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When is a licensing deal not a licensing deal? Answer: when it contained stipulations that had a realistic chance of winding up with a zero royalty rate. If the public had known about this, they might not have bid the price of the stock up in 1999. Perhaps jai and dws didn't feel mislead, but I know many others did.
Because of the unusual nature of the NOK contract and because the public was mislead about it for several years, the setting of a rate and payment would not be an ordinary event in any reasonable definition of the term.
If announcements of agreements with NOK and SAMSUNG were not made in a timely fashion, how do you think it would set with analysts following IDCC and those who are thinking of initiating coverage?
Rayfer
Unfortunately I am like a deer in the headlites. I will hold my position for several reasons:
1. I truly believe we will win out in the end.
2. I'm not a trader and I did not buy this stock to trade.
3. I'll admit it. I've become emotionally involved with this stock and I find it difficult to give it up. I've invested in a lot of stocks and not had this problem. I think H.G. talking about not having enough zeroes on the calculator got to me. It's a little bit like a disease which I see that he,himself, does not have.
Count, you must be kidding
This is the company that gave us a weather report from KOP in March.(the sun was shining at the time) Unfortunately it got overcast when they sold shortly afterwards. It brightened up again in May when they released news of Rimm and a Japanese company becoming licensees. They again they sold within a week or two and it got gloomy once more. Frankly I'm now primed to take the good news followed by the sales rather than the quiet(I hope not before the storm) that we have been experiencing.
Count
If you go back one month as your reference point, the nasdaq is up 2% and idcc is down almost 6% for a negative spread of about 8%. If I were a manager of idcc and I had any good news, I'd figure this is the time to release it.
Differences between Ericy case and Nok negotiations
In the Ericy case, the stakes were high for both parties. A major loss by either company may have meant the end of that company as an independant entity. In the Nok negotiations, the stakes are similiarly high for Idcc but not for Nok. The chances of winning against Ericy in court were at least as good as getting what is owed from Nok without arbitration. The rewards of winning against Ericy were however much higher than getting what is owed from Nok. Idcc backed down and let Ericy off the hook for reasons best known to them. They can not afford to do this with Nok. I think both Nok and Idcc understand this and that is why I believe that in the end Nok will pay what they have owed since January 2002.
IDCC seems to follow market on down days but not on up days. Nothing good will happen to this stock until the NOK mess is cleared up. I hope future contracts will not invite a situation like this. So far the only ones who have benefited from the NOK contract have been management, who sold in the aftermath of its announcement in 1999.
Thots on arbitration
I doubt that NOK would arbitrate for penneys. I would suspect that if they arbitrate, they would go for the whole ball of wax. i.e. they would claim that the agreement with ERICY does not fulfill the terms of their contract with IDCC or that the terms of the ERICY contract were fraudulent in that they were crafted purposely to take advantage of NOK. I am sure that IDCC consulted with F and J before signing the agreement with ERICY and foresaw this possible objection from NEC and opined that although NOK might not like it, they would be bound by it. This is why I believe that IDCC will not give in even if they have to go to arbitration and that they will win if they do. I still feel that NOK will eventually agree and have the courtesy to pay what is owed without arbitrating.
The market dropped today because it wanted to.
IBM showed poor sales but good earnings partly because of "currency gains". The market chose to be bearish on IBM because it felt that no attention should be paid to the earnings because of contamination by the currency gains. It concentrated instead on the poor sales. Nok had good sales but poor earnings due to "currency losses". The market ignored the sales and fixated on the currency losses. The market was primed today to emphasize the negative aspect of every picture.
IDCC will not rollover for NOK as they did for Ericy
THE REASON THAT THEY SETTLED WITH ERICY FOR PEANUTS WAS BECAUSE THEY WERE SCARED TO DEATH OF EVEN THE SLIM RISK OF LOSING IN COURT. THAT WOULD HAVE ALLOWED NOK TO PAY NO ROYALTIES ACCORDING TO THE 1999 "LICENSING" AGREEMENT. That in turn would have highlighted the way management mislead the public about the contract and then cashed in when the stock price ran up. That might have caused them to lose their jobs or worse.
The situation is different now. They have little to lose personally by hanging tough and I believe they will get what they should or they'll go to arbitration.
GREG S
The thots of those who are bullish on IDCC are welcome. The thots of those who are bearish on IDCC are welcome. The thots of those who are ignorant of the contributions that Bill has made over the years and don't know what they're talking about are not welcome. Get lost.
GE_Jim
"Everybody has there own time table on this. Mine is, if both parties agree, late Aug with perhaps a release in Sept."
While I feel the same as you, I like to put a percentage likelihood on scenarios like this. Admittedely it is only a guess, but I figure there is about a 60% chance of this happening and 40% chance of arbitration. Any thots on putting a percentage chance on risks like this?
Its elementary my dear Watson.
Insider selling leaves a bloody trail and Tice is like a hound sniffing around for the scent of blood.
Tice sees a ripe situation. A risky small stock with a lot of insider selling after a big run up. It has already retreated some and the troops are getting restless. Perfect time for the buzzards to come in and knock it down a bit more so that the sweaty holders start dropping out making the stock slide a few more points and then he covers whenever good news comes. I'll be around for when he covers, which I suspect will be this summer.
NOK has the leverage in negotiations with IDCC:
If NOK wants to press their advantage for a favorable 3g rate, now is the time to do it. I would not be surprised if they were holding out on signing for 2g until they get a desirable deal for 3G. They figure that once 2g is signed IDCC will be tougher to deal with. It is still quite possible that a win win situation could come from this but IDCC has to be careful not to repeat the mistakes of the past and give away too much.
Skylark, you don't know what you're talking about.
"So I am basically just waiting for insiders to buy, and/or Harry's window to reopen, and then I expect that's when IDCC will get some money from Nokia." That's just basher trash.
Loop and Ronnie re arbitration:
I can think of only three arguments that NOK could make at arbitration:
1. The contract with ERICY is a sham.
This seems to be a very weak argument. The arbitrator would have to totally disallow IDCC claims and I don't see this happening.
2. The royalty, as established by ERICY is too high. I doubt this argument sways anyone, especially with the discount thrown in and the low rate.
3. NOK shouldn't have to pay for 2002. This is perhaps their best argument but the odds are it won't fly.
all IMHO
Loop, since IDCC granted Ericy a 20% discount, does not this put the real rate for any MFL licensee at 4/5 of what they "seem" to be asking. Also since the rate for Ericy was so low, is it practical for NOK to expect a lower rate for themselves regardless of the present status of ERICY as a manufacturer?
Reasons for IDCC and NOK eventual arbitration
I am making the following assumptions about the present negotiations between IDCC and NOK: First NOK is going to take a tough position in order to save tens and possibly hundreds of millions of dollars. Secondly, whatever decision IDCC management makes,it must, most importantly protect them from undue criticism and even loss of their jobs.
IDCC accepted a disappointing settlement from Ericy, softened by the declaration that they had a clear and binding contract with NOK to pay up. To accept a settlement from NOK on the order of the ERICY one would make them look like fools or worse no matter how they spin it. NOK has been prominent amongst telecomm manufacturers in the fight to keep royalties low. They would look weak if they caved in to IDCC without a fight. If this goes to arbitration, the losing side can point to the arbitrator and blame him.
The 8/4/03 Q2 earnings release date augers well.
It is a time honored tradition for companies with good news to select early dates for discussion of quarterly earnings and late ones for bad news releases.
BOD and managers are not evil people. They are just like the rest of us. They have families to support and children to educate. Naturally these interests are going to be first and foremost on their mind. They just need an occasional gentle reminder of who they work for. Those whose eyes are glazed over when it comes to the interests of the shareholders(like the top brass at ENRON) need to be warned that we are not asleep. If necessary, they need to be replaced by managers who can work together with us for our mutual benefit.
Dale: I disagree that "mistakes" have been made. You stated:
"we all love the work that they have been doing it just tiring seeing this same mistake costs us time after time."
There are loads of potential conflicts of interest when you run a company owned by others(i.e. in this case the shareholders) Supposing you had a job which netted you a good deal of money and your situation mainly depended on continuance of the company and not necessarily its growth. Then you saw an opportunity to grow the value of the company exponentially for the owners but with a small risk that the company might flounder if things did not work out well and you might lose your job. From the shareholders point of view, taking this risk with the potential of huge rewards might be worthwhile. From your point of view, the risk, even though small, might not be worth taking since you were getting rich anyway.
Management, with its insider selling of cheap options and restricted stock whenever we seem to have a rise in share price and are gathering momentum, has indicated to me that they are consistantly willing to put their interests ahead of the owners of this company.
Zitboy: when I opened your post the following advertisement coincidentally came up at the top of my screen:
Insider Activity - www.insideadvisor.com
The insiders know when to buy and sell. Follow them and win big!
Mschere: I am happy to see an increase in institutional buying. We also need more analyst coverage, especially from the larger firms, and I agree that insider trading has hindered that in addition to causing price weakness.(although I used this as a buying opportunity today)
Jimlur,Your reasoning is difficult to agree with. Ronnie stated:"..."I do know for a fact that in a number of cases this selling by so may of our senior executives has given the company a very negative prospective from the Wall Street Community. At a minimum, this selling has given the appearance of an 'immaturity' by our management".
You state "Somebody certainly found a way to interest Frank and the institutions so in my book I have to give credit to management on that issue."
How about the three or four additional institutions that might have covered IDCC but for the heavy insider trading. IMO your comment does not come close to refuting what I consider an important point made by Ronnie.
Question whether IDCC managers trade on inside information:
Assume that Lemmo and Goldberg knew that HC was selling 80,000 shares on 6/4 and 6/5. They could then reasonably conclude that this would depress the price of the stock after the release of the F4, which would come after the close of the market on 6/6. Then they themselves sell on Friday ahead of the announcement disclosing the HC sale. Would this not be trading on information known to them but not to the public? Of course there is no proof that they knew but one wonders.
Ronnie I was also surprised by Jimlur's post that stated:
"Your contact with Colorado (which IMO led them to sell all their shares)and your messages to the board members to their private e-mail addresses have damaged relations between the company and investors which will make it difficult in the future for new investors."
IMO it has been management which has damaged relations between the company and investors. I will not enumerate all the policies that management has instituted for their own self interest and against the interests of the investors. Your work has helped in alerting management that investors are not asleep and need to be considered in the equation. IDCC is not their personal play pen or piggy bank.
Ronnie, you have ranked among the two posters whose posts I have copied and reread and filed the most. I hope you will continue to post. .
Indemnification is a puzzle here. Apparently the whole telecom world knows which company is offering to indemnify. If so, why are the investors in IDCC not being informed about who it is so we can make a judgement on the issue. It is obviously material and not even a secret to anyone but us. I'm sure our analysts would like to know and perhaps they already do. I would also like to know how IDCC regards the situation and what they intend to do about it.
Joel, Please tell me why HC who has more money than all of us would sell if he thought the price would triple in a year or two. Other than not wanting to be embarassed by the huge number of shares sitting in his account that he acquired through options, I can't think of a reason. I can think of many bad reasons such as reducing the moral of his employees and shareholders and making his managers as cynical as he is. If you believe in leadership through example, where is he leading us?
BTW I am not in the least worried about HC sales of his options ruining the imminent squeeze of the shorts since I am and always have been in this for the long term. What worries me is what this COB will dream up next to enhance his own wealth and screw the company.
HC strategic plan for IDCC is now evident.
There can be no doubt that our COB plans to reap his harvest from this company via the sale of options rather than through the growth of the company. This should be evident even to his wildest supporter. IMO this is poisonous to the whole working environment of IDCC. If he were to leave, I would buy more shares immediately.
Warning: This stock can gap up on you
If you look at the 1999 chart, Idcc can gap up 75% of the previous day's price in one day. It's true that we're no longer in the "bubble" atmosphere of 1999 but what do you think would happen if a good 3G contract were announced with Nok or Ericy. The risk of being out of this stock is still greater than that of hanging in and hoping that management won't hurt you too much and this remains even with the recent defeat of the new requested options package. I for one would like to see HC take one of the jobs he says he has been offered and let a new COB install a new culture in this company.We need a new full time COB with superior technology skills, day to day hands on leadership and the ability to communicate the IDCC case to the world. JMO
Loop
I have felt that the essence of the NOK contract with IDCC was to let the IDCC-ERICY case determine the validity of the IPR. Thus the inclusion by NOK of the warranty that IDCC would continue the litigation with ERICY. In other words, rather than face a suit from IDCC which neither NOK nor IDCC wanted, they would let the court decide in the ERICY case as to the validity of the IPR. Might not an arbiter decide that the out of court settlement in this case was an abrogation of the letter and/or the spirit of the NOK-IDCC agreement?
Whatever happens at the asm, you can be sure of a couple of things. Some important info will be left out and other things will be so obscured or made vague that it will take a team of experts to figure them out and then they won't know for sure.
Mickey: The misinformation we got over the years on NOK phase 2 still sticks in my craw. I have suspected that the settlement with Ericy and even the recent request for more options have been at least in part to shovel dirt on the NOK episode and have everyone forget about it. After all, if we give them more options now, it implies that we forgive them for the way they misinformed us on NOK( and then sold at great profits for themselves). I say get rid of these guys and bring back Gersenstein, who I suspect was unpopular because he didn't want to accept the baloney that was going on.
Joel, several years ago Ericy engineers and management had an internal dispute. Their engineers looked closely at our patents and concluded that Ericy was infringing. They foresaw tremendous liabilities and advised management to pay up. Management said "you concern yourselves with the patents, we'll take care of the liabilities."
Fast forward to 2003. Ericy settled for peanuts, proving that management was right and the engineers wrong. This gave out a great message for the rest of the telecomm world. Now Idcc management wants to be rewarded for this wonderful example of how we back up our patents.
Joel
Every act we take has a risk reward equation that goes along with it. When we travel by car or by plane, this equation applies. Also, when we take medicines or have surgery or when we marry (or divorce) etc. etc. I was convinced as were others on this board that the risk reward equation in pursuing Ericy in court was very favorable to us. I was looking for Idcc to become a fortune 500 company not to be sold as I recently have seen rumors emerging. Our expectations, which I felt were realistic, have taken a fall since this move.
Idcc vs Ericy needed to be tried
Experience in 2G told Idcc that we would not be paid without a demonstration that we intended to enforce our patents to the limit. A decision was made in Q1, 2003 to trade 2G for a better cash flow and concentrate on 3G. This sent a message to infringers that you can abuse Idcc and get away with it. Many companies have infringed and apparently will never pay. It also is embarassing to the few companies which actually paid. We had a good opportunity to turn this around with Ericy and we flubbed it. We are now looking at 3G. Time will tell how much we hurt ourselves by settling with Ericy for the small amounts that we got.