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Jim Charts: I agree. I believe the board wanted both HC and HG to go but it would have been awkward to replace HC, the COB, and leave HG, the CEO, dangling. I suspect that they are looking for a heavyweight to replace HC at the moment.
I've asked myself many times why we have not sued LG or Ericy for 3G. The only answer I could figure out was that we expected a favorable decision in the arb and then expected Ericy and Nok to pay, followed by others without having to sue anyone. From this I have taken it that, after the arb decision, we should have an agreement for 3G from Ericy in short order. I hope management was correct in their judgement and will not now need to initiate a 3G suit after delaying almost two years.(We have sued LU, but only for infrastructure and not for WCDMA IPR)
The share price today or during this past week is unimportant. Right now the important thing is the panel decision, which is coming this month and which has an 80% chance of being somewhat or very favorable. I liked WM when he intimated we will not accept a wimpy settlement. I also liked when he emphasized his good relationship with Ericcson.
WM has been CEO for less than a week. HC has been COB for many years. I believe that it would have been appropriate for the COB to be present at the cc and introduce WM rather than relegating that job to JP. We need a COB who is able to do things like that. We do not need a new COO. We need a new COB.
Replacing HC with WM is a good start Now I would like to hear that HG is retiring and being replaced by Irwin Jacobs. Now that would make the stock go up a point or two wouldn't it. LOL
Corp:you said "let's make a deal BUT it has to be the RIGHT deal not just a deal that we can get" - agreed, otherwise, let's take the arb. award. That is still an option for IDCC.
"favorable enough terms that the industry recognizes it as a VICTORY as a WATERSHED event, not as IDCC wimping out and taking nuisance type settlement money"
When Idcc first made their demands on Nok after the Ericy settlement, Nok alluded to CRIMINAL behavior on the part of Idcc management. These charges hinted at what they considered pumping and dumping. This is something that neither HC or HG could never forget or forgive. Nok has admitted that they never intended to pay for 2G or 3G, figuring that Idcc would never sign a trigger. Recently they began attacking our patents in Delaware and in the UK If they now pay a meaningful 3G rate without a court mandate, I will be astonished at this reversal of form.
HG, a conservative ex-SEC lawyer, has been cast by posters here as a fire eating, flame throwing nemesis of Nok and adversary of HC. To the contrary, he has lasted as long as has because(unlike MG) he has always said yes to whatever HC wanted. I believe he quit because he did not want to be a whipping boy for everything that might go wrong with Idcc. I am happy to see Merritt as his successor and I would be happy to see HC retire as well and be replaced by an experienced(in telecom) and connected full time COB.I still expect a favorable panel decision instead of a wimpy settlement.
The arbitration will not be settled but will go to a panel decision. We will win, but perhaps not as much as we had hoped. We will have to sue a trigger or triggers over 3G. HG was promising more than this scenario and did not want to stick around and take the heat. I think this was HG's decision and not that of the board.
Open letter to HC: Now more than ever Idcc needs an energetic full time COB with technology experience and contacts in the field to work 24/7 and sleep on airplanes. HC, at this stage, do you really want or need to do that? Its not too early to start to think about capable hands to continue with and add on to what you've already built?
HG felt on the hook for both a 2G win in arbitration and a 3G license from S/E. A loss in the arb would have meant a humiliating firing and he would have been the lightening rod for all the blame. Failure of Ericy to sign for 3G in a timely fashion might have ushered in the same consequences. Too much to lose. Not enough to win. The pressure was getting to him. Ergo, out the door for HG(who is not your basic risk taker anyway) Merritt had no need for Tilden so he had to go too. This does NOT mean that we won't do well in the arbitration, which I still believe we are on track to WIN. In the end, this episode may prove to be good for the future of Idcc. Expect a 3G license from Ericy(followed by one from NOK)or a lawsuit against Ericy very soon. IMO
Danny: I've been around for over 5 years and, in my view, the next few months are the most critical time of all for the future of Idcc. We need your insight now more than ever. With Loop on medical leave and with you, DR, and Ronnie getting pissed at each other, Jim's board might just blow up at the worst possible time. Why don't we cool it and call a truce.
DD: You're speaking for yourself. I, myself, on the other hand, and, I bet plenty of others, plan to be around for a while regardless of what happens in the arb decision. Our management may not be perfect but I don't want to see this company stolen from us either. My holdings might even wind up in my estate.
A buyout of a company on the verge of explosive growth, as I believe Idcc is, is never a good thing for the shareholders. The worst kind of buyout is when management takes a company private. They are sitting in control and pulling all the strings, including steps which might bring the company close to insolvency in order to advance their own cause and make you sell out for pennies. The next worst takeover is when management arranges preferential treatment for itself while selling to a larger company for small money. I have lived through both. In the case of management taking the company private, I really got whacked although a white knight came in at the end and helped out a bit. In the latter case, management got good positions and options from the acquirer while we got peanuts for our shares. These M and A shops are facilitators for corporate bandits who use corporate legal loopholes to enrich themselves and screw shareholders. I want no part of them. Forgive my stridency on this issue but it was not pleasant to feel powerless while being raped. IMO
Its almost high noon for the gun fight in the nOK corral. Idcc pulled the trigger first with the Ericy license. We'll soon see if the bullet has hit its mark. Now we've got to make sure we don't get shot from behind by one of our own boys.
As a guess, I think any cash award of 3 times or more what we've shelled out in recent years for stock buybacks would be considered a win. Any new insider sales could hurt badly and blunt any win.
Uh Oh: Idcc is mostly about 3G. If we lose the 2G arb decision, we will take a 50% bleed. Then the vultures will really swoop down to feed on the quivering carcas. This is the kind of classic situation these vultures are looking for. Lets hope we win the arb and don't have to suffer vultures fighting over us.
Buybacks deflect attention from the millions of shares management has grabbed for themselves through options and RSU's. They weaken the company through attrition of cash which just might come in handy in the future to defend IPR and they make the company more susceptable to a takeover if things don't go well in the arbitration. IMO
Idcc must be in heat. The hounds are sniffing around. I have an idea of what they would like to do with us.
ams:"The company will have to enter long and expensive litigation to get paid for 3g, and will quickly use up all of the cash reserves."
This depends on how much the arb settlement adds to our cash reserves.
re Cramer: If Idcc loses the arbitration decision, he's a genius. If Idcc wins, he's an idiot. My bet is that he's more likely an idiot.
Jim: I have no issue with Corp posting his opinions on Idcc and its management even if I disagree. One of the things I disagree with him on is the share buyback, which he thinks is a positive. I think it is foolhardy at this point in time. I know there are benefits of a buyback today considering that the share price may rise right after the arb decision, but I don't feel we should be taking any unnecessary risks right now. I think we should wait until after the arb decision so that if it doesn't go the way we want and expect it to, we will still have more than enough cash to use in defending our 3G IPR. I intend to remain long no matter what happens in the arbitration.
Jim:re 5%
At that time, I believe QCOM was demanding and getting 5% from its licensees so its not so far fetched that IDCC might have asked it of ERICY.
Idcc is going to face huge challenges in the next few years after a win in the current arbitration process. They must now take a risk with their 3G IPR with faith that they will not experience another MOT setback as happened in 2G. IMO they will need a win in court before they establish themselves. They will need to license Ericy and Mot as well as Nok and Samsung by whatever means it takes. If necessary, they can "ladder" their court challenges of infringers and not depend on a universal cave in after one victory. They may also want to acquire some smaller entities along the way as they did with Tantivy.Management will require technical, legal, m and a, and media skills as well as social and political skills. It is one helluva job but if done well it could result in IDCC becoming one helluva company.
Dave: this would seem to rule out further negotiations AFTER the decision has been transmitted to NOK and IDCC. I take this as a positive since the best deal Nok would have offered would have been a reduction in the award in return for a 3G license contingent on certain events such as validation of idcc 3G IPR by the courts. This would have been a trap to use delay to hurt the company as they have been doing all along. We've had enough licenses with strings attached. It is appropriate at this time to harvest what's owed us and move to confront those who steal our IPR.
"Engine and transmission -- still a good read"...TWFG,It is interesting to read the Forbes article and see why it failed to accurately assess (at the time) the near and intermediate term future for Idcc.It says that Idcc had hundreds of CDMA and TDMA patents but did not state that Idcc had been paid for them. It talked about a joint development project with Nok but again nothing was said about royalties for patents having been paid. It also mentioned Idcc working with other OEM's but again no royalty payments. Even the famous "engine and transmission" statement was not linked to royalty payments. What we can learn from this article is that we should concentrate on royalty payments and not pay much attention to anything else in order to judge the future of Idcc. It looks as though, five years after this article was written, we are finally about to receive such payments from Nok.
The actual arbitration ended 1/27/05. The panel has had two months to make a decision and put it on paper. I don't believe the ICC needs two months to proof read it. One of the advantages of the arbitration process is its timeliness. This has gone on for two years and Nok has been making it into a circus with its related U.K. and Delaware lawsuits. I believe the ICC will announce the decision sooner than 5/31/05 and possibly a lot sooner.
j70k; with that kind of money in the bank and especially if we can get paid for 3G, we can start thinking seriously of manufacturing our own chips or acquiring a small manufacturer.We've got the IP. Why not put it to good use.
Nok is looking at a potential payout for 2G from a panel decision and a potential payout for 3G if they settle. They have decided to gamble. The payout for 2G may not be huge for Nok but hopefully it will be for Idcc. Now it will be up to Idcc to carry the fight for 3G if Ericy balks at paying. We've had enough of settling It's now or never for Idcc.
Nok has appointed itself the leader of a conspiracy of OEM's with the aim of disavowing royalty payments for all IPR(except their own)Not only will they not agree to pay for 3G but they will appeal the panel decision with the purpose of further delaying payment for 2G. I have been observing Nok for 5 years and a pattern of their behavior has clearly emerged. IMO
Corp: several factors contribute to my hunch that Ericy will pay for 3G after being confirmed as a trigger by the arb panel. First I recall the H.G. statement 2 years ago to the effect that Ericy was an ethical company. I felt then as I do now that there was an agreement that Ericy would pay for 3G as soon as it was established that their competitor, Nok would also pay. Then there is the fact that Idcc has held off for 2 years in suing Ericy or any of the other big infringers for 3G(except for Lucent)Then there is the mighty push by Nok to see all the documents in the Ericy case which may include an mou dealing with 3G. Then there is the understandable hesitancy of Idcc to to settle with Nok for anything not including a 3G rate or at least a confirmation that Ericy is a trigger.
Marchma:my thots on recent adverse events
* Insider sales by CEO and COO--regrettable but not crucial
*Delayed 4Q report;--not significant
* Nok 3G litigation launched;--we were going to have to test our 3G patents in court at some point anyway
* UK 2G litigation came to light;--win or lose, our future is in 3G
* SEC accounting review;--not significant
* 10K delay filed;--not significant
* Still no new licenses;--after arb decision we should get new licensees or initiate suits
* Extraordinary RSU bonuses handed out to CoB and others;--regrettable but not crucial
* Analyst downgrades;-- not crucial
Guidance:
* 4Q expenses increased more than guided;--we have the cash on hand but have to conserve it for legal expenses
* 4Q loss reported;--really a break even
* Guided another significant ~15% Q-Q expense increase;with an arb win we will have more than enough cash to cover our expenses
* 1Q05 Revenue guidance weak, despite strong industry results--guidance does not include revenue from an arb win
* Insider sales by CEO and COO--regrettable but not crucial
*Delayed 4Q report;--not significant
* Nok 3G litigation launched;--we were going to have to test our 3G patents in court at some point anyway
* UK 2G litigation came to light;--win or lose, our future is in 3G
* SEC accounting review;--not significant
* 10K delay filed;--not significant
* Still no new licenses;--after arb decision we should get new licensees or initiate suits
* Extraordinary RSU bonuses handed out to CoB and others;--regrettable but not crucial
* Analyst downgrades;-- not crucial
Guidance:
* 4Q expenses increased more than guided;--we have the cash on hand but have to conserve it for legal expenses
* 4Q loss reported;--really a break even
* Guided another significant ~15% Q-Q expense increase;with an arb win we will have more than enough cash to cover our expenses
* 1Q05 Revenue guidance weak, despite strong industry results--guidance does not include revenue from an arb win
Two years ago Idcc was awaiting a jury trial in the Ericy dispute. The share price was in the 14's. Fast forward two years. Ericy decided to pay for 2G. Our IPR for 3G was increasingly accepted by standards committees. 3G in the form of WCDMA, began to arrive despite doubts 2 years ago. We are awaiting a panel decision in the Nok case by professional arbitrators, not laymen jurors. We are closer to a decision by the JPO on our 3G patents, which has a good chance of triggering payments by Panasonic. We have reason to believe that a positive arb result may induce Ericy to pay for 3G and perhaps Nok as well. We have more cash on hand than 2 years ago. Is anyone else wondering why the share price should not be more than a point more than it was 2 years ago?
Why do we Idcc have to wait until May 31 to have the panel decision made public? The decision will be put to paper by March 31 and should not take 2 months for a revue. The chances of a settlement are now slim to none.
Corp: This is not your father's idccmobile. In the past, management was afraid of Idcc being snuffed out and went for the quick buck. Now, they have much more to gain by staying the course with all their stock and waiting for the real pay off. I would be surprised to see substantial selling from here on in until they're very rich and want to diversify like Bill Gates did. The first test will come after the arb decision, which will probably be followed by a pop in the price. With Ericy and 3G waiting in the wings and with Idcc having enough cash to make it happen, why would they want to sell. Incidentally Nok was never going to include any kind of a reasonable rate for 3G in a settlement anyway and, without 3G, it never would have made sense for Idcc to settle . IMO
VG_future: Idcc can not setttle without a 3G agreement because it would look like the Ericy settlement all over again and there would not be the same initial positive reaction as was the case with the Ericy settlement. Also Idcc is looking for affirmation that Ericy is a trigger for 2G and, by extension, for 3G, which a positive panel decision would give it. Nok has shown no indication that it is willing to pay for 3G despite their contract with Idcc. Unless Nok feels they will have to pay anyway for 3G because of later developments following the panel decision, they will not settle. In this case you have an immovable object(Idcc) up against a stone wall(Nok) IMO
It now seems probable that the Nok-Idcc dispute is going to a panel decision rather than a settlement. The Idcc stock price should move up as we approach May since we will be only a few weeks away from a decision in which the odds favor Idcc. The 4Q earnings report and upbeat comments at the CC may also move the price along some.
Loop:I remember reading about this and I have often thought about it. I hope someone asks a direct question on this issue at the CC next week to clear the matter up.
"IDCC warranted that it would continue to prosecute its defense of its patent claims and infringement claims against Ericy.
My confusion remains regarding the warranty to prosecute its Ericy action and whether notice was required if a settlement was suddenly on the table."
The most important statement to come from Nok during the court and arbitration proceedings was that they never intended to pay Idcc anything. This, to my way of looking at it, is an open admission that they entered the licensing contract with Idcc as a sham to throw a fraudulant bone to Idcc. In the contract, there are descriptions of ways for the royalty rate to be determined. If Nok had told the truth at that time; i.e. that they had no intention of ever having to pay, I'm sure that Idcc would have declined to sign such a sham contract. This bad faith should be a critical factor in the deliberations of a court or arbitration panel in reaching a decision in the Idcc-Nok dispute IMO
Idcc, for whatever the reason, is in no rush to schedule a CC and answer a bunch of questions at this time. This IMO, is why they are scheduling the earnings report, which is usually followed by a CC, as late as possible.
I don't see how Nok can bellyache about the rate that Idcc got from Ericy and now wants Nok to pay when Qcom is charging 10 times as much. Idcc accepted a very low rate from Ericy because they were desperate to sign a large European OEM. Whatever rate NOK pays based on the Ericy settlement, they will be getting a bargain.