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The stock price is depressed by a lack of trust. Ordinarily the strategy of buybacks is unimpressive but with the the stock price so artificially low, I think it is a good idea. How do you restore trust and confidence in IDCC? A really fair licence from NOK, not a puny one, and not followed by more gifts to management, might help.
Great post John: "A Nokia spokeswoman said the company was “reviewing the decision and considering its options.” I think the most compelling option would be for Nok to settle and get get going in claiming a share of the American market.
Usually when a COB resigns, the stock price takes a hit. I believe that if H.C. were to resign, the effect on the stock price would be positive. This part time CEO's recent actions, as well as those over the years, have promulgated policies of self enrichment, lack of concern for shareholders,
and lack of transparency. I still believe IDCC has the assets to become a great company but I do not see this happening as long as H.C. is at the helm.
The recent bonus incident is not the problem but is rather a symptom of the problem. management has looked at two different strategies. They could either take reasonable risks with the goal of growing the company into a much larger and more successful one or they could minimize the risks and go with the conservative strategy of generously compensating themselves with lavish salaries, bonuses, and stock options which they dispose of in a timely fashion. This creates wealth for them while the shareholders go up and down the price roller coaster never achieving the breakout contingent on IDCC being taken to the next level. Evidently management has chosen the conservative and sure strategy to enhance their own wealth without concern for the finances of the shareholders.
O.T.Poche: Temporarily relaxing mark to market on specific assets may not be so off the wall. The government could figure out an estimated price on these assets, set up an exchange for them, and then, after a period of time, agree to make good on a percentage of the losses or capture a percentage of the profits when the assets exchange hands at that time.
I believe the recent dive in the stock price is not only due to the earnings miss but to the way the bonus incident was handled with a consequent loss of credibility and trust. No way management should have allowed the incident to play out in this manner IMO.
Jimmy: I agree with most of what Forbes says but it is not quite as simple as he makes it out to be as regards mark to market.
"If the president really takes Roosevelt's legacy seriously, he should suspend mark-to-market accounting rules, restore the uptick rule, and enforce the prohibition against naked short selling."I believe the failure of ENRON to mark their assets to market was what gradually got them them into a lot of trouble. I believe there should be a government appointed panel made up of the best economists and business people available that looks at specific assets on a case by case basis and makes a reasoned decision on what these assets should be valued at. This arrangement should be temporary with a return to mark to market as soon as the crisis is over.
IDCC gained $.70 from its lows in the last hour of trading. This is a sign that the margin selling is played out, IMO. We can now re-assume our rise.
I am enraged at management's handling of their outsized bonuses. While enriching themselves, they showed a callous disregard for the interests of the shareholders who got no bonuses and who not only lost huge amounts of money but, in many cases, were forced to sell their stock. This could have been readily foreseen by management and IMO probably was. Management have held on to relatively small amounts of the shares they have awarded themselves over the years and obviously have less interest in the stock price than in their bonuses. These policies will only continue into the future. Chances of removing them are slim to none. I believe that a reasonable takeover offer for Idcc would be well received at this time.
I feel 50% emasculated by the lightening bolt that hit yesterday. Would it not make sense to defer the slimchip disposition until Nok is settled so as to avoid the other 50% of the emasculation?
This is a good time to keep our emotions in check and just hold on. The next few days may see some softness. The market is weak and getting weaker and those on margin may need to sell some or even all of their Idcc shares. If we are lucky enough to be able to walk away from today's bombshell and get to a shelter, we may be able to emerge in a few months and be right back where we were before the raid and probably even better off.
Red: Idcc is in a kind of limbo until the Nok deal gets done. This deal will determine the future direction of the company as well as the size and scope of its new initiatives. With ample cash there are plenty of opportunities out there in this environment to grow the footprint of the company. New or expanded businesses could be anything from chips to software to services. These are exciting times. I agree that paying dividends is not Idcc's most pressing thrust at this time.
Nok is now competing to gain share in the American market for their handsets and to quick start the sale of their new services business, which may find more a more attractive market here than elsewhere. They do have a big stake in the outcome of their little skirmish with Idcc.
TC has shown us much courtesy and I thank him for this. I feel,however, that the critical element in his thinking is that Nok will not sign soon. He feels there is an "absence of near-term catalysts to significantly impact share price". I have a note posted on the border of my computer screen that reminds me:"Nok will litigate in every possible instance". However, with Sam having signed at a reasonable rate and with the cards clearly stacked against them at the ITC, I think this instance will be an exception to that rule. Nok does not need the reputation as AN OBSTRUCTIONIST COMPANY PRONE TO ABUSE THE LEGAL SYSTEM. Therefore I believe they will settle and get on with the business of penetrating the American market with their products.
Dmiller: What you advocate is a conservative method of trading the market. It is, however, not without risk. What you have done is set a 2 or 3 dollar stop while you watch for further good news. Bad news at this point becomes less likely than good news The questions are how imminent and likely is this good news and how rapid and strong will the market reaction be. I believe the pump has been primed by Samsung and signing Nok may produce a sudden gusher that could wash your model away. It would be a shame, after studying this stock for all these years to walk away with measly gains. On Wall St, bulls make money, bears make money, eunuch's don't.
The discussion here is reminiscent of that following the APPLE deal. This deal is definitely better since we can renegotiate in 4 years rather than in 7.
Looking at the bright side, the key to this deal is that Idcc did not give Sam a paid up licence for 3G. This means that we can and will renegotiate in 2012 for additional revenues. We also can use these funds ASAP to pursue to the max the rest of the MENS club for royalties they owe us for past and future use of our patents.
When management prematurely rewarded themselves, they added significant risk for the shareholders. Negotiations are all about leverage. If Sam were to reneg on the settlement and negotiations were to continue, management would have a tremendous incentive to sweeten the terms for Sam to make a deal in order not to look like avaricious bumblers. In the end, shareholders would pay much more for the loss of leverage than for the generous amounts management already showered on themselves.
No company needs 45 days to choose between one of two payment options. Either Sam was looking to do the deal in 2009 rather than 2008 for tax purposes or this was just another delaying tactic, even though short compared to previous ones.
The recent Sam-Idcc agreement was done in the spirit of reconciliation. The 45 day delay in paying was agreed to in that spirit also. Now if Sam chooses to delay futher, it would be, at best, a violation of the spirit of the agreement. Also, having prematurely rewarded itself for accomplishing the agreement, Idcc management owes it to its shareholders to be as transparent as possible as soon as possible.
"Why didn't they wait until the Sammy details have been released and hit the wires?" I think the answer is that they intend to do a buy back soon after results of the Sam license are announced and it would have been awkward to be withdrawing shares from the market while giving themselves shares at the same time. Also the shares may soon be worth more, making their gifts to themselves seem even more generous.
The psychology on this board is weird. IDCC is due to go up 10 to 20% in a couple of weeks in about as sure a bet as you can make in the market and everyone here is arguing about whether a recent piece of further good news is sufficiently good to report on. The whole thing seems a little sick.
I think that 2 events should soon propel IDCC towards $35/ share. First the completion of the signing of SAM will lead to expectations of the signing of other tier one players. Secondly the coming on board of new analysts, after the announcement that SAM has chosen a payment option according to their binding agreement with IDCC and has actually paid, should help the stock price.
Slacker:Idcc gets stronger with the addition of each new licensee, especially a tier one player, and its going to be tougher for a large licensee to jerk them around in 2013 than it was in 1993.
Ghors: The closing figures for the Friday IDCC March 25's are 218 contracts bid at $4.10 and 31 contracts asked at $4.30. This is a spread of $.20 which is almost 5% of your purchase price. Even at that, you can buy only 31 contracts(3100 shares) at the advertised price if the market makers deign to give you the whole 31 contracts which, in my experience, does not always happen.
IMO The biggest problem by far in trading options in small or medium sized companies is that the market for them is illiquid. As an example, the March calls for IDCC traded only 3 contracts(300 shares) all day on Friday. This puts you squarely at the mercy of the market maker. If you want to deal in any volume, forget it.
The telecomm IP business is a bit like mud wrestling. The idea is for the big bully to hold the little guy's face in the mud until he drowns or begs for mercy and slinks away. We've finally mastered the art of mud wrestling and now its time to get out of the arena and let our opponents take a bath. Hopefully we can now meet our previous adversaries in a more civilized arena as partners where they work to our mutual advantage rather than trying to cripple or kill us.
Lack of transparency is like an iceberg where only the tip is showing. It may be legitimate and harmless if it is truly just to protect the interests of one or both parties to a deal. But it can become abusive if it has the effect of making the company more attractive so that insiders can sell at a higher price.
Would it not be appropriate for Sam to make a good faith up front license payment, even a token one, to Idcc prior to 12/17 to avoid the hassle involving the CCA hearing on that date?
Merritt made it clear in the UK talk that an agreement has been signed and the financials will be discussed after Sam selects a payment option
I believe that whatever arrangements IDCC and Sam have agreed on for 2G have been factored into the 3G settlement and are an integral part of it. This was alluded to by Merrill when he mentioned the virtue of being "flexible " in these negotiations.
Sam may make a habit of playing Idcc for a fool but is not up to playing the ALJ for a fool. The two sides undoubtedly came to an agreement over the weekend and Sam asked for more time to iron out the details. Idcc acquiessed and now we have this settlement and the "binding terms" document. I would be astonished if Sam turns around and tries to use this as a ploy to further delay or weasel out and I think the court would be too.
We may or may not get definitive information today or tomorrow but I doubt the shorts want to wait much longer without covering. We probably have seen the beginnings of a short squeeze today and it could well extend itself.
I have no doubt that SAM will appeal an adverse decision on the basis of its being an act of protectionism and an impediment to the smooth functioning of the global economy in these difficult times. They'll do anything to avoid paying a fair rate for the patents they've been infringing on IMO.
O.T. Why not suspend the mark to market accounting rules to give financial institutions more time to create a market for their bad paper. The government could closely regulate them to make sure they didn't make the situation worse.The government wouldn't have to spend all that money and nationalize the banks. They could use the money to stimulate the economy and gradually these bad assets would find a market. This might not be perfect and some of the banks might not survive but it seems to me to be better than what they're arguing over in Washington right now. I'd be especially interested in what our resident accounting expert, Ronny Marchma thinks about this idea.
On first blush your plan for exchanging some of the 2G money for Sam's signing for 3G seems like a good one. Of course Sam would probably ask us to give up the $200 million they owe us in return for a low royalty licence. But even if that could be negotiated, I doubt that NOK would sign without further court action. On the other hand, if we can succeed at the ITC, I think NOK would then sign for a reasonable royalty rate.
The success or failure of IDCC as a growth stock does not depend on whether they meet analysts' estimates in the past quarter or this quarter or next quarter for that matter or even on whether they collect $200 million from Sam for 2G but on whether they sign Sam and Nok to long term licences. It is amazing how this stock goes on sale for the wrong reasons again and again. If they fail to sign both Sam and Nok within the next 12 to 24 months, they deserve to be on sale. Otherwise this decline is just a gift to anyone with dry powder.
Perhaps a buyer who intended to purchase 150 call contracts on line accidentally typed in 15000 and was immediately awarded the calls by the market maker who would be going naked.
The request for a rehearing is another example of the rule:"Nok will litigate in every possible instance"The only exceptions to this are when they negotiate a very advantageous settlement or if they perceive some severe penalties or losses by continuing to litigate. Nok prides itself as the lion king of the legal jungle. I feel that it will be necessary to have Sam experience a significant set back for their infringement before Idcc might then be able to deal equitably with Nok. A mediocre settlement with Sam will not change Nok's approach IMO.
Loop: You are of course correct with respect to the victory in England. I will not diminish this in any way. However it was not the type of victory I had in mind. The English case had to do with Nok's intent to deliver a body blow to Idcc and put it out of the game. Idcc successfully defended itself but did not reap a nickel from the case and probably lost in the sense of having to pay enormous legal fees. I was thinking of victory in a case in which Idcc might actually get some remuneration either directly or indirectly.