004 expenditure for this plan will hurt the share price and has already caused analysts to reduce 2004 earnings forecast. I do not feel that this is the appropriate time to spend 7% of 2004 revenues on a compensation plan while shareholders have lost 10% of the value of their shares this year.
I am not against compensation plans in the future and hope that this plan will be reconsidered until either after the Nokia arbitration issue is resolved or another major revenue deal is completed.
The point isn't about changes but about compensation. As a shareholder I have a problem implementing a plan that costs $7 million dollars to compensate IDCC management and employees. This problem has nothing to do with the BOD or changes in management. It also has nothing to do with pefromance of business. Based only on the stock performance I do not feel this compensation is appropriate and I do not like the fact that 2004 earnings will suffer because of this plan.
I am not happy about an $18 a share price. The market says that IDCC is worth this and I have to accept this fact. IDCC feels that it is appropriate to install a compensation plan at this time which will cost $7 million dollars in 2004. I simply do not feel the same way and beleive it should be delayed until the stock price rises.
Right from Rich Fagan.
"In 2004, as a result of the compensation program changes, InterDigital will recognize expenses of approximately $3 million and $4 million, respectively, related to the cash-based LTI and restricted stock units," Rich Fagan, Chief Financial Officer commented.
Jim,
It is clear that sales will be slow becatuse of the Nokia bottleneck. Forcing people to pay up on IPR is no easy task as we can saw what happened in the court room last December when Nokia petitioned the court to unseal the Ericsson documents.
Future projections is what moves stocks. IDCC needs to paint a picture for analysts and institutional investors where they can see foward revenue. I have many close freinds and relatives invested here. Since the crash I've been sending off as much data as I could to help make sure they still have faith in the investment. My very crude projections estimate a $50 a share value after Nokia/Samsung is settled (if IDCC wins).
But how can we project potential revenue from that point? Can we put a range of values on Motorola 3G sales? How about Samsung 3G or LG? NEC and SHARP clearly set the parameters for 3G sales. Why can't a very generalized picture be painted based on expected 3G sales which is not vendor specific. A broad range with vauge time tables may help clear up the potential of this stock.
I've read the Marsala reports and he has revenue declining in 2006. This could be part of the problem.
It is funny how Nokia has an earnings miss and we lose .75 cents a share. Does anyone know that Nokia is not paying? RIMM and SWIR are exploding. Does anyone know that they are paying?
Yes sales is very important but I've come to realize that the only people who really beleive IDCC's story is members of this board.
hookrider,
I picked April 8th 2003 because it showed year over year progress.
The discussion started by Ronnie involved stock compensation to a 100 person pool which included the management team.
Based on Ronnie calculations it will cost about $70,000 per employee to cover taxes on stock gains or $7 million dollars in additional expenses this year.
Frank Marsala came out with a report yesterday which lowered 2004 earning because of this expense.
If this stock was trading in the 20's like it should be I would not think this would be a big deal.
Now with revenues projected to be in the $100 million range for this year, $7 million dollars = 7% of gross revenues.
I do not feel that this expense is justified considering the stock price performance.
I feel stock options and RSU should be given as a reward for good performance and not as an entitlement because they worked at IDCC for 1 year.
How about some shareholder compensation?
On April 8th 2003 the share price closed at $19.65
8-Apr-03 19.81 19.95 19.33 19.65 429,200 19.65
On April 7th 2004 the share price closed at $17.85
7-Apr-04 18.07 18.33 17.75 17.85 575,300 17.85
On April 8th 2003 the NASDAQ was at 1382
8-Apr-03 1,388.53 1,392.52 1,376.60 1,382.94 13,127,700 1,382.94
Yesterday NASDAQ closed at 2050
7-Apr-04 2,055.61 2,060.44 2,038.74 2,050.24 17,749,600 2,050.24
So while the NASDAQ climbed 30% we lost 8%.
My feeling is that management should not be talking about compensation based on this performance. If a vote is taken I will vote NO!
You left out that it keeps sucking up all your money because you always buy more.
TRUCE
I have not seem this much fighting since the last ASM, can't we all just get along?
Almost all company executives (not just IDCC) over compensate themselves. It is the nature of the beast. They control the cookie jar so they eat a lot of cookies. We have to expect this but as shareholders we need to act if they become pigs.
I'd like to declare my sentiment as to somewhere between throw the bums out and this is the best management team in the history of business. I can't understand why more shareholders can't come to the middle.
On Compensation, good points on both sides. These guys deserve to be compensated with options and RSU just like every other company that is listed on the NASDAQ. We can't expect to stop compensation because in the past they were over compensated. Hell the Yankees have to pay Steve Karsay big bucks this year even though he hasn't pulled his weight in the last two years.
Limiting compensation can be a good thing for shareholders. The option plan last year was dilutive and excessive. If we feel that they are eating too many cookies we must act in the best interest of our shares. In a very simple equation that 5 million share plan last year may very well have diluted the value of our shares by 10%.
On management performance.
The Good.
year over year revenue has increased substantially.
Total Revenue 114,574 87,895
Three new licenses in RIMM, HTC and Sierra Wireless.
Steady and somewhat predictable revenue streams provided by NEC and Sharp.
They have gotten more analysts on board.
The Bad.
Not delivering enough 3G licenses.
Poor communication with the investment community, no future revenue potential built into the price.
Need more institutional ownership.
I'd like to stop seeing posts telling people who complain about performance to sell their shares. We own this company and we have a right to state what we see as problems.
Just remember every long shareholder has the same goal, for the stock price to rise. And all one has to do is look at the headlines from the Tyco trial to understand why certain shareholders will question management for their activities.
At the ASM we can all focus on this.
I've stated this before but I was impressed by the reaction to Tom Carpenters report last year. His 3 major concerns were addressed, Insider selling, Board of directors makeup and 3G licenses. This shows me that this team has the ability to listen and act.
Maybe you can give Fagan a call, he may need a little help.
I'm not going to call for any executives head.
I want them to do better. The first step to improvement is to discover that the methods you are using are not the best. The Fagan issue is part of the broader corporate communication issue. They need to improve the message.
You don't sell your car if you get a flat. I like this car. I just want to repair the tire and then put some air in it.
Good that is $7 million or $1.75 million per quarter. That means that these 3 signees have increased revenue by 8%. How about that for an answer. In the past 4 years Ronnie has done a better job of revenue projections than Fagan ever has.
I beleive that IDCC has a communication problem. This needs to be addressed. I beleive if they acted like other companies that I have invested in the share price would rise.
Why can't we have a revenue projection stream from RIMM, HTC and SIERA WIRELESS? They are either too general and vauge with their answers or too exact so they are judged wrong. They need to find that middle ground. No reason why Fagan could not state that he beleives the company may be cash flow positive for the year but circumstances may prevent this from happening.
Guidance is what they are looking for not answers. No one knows what exact dates or what exact revenue will be until after they occur. I want Fagan to do a better job of guidance then he has done in the past.
Time for Fagan to STEP UP.
Looking at SWIR take off, up almost $5 a share today and RIMM up over $8 a share past $104 it makes me wonder why Fagan can't give range projections on the value of these licenses. Is he lazy?
We have just had 3 licenses with major data device manufactures who are all doing well. We know the terms of these licenses. Why can't a numeric range be put on revenue that will be generated from these companies in the next year?
I look at SIRI and its $4.3 Billion dollar market cap and $12 mil yearly revenue and think maybe we can project some value into this company by getting investors to beleive we will have a solid revenue stream.
FROM SIRI 10K
"Total Revenue. Total revenue increased $12,067 to $12,872 for the year ended December 31, 2003 from $805 for the year ended December 31, 2002."
Fagan has to do a better job at numbers projections. The "if I don't say anything I can't be wrong" attitude is not good for this stock price. I like to see him be better prepared at the next CC and start acting like a real CFO, you know the ones who actually guide analysts instead of having analyst guide them. This whole "I read what you read" crap when asked about handset sales is getting old. I know we are up today but why is it wall street can see potential in IDCCS license base and not in IDCC?
Shareholder activism is vital to protect the investments that we have made in this company. Corp was absolutely justified and correct in his campaign to get the 5 million share package defeated. The proposal last year was dilutive and would have caused tons of insider selling. So he posted vigirously untill it was defeated. I say he should be commended for this action and not belittled.
Jim,
It might be time to get this character off this board. He is here to break everyones chops and not to enter into any intelligent discussions. I smell a BIG RAT.
While I have been and continue to be critical of managements communication skills I do beleive they are doing a good job.
I strongly disagree that we "are being played by this management team".
The Nokia dispute helps me understand more about the thinking and tactics of these wireless phone vendors. Attack, delay, ignore and circumvent seems to be the MO when trying to collect royalties. I will not fault them for this arbitration and the delay of the other big companies LU, MOT, LG and SAMSUNG. They have a plan. It is being executed and the Nokia arbitration is a very big part of this plan.
I think they have done a great job in the last year to address certain issues, insider selling, new agreements, new board members and need a deeper understanding of how toi communicate the message on a daily basis to the investment community.
Basically, while I'd like to see them get better, I think they have been doing a good job for the shareholders and the ones who are patient enough will be richly rewarded.
Carpenter already has shown to be positive by his upgrade after the last CC. This was a huge positive for me. I was convinced after listening to the call he was down on the companies performance. When I reread the transcript it appeared to be a better call than I initially thought.
It doesn't help that immediately preciding the call my brokerage accounts took big haircuts as IDCC's price was falling. Never thought we would see the teens again.
It has to help that two of our last licensees are wall street darlings. RIMM is up near the century mark again and added close to $4 billion dollars in market cap value in 4 months.
SWIR was a 10 bagger this year going from $3.49 to $36.30 a share.
Now I'd like to see someone at KOP program their speeddial with Spencer Churchills number from CIBC.
"RESEARCH ALERT-CIBC ups Sierra target, stock at 3-yr high
Tuesday March 30, 12:35 pm ET
(In U.S. dollars unless noted)
TORONTO, March 30 (Reuters) - CIBC World Markets said on Tuesday it raised its price target on Sierra Wireless Inc. (Toronto:SW.TO - News; NasdaqNM:SWIR - News) to $40 from $32, based based on strong demand for the company's wireless modems.
Analyst Spencer Churchill, who reiterated his "sector outperformer" rating on the stock, said Sierra was being helped by improved industry fundamentals.
"We believe the rollout of new high-speed wireless networks is re-energizing growth of Sierra's core PC card business, as carriers in developed nations seek to offset slowing subscriber growth (and voice revenues) with new wireless data products," he said in a note to clients.
"As the leader in the wide-area wireless PC card market, we believe Sierra is well positioned to capitalize on this trend."
How about Novatel and a new analsyst.
I'm setting up my WISH list for the next CC. We have got 5 to 6 weeks till earnings. We have the Sierra Wireless deal to talk about which was done after the last CC but I'd like to see Novatel get done before May.
RIMM currently has 19 analysts on board.
Avg. Estimate 0.50 0.57 0.91 2.55
No. of Analysts 19 17 21 21
I'd like to see IDCC approach 1 or 2 of these analysts for coverage. Small steps are important when you lose momentum.
Can't close Nokia. Doesn't look like any of the big boys, MOT/LG/NT will sign right now. Might as well do a full court press on the "low hanging fruit" and get Novatel done.
So pack up the projector and pretty up the powerpoint presentation and hit the road.
Come on guys 1 analyst and 1 license.
Jim,
IMO this Immel character is here to break our chops. Post after post about IDCC just rehashing points that other posters say. I'd put him on ignore before you get frustrated by his posts. He seems like he is trying to goat longs into beleiving he is this ultra positive cheerleader.
loophole73,
Very happy to hear everything went well. Wishing you a speedy recovery and hopefully you will be ready for the Houston 100.
jai
I currently have 2 different types of investments in IDCC. I have a large (for me anyway) core position which I'm holding till the Nokia resolution. I also played some options in the event that this quarter is better than last. I hope to make a couple of bucks on these.
The quarter to quarter mentality is what the street is about right now. Stocks are becoming more and more predictable by earnings release dates. For traders this is a very good thing. Buy prior to release and sell on news. It only works where you have confidence the quarter will be good.
The fact is because I got caught up in IDCC's story it has hindered my ability to objectively trade. The first rule of investing is never fall in Love with a stock. At $27 a share IDCC was fundamentally overvalued. I did not sell. Because I love the story. LOL.
Let's stick with realistic expectations.
One of the problems of owning IDCC is we are all booking airline tickets to the Houston 100.
We need to communicate the current message to the street in a way that does not hurt the companies credibility. With the current licenses and revenue streams the company can project a story that will value this stock properly untill those events happen.
The actions that this management group has shown me over the past year has lead me to believe that they are capable of change. Guiding analsyst based on Panasonic or a new signing is not smart. Everyone knows the possibly catalysts.
I'd like to see them offer more ranges to the analysts. Something like "We feel the revenues for the following quarter will be $22 million to $28 million range". Now if they come in at $29 everyone is happy. If they come in at $22 they came in at the low end of the estimate.
I keep getting the impression that they are afraid to be wrong so they don't say anything or mumble answers. What would have been the problem with Fagan giving a range in cash flow projections?
Let me help be a wall street translator for that question.
"For 2004 cash flow should be in the range of -$10 million to +$10 million. The wide range is due to the uncertainty involving continuing litigation expenses".
Give an answer and a reason for the answer. Ranges are acceptable if you can explain why you set the high and the low ends.
Well put some chocolate coating on them and they would taste pretty good to me.
$20 from $17.26 is a realistic expectation in a 1 1/2 month time frame.
sjratty,
Good post. I remember when the Nokia arbitration information first hit. You posted the time table would be at least 18 months. It seems that you were correct. What is your opinion on the current arbitration schedule as well as the outcome?
Thanks
Jai
Another reason I think we will be at $20 a share by May's CC is we will have 2 months more of arbitrage pricing built in from Nokia. This stock is reacting almost like a buyout candidate. Everyone though the date was July. It gets pushed back 6 months and we lose all money associated with Nokia that was priced into the stock. The closer we get to Jan. the more Nokia money will be priced in so by May we should have some Nokia money priced back into the stock.
Ed,
If QCOM's is worth close to 12 times yearly revenue, why should IDCC not be worth 10 times?
Market Cap (intraday): 49.72B
Revenue (ttm): 4.12B
Fundamentaly, I have IDCC going to $20 a share after the May earnings release.
I beleive that last quarters NEC shipment problems have been solved, Sharp sales will increase and HTC revenues will start this quarter. These 3 events may take us to $27.5 million in revenues. If we hit that number ($3 million more than last quarter), the market will take us back to a 10x revenue valuation. ($110 million a year sales x 10 = $1.1 Billion Market Cap / 55 million shares = $20 a share).
Two deals that I am waiting for is Novatel Wireless and Palmone. Both are darlings of the street right now. While the numbers would not be big they will bring more exposure to IDCC. It will also pretty much get all the major wireless data device manufacters in fold, HTC, RIMM and Sierra being the other 3.
I think in some way the LU suit helped us with Sierra and may help with Novatel. If I'm a small manufacturer why would I go through the expense of a patent law suit that it all likelyhood would lose. I'd have Uncle Billy parked outside their door with a pen and a contract. Getting 2 more licenses before the next CC would be huge. It would erase all memories of the "Patrick Ewing" like guarentees of last Novembers CC and would create a very, very upbeat call.
So come on Uncle Billy fill up that fountain pen. Put on a raincoat and golashes. Bring a nice hot thermose of COCO and sit right at these guys door until they sign.