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RIMM (corporate) + PalmSource (consumer/corporate) + Palm/Handspring (consumer/corporate)?
PalmSource and RIM to Extend BlackBerry Wireless Email and Data Connectivity Solution for Palm Powered Devices
May 6, 2003
PALMSOURCE DEVELOPERS SEMINAR, San Mateo, CA - PalmSource, Inc., provider of the world's most popular operating system for handhelds and smartphones, and the Palm OS® subsidiary of Palm, Inc. (Nasdaq: PALM), and Research In Motion (RIM) (Nasdaq: RIMM; TSX: RIM), the leading developer of wireless enterprise solutions, today announced they will work together to market and promote the BlackBerry Connect™ solution to Palm OS licensees to enable secure, push-based email and data connectivity for wireless Palm Powered™ handhelds and smartphones.
As the enterprise becomes increasingly mobile, demand for easily deployable, wireless solutions that immediately increase productivity and reduce IT costs continue to grow. Mobile professionals and IT departments require reliable and secure access to corporate data from their wireless device and the ease of integration with existing back-end resources. Through RIM's BlackBerry Connect licensing program, Palm OS licensees will be offered RIM's software solution for Palm Powered handhelds and smartphones, that will enable behind-the-firewall, enterprise-ready BlackBerry® email and corporate data connectivity.
"The BlackBerry connectivity architecture and infrastructure has been certified by leading wireless carriers around the world and BlackBerry Enterprise Server™ has been deployed in more than ten thousand companies and government organizations," said Mike Lazaridis, president and co-CEO at Research In Motion. "Together with PalmSource, we will enable carriers and customers to leverage their existing investments and deliver the BlackBerry wireless experience to new users of Palm Powered wireless devices."
"We are pleased to partner with RIM to deliver an industry-leading robust, secure wireless email and corporate data solution for Palm Powered mobile devices," said David Nagel, president and chief executive officer for PalmSource. "BlackBerry Connect for Palm Powered devices will widen the choices of wireless messaging solutions for Palm OS licensees in order to better meet the needs of our enterprise customers."
BlackBerry Connect on Palm OS will deliver a powerful combination for Palm Powered mobile devices to execute on enterprise customer requirements for enhanced flexibility, security and manageability, uncompromised power and ease of use, and low training, support and maintenance costs. Palm OS has achieved a leading position in the enterprise because it offers a low total cost of ownership (TCO), while also supporting the largest base of mobile software worldwide1.
BlackBerry is a leading wireless enterprise platform that has been widely deployed to provide mobile access to information. BlackBerry Enterprise Server supports both Microsoft® Exchange and IBM Lotus® Domino™ environments with single mailbox integration and provides IT departments with centralized administration, end-to-end security (using Triple DES encryption), multi-network support and a powerful development platform. RIM's BlackBerry Connect licensing program enables mobile device manufacturers to equip their handsets with the same reliable, secure and push-based BlackBerry wireless data experience.
Further details regarding the agreement have not been disclosed at this time.
About Research In Motion (RIM)
Research In Motion is a leading designer, manufacturer and marketer of innovative wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software and services that support multiple wireless network standards, RIM provides platforms and solutions for seamless access to time-sensitive information including email, phone, SMS messaging, Internet and intranet-based applications. RIM technology also enables a broad array of third party developers and manufacturers to enhance their products and services with wireless connectivity to data. RIM's portfolio of award-winning products, services and embedded technologies are used by thousands of organizations around the world and include the BlackBerry® wireless platform, the RIM Wireless Handheld™ product line, software development tools, radio-modems and software/hardware licensing agreements. Founded in 1984 and based in Waterloo, Ontario, RIM operates offices in North America, Europe and Asia Pacific. RIM is listed on the Nasdaq Stock Market (Nasdaq: RIMM) and the Toronto Stock Exchange (TSX: RIM). For more information, visit www.rim.net or www.blackberry.com.
About PalmSource
PalmSource is the company behind Palm OS, the world's most popular operating system for handhelds and smartphones. Licensed by industry leaders - including Aceeca, Acer, AlphaSmart, Fossil, Garmin, GSL, Handera, Handspring, HuneTec, Kyocera, Legend, Palm, Samsung, Sony, Symbol and Tapwave as well as Palm OS Ready Partners including ATI, Intel, MediaQ, Motorola, Samsung Semiconductor and Texas Instruments - Palm OS has been shipped on more than 28 million handhelds and smartphones, and given rise to a huge community of users, enterprises, developers and manufacturers, who together make up the Palm Economy. PalmSource's new headquarters are located at 1240 Crossman Ave. in Sunnyvale, Calif. PalmSource is a subsidiary of Palm, Inc. (Nasdaq: PALM). More information about PalmSource, Inc., is available at www.palmsource.com. Information about Palm, Inc. is available at www.palm.com/aboutpalm.
http://www.rim.net/news/press/pr-06_05_2003-02.shtml
Handspring buy may boost Palm wireless plans
17:24 Wednesday 4th June 2003
Matthew Broersma
Palm's buyout of Handspring will give the handheld computing leader valuable mobile data technology - and could give it a foothold in Europe's wireless market.
Palm's acquisition of Handpsring will give the company valuable wireless technology and expertise for the smartphone market, particularly in Europe, according to industry observers.
Canalys, a London-based analysis firm focused on mobile devices, said that the stock-based acquisition, announced late on Wednesday, will have little short-term impact on the handheld computer market, because the two companies' product lines have almost no overlap.
Palm is the market-share leader for handheld computers, and is concentrated on data-oriented handhelds for the consumer and enterprise markets. Handspring initially became known for its Visor handhelds, but in recent months has shifted its strategy to the Treo line of smartphones.
The Treo technology could fill an important gap with Palm: wireless technology, and particularly expertise with devices that use GSM and GPRS, the mobile phone standards used in most of the world for voice and data communications.
"Handspring's move into smartphones was a brave and potentially very lucrative decision, but it didn't really pay off," said Andy Buss, senior analyst with Canalys. "This acquisition means that Handspring doesn't go bankrupt, and it means that Palm acquires that wireless technology and experienced engineers."
While the bulk of Palm's sales are in the consumer market, with low-cost devices such as the Zire, the company is in the midst of a long-term strategy of wooing enterprise IT buyers and hardware makers with its Tungsten line, which includes the GSM/GPRS Tungsten W. The Handspring acquisition could add steam to this programme, Buss said.
"Palm is attempting to go upmarket, and this helps them with that. It gives them access to a lot of technology Handspring has developed around GPRS communications. It gives them the ability to go into the enterprise and cover their needs," Buss said.
A recovering handheld market
Shipments by both Palm and Handspring have been stagnant or falling in the EMEA (Europe, the Middle East and Africa) region for the past three years, according to Canalys figures. Palm shipped 1.3 million devices in 2000, but only about 928,000 in 2002, while Handspring shipped about 117,000 in 2000, about 197,000 in 2001, and 121,130 in 2002.
The sluggish sales has been partly due to an overall slump in the handheld market, but the market has stabilised in the first quarter of this year, Canalys said. Palm shipped 226,500 devices in EMEA in the first quarter, compared to Handspring's 19,810.
Handspring has a more mature GSM/GPRS line than Palm, Buss said, and has been selling the Treo in Europe since its introduction. By contrast, the Tungsten W was introduced only this year, and has yet to get much publicity in Europe.
Handspring has sold the Treo largely through mobile phone operators, and has racked up a number of operator deals in Europe, including operators mmO2 and Orange in the UK. Those deals will come in handy for Palm, Buss predicted.
Hard work ahead
The combined company will have its work cut out in carrying the Palm OS platform forward and extending it into more lucrative markets, according to Canalys.
Microsoft has been busy signing up licensees for its Windows CE-based mobile operating systems, such as Windows for Smartphones and Pocket PC, while most major mobile phone makers have now signed on to make smartphones based on the Symbian OS. In the mean time, the number of Palm OS licensees has been falling, with Handera recently cutting off its Palm OS line. After the acquisition, Palm and Sony will be the only two companies with a significant Palm OS programme, although PalmSource, which looks after the Palm OS, is actively recruiting more licensees, Buss said. The Palm OS doesn't yet have the enterprise cachet to match Windows, either, he said.
However, that could all change. "If Palm can accelerate its next-generation OS, get a couple of significant licensees, and come up with a few innovative applications, it is well positioned to retake the market," he said. "And don't forget that today the handheld market is dominated by consumers, and that's where Palm is strong."
http://news.zdnet.co.uk/story/0,,t284-s2135618,00.html
Question..Will IDCC only collect on RIMM devices or also their technology in OS and software? TIA
Good question. I initially assumed that, like cell phones, royalties would be based on factory cost of the device, but now I don't know if RIMM's BlackBerryies require additional software to connect to different 2G and 2.5G networks. I don't think IDCC will collect royalties on RIMM's other products.
Enterprise needs
According to Ray DePaul, director of product planning for RIM, there are three key aspects that enterprises look for in mobile e-mail services: security, single-mailbox integration, and push (where the e-mail is automatically delivered to the device rather than the user having to initiate the process each time). He should know -- Rim has been the dominant force in the field, boasting some 403,000 subscribers as of August 2002. In fact, according to the Gartner Group, RIM has the largest installed base for enterprise mobile e-mail/PIM.
Besides its always-on e-mail delivery, well-designed handhelds, RIM's success lies in its adaptation to a wide number of communications networks. The company's older models use the legacy PCS-based DataTec and Mobitex wireless networks. However, the recently released Blackberry 6710/6720 models include an integrated GSM/GPRS phone, and RIM is now working on CDMA and iDEN-compatible products. The Blackberry Enterprise Server software is available for either Microsoft Exchange or Lotus Domino, and works by monitoring users' mailboxes for new e-mail, applying filters, compressing/ encrypting incoming messages, and doing the same for outgoing e-mail.
http://www.zdnetindia.com/techzone/stories/70605.html
Next.
Dow Jones Business News
Palm To Acquire Handspring For $168.9 Million in Stock
Wednesday June 4, 8:47 am ET
Palm Inc. said Wednesday that it agreed to acquire Handspring Inc. (NasdaqNM:HAND - News) for about $168.9 million in stock, creating a stronger provider of hand- held computing and communication products.
ADVERTISEMENT
Palm's board also gave final approval for the much-anticipated spinoff of PalmSource Inc. Palm has been planning the separation of the software division since last summer, and has said it expects to spin off the division by the end of this summer.
Palm, based in Milpitas, Calif., said shareholders of Handspring, Mountain View, Calif., will receive 0.09 of a Palm share for each share of Handspring common stock owned. Based on Palm's closing price of $12.15 Tuesday, the deal values each Handspring share at about $1.09, representing a discount of 1.8% from the Tuesday closing price of $1.11.
Palm said it will issue about 13.9 million shares of Palm common stock to Handspring's shareholders.
Handspring's shareholders will own about 32.2% of the newly merged company on a fully diluted basis, and Palm's shareholders will own about 67.8%.
The deal, encompassing the spinoff of PalmSource and the merger of Handspring with the remaining Palm Solutions Group of Palm, is expected to close in the fall.
The boards of both companies approved the agreement, which also has the support of Handspring's three largest employee stockholders -- Jeff Hawkins, Donna Dubinksy and Ed Colligan. Messrs. Hawkins and Colligan and Ms. Dubinsky control about 37.5% of Handspring's outstanding shares.
Palm and Handspring share a bit of history. Mr. Hawkins co-founded Palm in 1992 with Ms. Dubinksy, Handsprings' CEO. In 1998, Messrs. Hawkins and Colligan and Ms. Dubinksy left Palm to create Handspring.
The combined company will be structured around two business units: handheld computing products and smartphones.
It will be led by Palm Solutions Group President and Chief Executive Todd Bradley, who will remain in those positions. Mr. Hawkins, Handspring's chairman and chief product officer, will become chief technology officer.
Ken Wirt, currently Palm Solutions' senior vice president of sales and marketing will lead the handheld computing group, while Mr. Colligan, current president and chief operating officer for Handspring, will head the smartphones business. Ms. Dubinsky will serve on the board.
Palm said it expects "greater revenue opportunities" from the combination, and anticipates improved operating efficiencies to result in about $25 million in cost savings annually. The company anticipates the elimination of about 125 jobs and overlapping programs.
Palm said it will provide an initial $10 million line of credit to Handspring for working capital until the deal closes. The line of credit may increase to $ 20 million, under certain conditions, the company said.
-Yolanda E. McBride, Dow Jones Newswires; 609-520-7861
The BlackBerry wireless platform allows StarHub's corporate users to manage their corporate email, data and Personal Information Management (PIM) tools through the use of a Java-based BlackBerry Wireless Handheld(TM) with integrated email, phone, SMS, web browser and organizer applications on the go. The BlackBerry 6720(TM) handheld operates on StarHub's robust GSM/GPRS network.
The highly secure mobile email and data solution supports Microsoft Exchange and IBM Lotus Domino(TM) environments allowing easy integration with the user's corporate email address and mailbox. Emails and calendar appointments are automatically "pushed" to and sent from the industry-proven handheld while they're out of the office. The handheld features a patented, built-in keyboard that makes it extremely easy to type using two thumbs. The BlackBerry handheld is an indispensable communications tool for busy executives.
The "always-on" data and email connectivity is provided via StarHub's robust GSM/GPRS network. Coupled with over 40 GPRS roaming destinations covering major destinations in Asia, Europe and the USA, StarHub's customers are able to manage their corporate email overseas. No need to dial-in or "pull" data, no time wasted and all the latest email and PIM "pushed" to their handheld automatically.
http://www.investorshub.com/boards/read_msg.asp?message_id=1046049
Not really, if you have been paying attention to the technical discussions over the years. His QCOM bias has moderated somewhat during the last few years as the extent of QCOM's relentless stock decline became too obvious. LOL. Still, as I, IQ and some others have noted and confirmed publicly and privately over the years, he has consistently skewed the technical aspects in QCOM's favor despite the fact that QCOM claims essential IPRs in only 3 modes of 3G while IDCC claims essential IPRs in all 5 modes of 3G. Like I said, that used to send the productive technical puzzle sessions into very unproductive QCOM vs IDCC mode because other IDCC bashers would usually feed off those questionable technical views and start useless food fights.
Trust and verify.
It actually used to be much worse before the 3 straight years of relentless decline in QCOM's stock -- despite 3 straight years of increasing cash flows!!! -- forced these rising tide QCOM genuises to grudgingly accept the common sense point that many of us have been making all long: QCOM and IDCC are not mutually exclusive investments but are, in fact, complementary.
Think of the recurring attacks, as you put it, as a proactive attempt at deterrence. Rox just happened to stick his glass jaw out at the wrong time.<g> Nothing personal.
IQ calls it an agenda, I call it a conceptual box, but we're really talking about the same blind elephant.<g>
It's fair to challenge any well known QCOM fan like Rox who tries to make assertions about the technology or the standards process precisely because they have previously demonstrated patterns of inside the box thinking that have often lead to dead-end discussions in the past.
For example, Rox's statement that IDCC owns a very small part of the air interface is flimsy, unsupported and flies in the face of IDCC's claim in its sworn filings that more than 600 out of their 1,000+ contributions to the 3G standard (5 modes) have been accepted. Clearly, not even IDCC is claiming 100% of the standards, right? But they're not conceding that they have only a very small part either.
You are also right that there are a lot of unknowables in the standards process. Each vendor can still go in so many different technical directions even after the standard is set in stone. That's why I'm skeptical about Rox's approach and its predictable conclusions. How can anybody look at the technical specs without relating it to the multi-million dollar business decisions that have already been made about IDCC's CDMA patent portfolio? Keep in mind that IDCC's CDMA patents are built on the very solid foundations of the Schilling patents and they continue to invest heavily in it so that it can keep pace with Moore's Law.
Below is another good example of this type of inside the box thinking. This is a post by a certain BRational who was then considering a paired trade -- going long QCOM while going short IDCC at the same time -- when IDCC was below $20 and QCOM was near $40. Ouch!
I conclude that either IDCC has gotten ahead of itself and of (its best case) “comparables”, or that QCOM is way below where it should be, or both. My conclusion would be that this seems like a good time to sell one and buy the other—there is even a nice gap between 14 and 17 in IDCC’s recent climb.
http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=18912810
IDCC is a turn-around story. QCOM is a growth and established success story: they have a top notch RF team, they have taken ownership stakes in major internet companies, they have an established PC software arm, an industry leading chip unit, and so much more. IDCC is nothing like QCOM. Comparing the two does nothing to evaluate the recent stock surge of IDCC. Although it does provide for some good message board fodder
http://www.siliconinvestor.com/stocktalk/msg_multireplies.gsp?msgid=18912810
History has yet to record an answer.<g>
There's a significant difference between calling somebody anti-IDCC and pointing out the rigid conceptual box in which a person operates. In this case, the box I clearly referred to was Rox's well-known QCOM-centric view which affects his views of other IPR holders like IDCC. This is not something new. In fact, the shorthand reference for this inside the box thinking is often accompanied by rolled eyeballs and yawns.<g>
That contest is rigged! I coulda' won that contest, hands down, if you had bothered to announce it properly.<g>
My guess would be Motorola because it doesn't have any licensing agreement with IDCC.
I really don't know, Jerry, and I'm too lazy right now to find out. LOL. I've always assumed that the board has full responsibility for the actions of the different committees. No room to hide, you know what I mean?
No room at the inn. Besides, nobody splits their stock anymore because the market has done a fine job of splitting it for almost everybody.<g>
Authorized common shares is 100.0M with 57.2M shares outstanding as of the latest 10Q. Authorized preferred shares is 14,399 with 54 shares outstanding.
He mentioned that they heard it from 3rd party, that is, the potential licensee; that's the reason they can publicly disclosed who is the indemifier.
Who is the indemnifier?
I don't understand the persistent disconnect here. There's a company that's willing to indemnify potential IDCC licensees to discourage them from entering into 3G contracts with IDCC. Why should IDCC negotiate in public or show its plans prematurely?
As usual Rox, you're talking about inside the box-thinking organization men like yourself. Like I said, with the 2G litigation behind them, IDCC can now go after top 5% managerial and technical talent with more creative compensation packages to match their enterprising spirits. The proposed rule expensing options does not outlaw equity incentives, obviously.
By the way, I said the average package is 35,000. Average means higher and lower values. LOL.
R&D, as a group, gets larger packages than the staff, but even then you have different scales within that group. For example, if the top 5% inventor is 3x to 4x more productive than the average inventor then the packages should reflect that too.
I don't agree with the Heartland position, obviously. LOL. It's not even consistent! If they thought that management was "borderline greedy" then why did they vote for the board members up for election? Only the board (compensation committee) has the authority to issue options.
IDCC exited 1995 with outstanding options of 6.4M with an average exercise price of $6.91. IDCC exited 2002 with outstanding options of 10.5M with an average exercise price of $11.86. Everybody except Mickey will probably agree that the IDCC of 2003 is a much different company from the IDCC of 1995.
Fully diluted O/S went from 48.5M shares in 1995 to 56M shares in 2002 -- an increase of 17% -- while outstanding options went from 6.4M in 1995 to 10.5M in 2002 -- an increase of 64%.
However, R&D also went up from $10M in 1995 to $47M in 2002 -- an increase of 370%! This is the key number.
BSW
P.S. How did you get 28%?
Whoaaa, slow down. You're not thinking straight.
First, the options vest over a period of time up to 10 years. You make it sound like it's a one-shot deal.
Second, the new hire only makes money if the stock appreciates over and above the exercise price which is generally equal to the market price at the time of the grant so calm down and do the math. Nobody is giving $1M right away to a new hire. A top notch engineer with an average compensation of $150k to $300K per year can make $1.5M to $3.0M over a decade so structuring part of that compensation in the form of equity is not out of line.
Lastly, with the 2G litigation mostly behind it, we're talking strictly about top 5% managerial and technical talent now. Forget about your average manager or engineer off the street who needs years to become productive. See WiDax example below. As you know, WiDax is the newest Schilling company.
IDCC currently has 216 R&D personnel. The accelerating patent production suggests strongly that IDCC has strenghtened its basic/applied science capabilities since the 1995 Motorola loss. That's fine. What is unproven is IDCC's ability to successfully bring a product to market. The people I want them to get are the people who know how to make the pragmatic trade-offs between engineering perfection and time to market.
As it stands now, the US wireless data market is developing very differently from the European market or the Japanese market. The kind of organization that IDCC has now is optimized for de jure standards-based carrier economics. The rapid growth of WiFi suggests that IDCC needs to get more people who are used to de facto standards-based non-carrier competition so they can take full advantage of a global wireless installed base that is going from 1.1B subscribers in 2002 to north of 1.5B subscribers in 2004.
So after all that, you still haven't answered the simple question: greedy compared to what?
Gary P. Jackson
Vice President - Sales and Marketing
Gary P. Jackson has over 20 years’ experience in enterprise class systems and applications software, focused on building and growing sales and customer satisfaction. Most recently, Mr. Jackson was President and COO of Ozro, a leading developer of Supplier Relationship Management (SRM) software. In addition to driving all customer interface operations, he formulated the strategy that drove rapid recognition by industry analysts of Ozro, as a top provider. Jackson also secured funding and landed key development partner agreements.
Previously, Mr. Jackson served as VP Sales and VP International Operations for Vantive, a market leader in Customer Relationship Management (CRM) software. During his tenure, Vantive grew from a start-up to a company with $160 Million in revenue.
Among the accomplishments: Mr. Jackson created the international strategy of Vantive’s business, created and managed 5 wholly owned subsidiaries, established distribution in 17 countries, developed consulting partner relationships, and shaped Vantive’s formal sales process and post-sales support process. Mr. Jackson drove a strategic task force that resulted in a successful merger with Peoplesoft, a $500 Million transaction.
Mr. Jackson received his BA in Business Administration from Boston College.
http://www.widax-corp.com/company-e2.htm
So what do you think, Joel?
52% For, 48% Against???
Statistical Deadheat??? LOL.
Interdigital (IDCC)
Various Equity Incentive Plans
.
Available for Grant
.
2000 Stock Award & Incentive Plan* 1,144,912
2002 Stock Award & Incentive Plan* 762,500
Employee Stock Purchase Plan (ESSP)* 1,116,805
1999 Stock Plan
(Restricted Stock & Stock Units)** 2,578,936
.
Total Available for Grant 5,603,153
.
*Currently not expensed against earnings.
**Currently expensed against earnings.
Restricted stock and restricted stock units currently have shorter vesting periods (3-5 years) than options (up to 10 years). RS/RSUs are also expensed against earnings while options are not.
If IDCC management were truly greedy, as some of its shareholders believe, wouldn't they be pigging out on these outright grants instead of options?
Greedy compared to what? QCOM? LOL.
Under the 2000 plan, IDCC has 9,748,942 options outstanding and 1,144,912 options available for grant.
Using the corporate average package of 35,000 options, that's enough for about 32-33 new hires. Using a technical employee average of around 75,000 options per engineer that's enough for 15 new hires.
IDCC Headcount
As of 3/20/2003
.
R&D 216
Patent Administration 11
Others - Full-time (staff) 73
.
Total 300
.
Others - Part-time 12
You can't argue out of both sides of your mouth, Rox. You can't argue that IDCC hasn't laid out its business objectives for 2003 and then also argue that you would be surprised that they would even have 50 new hires in 2003.
LOL. Once again we have another clear example of how some of IDCC's own shareholders are just little too eager to paint their management in the worst possible light and hold the company to impossible standards even at the expense of its competitiveness. In this case, the issue is now IDCC's equity incentive plans not approved by shareholders!
SEC Adopts New Disclosure Rules for Equity Incentive Plans
January 7, 2002
In its continuing effort to provide full and fair disclosure to the investing public, the Securities and Exchange Commission voted unanimously on December 19, 2001, to adopt amendments to the disclosure requirements applicable to proxy statements and annual reports under the Securities Exchange Act of 1934.
These amendments enhance disclosure of the number of shares to be issued upon exercise of outstanding options, warrants and rights granted to participants in equity incentive plans, as well as the number of securities that remain available for future issuance under these plans, including plans which have not been approved by shareholders.
Companies must be in compliance with the new disclosure rules for their Form 10-K filed for fiscal years ending on or after March 15, 2002, and for proxy statements for shareholder meetings on or after June 15, 2002.
BACKGROUND
.......Prior to the SEC’s new changes, companies were under no obligation to disclose the total number of securities remaining available for future issuance. Some companies voluntarily disclosed the remaining number of shares that were available for future grant under existing plans in the text or tables of an annual report footnote. Often, however, this number was difficult to find since it was not required to be in a designated location or format.
Additionally, the issue of whether stock option plans should require shareholder approval has been an ongoing debate between companies, institutional investors and concerned individual shareholders. Currently, companies are able to avoid shareholder approval if the stock option plan is “broadly based” or, for companies listed on the New York Stock Exchange, if they use treasury shares to satisfy option exercises.
Prior to the new changes, disclosure rules made it difficult to determine whether a company had adopted a stock option plan without shareholder approval or was using treasury shares to satisfy option exercises.....
HTML (cached)
http://216.239.39.100/search?q=cache:UvFukqeVhPEJ:www.fwcook.com/alert_letters/6-12-02NYSE%26NASDAQA....
Acrobat (PDF)
http://www.fwcook.com/alert_letters/1-7-02%20SECAdoptsNewDisclosure....pdf
The general thrust of the media coverage of the option
expensing issue misses the point, IMO. The issue of
option expensing has never really been about the
accounting. That was decided a long time ago.
It has always been about policy. Policy falls within
the realm of politics. Politics is the art of the possible.
So read on, all ye from small and smaller states.
Look at the way that two leading technology
companies from the nation's most populous state
used this policy to win the recruitment wars and
improve their balance sheets.
EBAY
Selected Financials
FY1998 to FY2002
.
Diluted Net Cash,MktSec Net Proceeds Tax Benefit
O/S Sales Restricted Options Options
.
1998 234M $ 86M $ 78M $ 69M -
1999 273M 225M 777M 713M $ 11M
2000 280M 431M 901M 83M 38M
2001 281M 749M 1.1B 124M 87M
2002 293M 1.2B 1.8B 252M 77M
.
Total $ 1.8B $1.2B $ 213M
.
.
.
QCOM
Selected Financials
FY1995 to FY2002
.
Diluted Net Cash,MktSec Net Proceeds Tax Benefit
O/S Sales Restricted Options Options
.
1995 460M $ 387M $ 579M $ 499M NA
1996 523M 814M 154M 24M NA
1997 575M 2.1B 809M 32M NA
1998 592M 3.3B 303M 50M NA
1999 650M 3.9B 1.7B 1.3B NA
2000 800M 3.2B 2.5B 144M NA
2001 756M 2.7B 2.6B 132M NA
2002 809M 3.0B 3.2B 120M NA
.
Total $ 3.2B $ 2.3B
.
QCOM's use of balance sheet leverage is highly
relevant and instructive to IDCC because, as I
pointed out repeatedly, the IPR business is a
high margin but high friction business.
.
I don't think many people realize that IDCC
entered the final stages of the Nokia
negotiations in late 1998 and early 1999 with
only $52M in cash and an operating cost structure
of $55M! Without the Nokia deal, IDCC would have
generated only $28M in revenue in 1999 and that
wouldn't have been enough to cover its operating
expenses! Unarguably, IDCC could have gotten a
better Nokia deal if it had a better balance sheet
in 1998/1999.
.
"We're finding these companies before anybody else," Barry says. "Once these micro- and small-cap stocks get bigger, the major institutions start buying. Then they get put into an index, the index funds buy them, and that's when we're getting out."
The small-cap fund invests in companies with a market size between $100 million and $1 billion, while its micro-cap counterpart looks for stocks with total market value ranging between $30 million and $300 million................
"...................Company management is not going to tell us anything more than they've told everybody else," he says. "And we don't listen to analysts."
http://cbs.marketwatch.com/news/story.asp?siteid=mktw&dist=mktwmore&guid=%7B74D648A6%2D8E25%....
My $150M-$200M estimate is for 2003 only. I don't see how NEC, Sharp and Matsushita can come up with your minimum of $100M in 2003. Sharp's PHS/PDC sales, for example, are expected to go down as its GSM/WCDMA sales go up. Your 2003 upside is only possible if Sharp's PHS/PDC sales decline much slower than expected and its GSM/WCDMA sales increase much faster than expected, but that appears to be a stretch to me. That is also beyond IDCC's control so why saddle it with unnecessary expectations. Know what I mean?
1Q2003 GLOBAL WIRELESS HANDSET MARKET
By Units and Market share
Source: Gartner
Units Market Share
.
Nokia 39.5M 35.0%
Motorola 16.6M 14.7%
Samsung 11.9M 10.5%
Siemens 8.6M 7.6%
Sony/Ericcson 5.4M 4.8%
LG 5.0M 4.5%
Panasonic 3.9M 3.4%
NEC 2.9M 2.6%
Others 19.9M 16.8%
.
Total 112.7M 100.0%
100% penetration or $1B a year in royalties is a stretch, but recurring royalties of $150M-$200M in 2003 would be very good start for IDCC. It increases the credibility of their claims that they can generate x amount from 2G and at least 2x amount from 3G.
More importantly, however, this baseline revenue level will support more R&D in the kind of competitive wireless environment sketched out in these articles below.
Obviously, the vendor that stands still in this cut-throat wireless environment, loses.
Good-Bye 3G - Hello Wi-Fi Frappuccino
....The goal for T-Mobile and similar wireless providers is a seamless network, where one device hops from the Wi-Fi network to the cellular network with ease. Call it communications convergence: a blissful harmony of technologies, invisible to the consumer, that allows broadband access anywhere, anytime, from any device. Despite significant technical hurdles (not the least of which is a lightning-quick power drain), chipset makers like Intel and Qualcomm are experimenting with built-in Wi-Fi, and dual-action handsets are on their way. Samsung and HP have already shown PDA-based Wi-Fi phones; Motorola has promised one by the end of the year.
http://www.wired.com/wired/archive/11.05/unwired/convergence.html?pg=2&topic=&topic_set=
Beyond Wi-Fi: The 5 next big things
Ultrawideband
This superfast, short distance wireless technology promises data speeds 10 times faster than Wi-Fi. It works by transmitting its signal over a wide swath of frequencies, including licensed bands, at such a low power that it doesn't interfere with the other occupants of the spectrum
Mesh Networks
One of the most highly anticipated technologies, mesh networking turns nearly any wireless device into a router, creating an ad hoc network. Members of a network no longer rely on a central routing hub to distribute data - instead, the information hops from one user's gadget to another until it gets where it's going. Each connected cell phone, PDA, or laptop pitches in a little routing power, forming a spontaneous, temporary wireless cooperative.
Software-defined radios
Software-defined radios can reconfigure themselves automatically to recognize and communicate with each other. This could impose order on the current Babel-like chaos of competing wireless standards (CDMA, GSM, TDMA, and countless others), transforming today's rigid networks into nimble, open systems.
Wireless Personal Area Networks
This short-range technology lets everyone have their own little local wireless network. Within a personal bubble of operating space, PCs, PDAs, mobile phones, and digital music players detect one another and interact. Defined by the Institute of Electrical and Electronic Engineers as a zone of at least 10 meters (32.81 feet) around a person, WPANs could forever eliminate snarls of cable and wire that booby-trap homes and offices. In their place: wearable, smart computing devices that converse on the fly, as well as new mobile digital payment systems and personal security technologies.
Adaptive radio
Adaptive radio is a move in this direction: a technology that lets wireless devices scout out the spectrum wherever they are, avoiding interference by tuning their transmissions to the available gaps. Such devices can modify their power, frequencies, or timing to suit the environment they find themselves in, making such adjustments at occasional intervals or constantly checking and changing as airwave traffic shifts around them.
http://www.wired.com/wired/archive/11.05/unwired/futurewifi.html
So you expect Sharp and other pre-settlement licensees to bring in $80M in revenue in 2003??? That's more than half the recurring revenue of $150M that you expect from Nokia, Sony/Ericsson and Samsung, which had a combined 53% share of the global handset market in 2002.
If 2003 is the baseline year the IDCC wants the street to use to measure future growth and progress then why muck it up with the same MickeyMath that led to overheated billion dollar expectations in the Ericsson case?
Skeptics point out that Nokia paid $31.5 million in royalties to InterDigital between 1999 and 2001, so an increase to $200 million during the next four years, when the licenses expire, seems steep...........
..............Similarly, Samsung Electronics paid $17 million in royalties from 1996 to 2001, making it seem unlikely to bears that it would be willing to pay the $70 million during the next four years that InterDigital anticipates it "could" receive
Samsung joined the BCDMA alliance in 1996 when its global market share was limited to 2G CDMA. Since then its global market share has increased 5x.
Nokia settled with IDCC in 1999 while it was nearly doubling its 1997 market share in a global wireless market
that was increasing its installed base by 5x.
Put simply, Nokia and Samsung combined shipped 24M handsets in 1997. Last year Nokia and Samsung combined shipped 188M handsets.
Global Annual Nokia Samsung Ericsson
Subscriber Handset Market Market Market
YEAR Base Sales Share Share Share
.
1997 200M 115M 19% ~2% 20%
2002 1.1B 408M 36% 10% 6%*
2004** 1.5B 505M ? ? ?
.
*50/50 joint venture - Sony/Ericsson
.
**Piper Jaffrey forecast
http://www.nordicwirelesswatch.com/wireless/story.html?story_id=3153
.
.
Now you have net earnings after tax of $170 million, which may be about $3.00 net earnings per share.
What about operating expenses, Mickey?
R&D accounts for nearly 60% of IDCC's annual expenses. If you're anti-dilution for anti-dilution's sake then you probably don't want R&D to increase.
From the most recent 10Q:
1Q2003
.
Sales & Marketing $ 1.2M 6%
General & Administrative 4.1M 21%
Patent Administration 3.1M 16%
Research & Development 11.4M 57%
.
Total Operating Expenses $19.9M 100%
2002 Total Operating expenses ($78.7M) per share was around $1.41 per share @O/S of 56M shares.
FY2002
.
Sales & Marketing $ 4.3M 5%
General & Administrative 14.5M 18%
Patent Administration 13.2M 17%
Research & Development 46.7M 59%
.
Total Operating Expenses $78.7M 100%
5/28/2003
AMGDATA
Independent Data on Fund Flows & Holdings
Equity funds report net cash inflows totaling $2.8 billion for the four-day week ended 5/28/03 - with most going to International ($2.5 billion), Global ($387 million) and Small Cap Growth ($388 million) sectors.
Equity Income funds report inflows for the 10th consecutive week;
Real Estate funds report the largest inflows ($147 million) since 6/26/02;
International funds report the largest inflows ($2.54 billion) since 5/15/02 with all developed and emerging sectors reporting inflows, the largest going to iShares MSCI Japan Index ($314.7 million);
Taxable Bond funds report net cash inflows of $157 million with most going to Government Bond funds investing in mortgage-backed securities, and International & Global debt ($105 million or 0.4% assets);
High Yield Corporate Bond outflows ($620 mil) are the largest since 1/29/03.
Oh yeah! We have rumble coverage now. LOL! Dow Jones Newswires versus WSJ's Heard On The Street! The winner gets to be warrior chicken for the rest of the year. The loser gets to be poultry.
HEARD ON THE STREET
May 30, 2003
Tech-Bubble Reminder?
InterDigital Shares Soar
By HENNY SENDER
Staff Reporter of THE WALL STREET JOURNAL
In mid-March, InterDigital Communications Corp., which designs and develops wireless technology that it licenses to telephone-handset makers, announced settlement of a longstanding patent-infringement dispute with Ericsson Inc. and Sony Ericsson Mobile Communications AB.
Since then, the stock has been on a tear, as bullish investors have extrapolated positive resolutions for InterDigital in continuing disputes with other handset makers that use the company's technology. In 4 p.m. Nasdaq Stock Market trading Thursday, shares of the King of Prussia, Pa., company fell 18 cents to $24.74 each -- from $6.22 a share in August. Champions say the price could go as high as $40.
But should it?
With the backdrop of a Nasdaq Composite Index that is up 17% so far this year, some critics say InterDigital is more proof the technology bubble may be swelling again. They say unrealistically optimistic expectations support an overvalued price for the shares. Moreover, they point out, some insiders seem to be cynical about the future. During the past 12 months, 15 insiders have sold more than 615,000 shares, with more than half of that coming during the 44% rally since the Ericsson settlement. The company says those sales represent "a modest percentage" of what executives hold.
Still, to the critics, InterDigital is a story that involves more hype than substance, a story more appropriate to 2000 than 2003.
The pact giving rise to the euphoria involves how much InterDigital is owed for technology embedded in the handsets sold by Ericsson and Sony Ericsson, units of Telefon AB L.M. Ericsson and Sony Corp. Counting an upfront payment of $34 million, it gives InterDigital a possible $100 million over four years, according to Rip Tilden, the company's chief operating officer. With a $20 million first-quarter revenue boost from the settlement, the company showed a nearly 80% increase in revenue to $37 million from $21 million a year earlier.
Citing the expectation of similar pacts with other licensees, the company's announcement of the Ericsson pact suggested it "could" receive $200 million in royalties from Nokia Corp. Soon after the mid-March agreement, Tom Carpenter, senior technology analyst with Louisville, Ky., securities firm Hilliard Lyons, wrote that Ericsson, Nokia and Samsung Electronics Co., another licensee, "will generate hundreds of millions in licensing revenue for IDCC in the near term." (Mr. Carpenter owns shares of the company but his firm doesn't.)
Frank Marsala, an analyst with research and brokerage firm Halpern Capital Inc. of Bay Harbor Islands, Fla., who rates InterDigital a "buy," expects the shares could fetch $30 or $35 each after reaching agreement on royalties with Nokia and Samsung sometime this year. He also says InterDigital will have additional royalty revenue once handset makers start making mobile phones incorporating third-generation technology, which he believes could take the share price to $40. Fans also note handset sales hit 116 million units industrywide during the first quarter, higher than estimates, which is good news for InterDigital because royalties are paid on the basis of handsets sold. (Neither Mr. Marsala nor his firm hold shares in the company; nor do investment-banking business with it.)
Ericsson and Sony Ericsson won't comment on the InterDigital estimate of $100 million, noting the pact commits them to an annual fee of $6 million and per-handset royalties. Skeptics point out that Nokia paid $31.5 million in royalties to InterDigital between 1999 and 2001, so an increase to $200 million during the next four years, when the licenses expire, seems steep. Mr. Tilden says the company can't disclose the royalty rate because of confidentiality agreements, but he also adds the company's estimates are conservative. Nokia declines to comment.
Similarly, Samsung Electronics paid $17 million in royalties from 1996 to 2001, making it seem unlikely to bears that it would be willing to pay the $70 million during the next four years that InterDigital anticipates it "could" receive. Mr. Tilden responds that his estimates reflect a different (albeit undisclosed) formula and increased Samsung sales. Samsung representatives couldn't be reached for comment.
Some critics also point to financial-statement matters. Since last year, the percentage of deferred revenue on the company's balance sheet relative to total revenue has fallen, according to research firm Center for Financial Research and Analysis Inc., Rockville, Md. Deferred revenue is a balance-sheet account reflecting upfront royalties paid by licensees, but InterDigital can recognize this revenue on its income statement only when the licensees sell handsets and any other products covered by the licenses, a company spokesman says. "When deferred revenues decline as a percentage of revenues, CFRA raises concern that future revenue growth may slow or that the company has begun to more aggressively recognize revenues that had been previously deferred," a recent research-center report reads.
The company says it was forced to recognize some previously deferred revenue because two Japanese licensees had withdrawn from the business. Mr. Tilden says accounting rules dictate when deferred revenue must be recognized as current revenue.
"The company has been very clear about where things have been booked and why," Mr. Marsala says.
Write to Henny Sender at henny.sender@wsj.com
05/29 2:00P (DJ) =DJ TALES OF THE TAPE: InterDigital Gears For 3G Wireless
Story 4797 (DJDAY, ERICY, IDCC, NOK, Q.SSE, S.ERC, Y.NOK, FI0009000681...)
By Dinah Wisenberg Brin
Of DOW JONES NEWSWIRES
PHILADELPHIA (Dow Jones)--Wireless technology company InterDigital Communications Corp. (IDCC), with the settlement of an important patent dispute behind it, aims to build on its position as the industry looks toward next-generation technology.
The company and analysts believe the resolution of the decade-long case against Swedish cellular-phone giant L.M. Ericsson Telephone Co. (ERICY) is a potentially transformative event that could help InterDigital, which patents inventions used to transmit cellular phone calls, to strengthen its position
in the industry.
Despite a large run-up in the stock since the agreement in March, the two analysts who follow the $1.3 billion market-cap company deem InterDigital a worthwhile investment with room to grow............
http://www.investorshub.com/boards/read_msg.asp?message_id=1052681
There you go again foaming at the mouth, Mickey.
IDCC has probably outperformed more than 90% of the market during the last 5 years -- most certainly 99% of the market during the last 2 years. Yet insider selling is not a major issue in 99% of companies.
Why?
Insider selling is just too unreliable as an indicator of future stock performance. All you have to do is look at IDCC's insider sales during the last 3 years to see that IDCC insiders have consistently sold too soon. Heck, try subscribing to any of the insider tracking services and they will tell you the same thing: insider activity is generally unreliable, but over a long period of time, the activities of certain insiders are worth following because they may provide an incremental trading edge. But even then insider buys are still only slightly more reliable than insider sales.
The only reason that insider selling is an issue with a high beta (4.93) stock like IDCC is because of the irrational reaction of people like you. That irrational reaction has obviously drawn the attention of many traders who are obviously well aware of the fact that the IDCC shares are being distributed from weaker hands to stronger hands.
Face it, Mickey. People like you are the weaker hands, a figure of speech that is certainly not written in stone.
we may be holding IDCC to a higher disclosure standard than their competitors, thereby putting them at a competitive disadvantage.
That's true. Most of the naysayers seem unable to keep themselves from getting in the way of management. I think it's done more out of laziness than out of malice.
IDCC management has quadrupled annual R&D spending since the 1995 Motorola debacle to adapt its business plans to a cut-throat and rapidly changing global market environment yet to this day, we still have people asking what management wants to do with those equity incentives since management already has all the fruits of previous R&D investments. Huh?
There's not much one can do with that point of view.<g>
My manners are fine. Impeccable, even, thank you very much.
People like you just need to work harder if the level of discourse on this board is to go back to the way it was when the geeks ruled and the legal beagles were still pet detectives.<g>
I tried the same approach, Kevin, and only ended up filling in some of the blanks.
1) EMC shipped 2 petabytes (1,000 terabytes) of Centera in the March 2003 quarter after selling 1 petabyte in the December 2002 quarter and a combined total of 1 petabyte in the June 2002 and September 2002 quarters.
2) NENG booked $8.1M in Centera revenue in the March 2003 quarter after booking $15.4M in Centera revenue in CY2002 and $2.0M in CY2001. Centera was officially launched in April 2002 so those numbers include testing and inventory units.
What is still hard to determine is the level of inventory EMC is maintaining for its 40+ software partners.
http://www.emc.com/partnersalliances/partners/centera.jsp
This is the first time that EMC has officially used its software partners as the primary distribution channel for a storage platform.
3) Pricing.
EMC CENTERA LIST PRICES
2002-2003
. Protected Raw
Hardware Software Capacity Capacity
.
Centera v1.0('02) $105,000 $100,000 5TB* 10TB
Centera v2.0('03) 64,000 84,000 4TB** 8TB
.
*RAID 1 (mirroring) only
**RAID 1 and Parity RAID
4) Centera v1.0 was introduced in April 2002. Before Centera v2.0 was introduced in April 2003, EMC reportedly had 150 customers implying an average of 27 TB (presumably raw) in Centera installed capacity per customer.
More later.
Why don't you use some common sense and relate the dilution to the business plan? I have cited several real world examples like QCOM, MRVL, RMBS and ARMHY that clearly show how companies have to dilute their stock to finance their growth. In other words, there is a reasonable trade-off between dilution and growth that companies have to make all the time. And no, if you don't understand the general outlines of the business plan by now then you will probably never understand it through every fault of your own.
As far as I can tell, the naysayers have avoided that clear correlation of those facts in favor of rehashing tired old arguments often devoid of any useful fact.
Hey Kevin! I extracted those numbers from the 10Qs/10Ks. EMC is the single largest customer cited in those filings.
My Centera chronology starts with EMC's FilePool acquisition in the March 2001 quarter. FilePool's software is the basis for Centera software. NENG then received its first order worth $500,000 from EMC in the September 2001 quarter followed by $1.5M worth of orders in the December 2001 quarter and $2.3M worth of orders in the March 2002 quarter. EMC formally rolled out Centera v1.0 early in the June 2002 quarter. They rolled out Centera v2.0 in April 2003.
It's better if you hang out here. All it takes is one nut job with multiple personalites and multiple screen names to mess up the Yahoo boards.<g>
This study provides a useful framework for understanding
the kind of changes that IDCC must continue to make in their corporate culture in order to transition successfully from being just a research-oriented company to also being a product-oriented company.
From an investing point of view, this type of framework is most useful when combined with an understanding of how a company's capital structure supports its operating strategy at different stages of its growth cycle.
Innovators Navigate Around Cliques
May, 2003
What's good advice for enhancing your creativity in business? Cut the umbilical cord to the folks around the office water cooler. Mix it up. Take a class with strangers, seek out ideas from people you don't ordinarily talk to, do anything to get out and mingle more with folks from other professions. Broaden your social horizons, and you just might come up with the next crazy idea that sparks an industry.
Traditional studies on business innovation do not predict whether an entrepreneur will be innovative, says Martin Ruef, assistant professor of strategic management. They predict instead whether an established firm or industry is likely to produce innovations. "I wanted to examine how people become innovative rather than why they reject conventional routines and adopt someone else's innovations," says Ruef. "What leads people to establish organizations that employ radically new routines?"
In 1999, Ruef surveyed Stanford Business School alumni who had started new businesses to find out what lights their fire. He based his study on data from 766 entrepreneurs from a target group of 1,786, including some foreign entrepreneurs. The metrics for innovation included the introduction of new products or services; trademark or patenting activity; exploitation of a new market niche; new methods of production, distribution, or marketing; and industry restructuring.
Looking at entrepreneurs' social networks and their career histories to see what the connection is to innovation, Ruef concludes that the most creative entrepreneurs spend less time than average networking with business colleagues who are friends and more time networking with a diverse group that includes acquaintances and strangers. "Contrary to common assumptions," says Ruef, "the evidence suggests that in many cases strong social ties do not provide significant new information, so it helps not to be as embedded in them."
Ruef has found that disparate information and its transmission are keys to innovation. "Weak ties—of acquaintanceship, of colleagues who are not friends—provide non-redundant information and contribute to innovation because they tend to serve as bridges between disconnected social groups," he says. "Weak ties allow for more experimentation in combining ideas from disparate sources and impose fewer demands for social conformity than do strong ties."
Entrepreneurs who spend more time with a diverse network of strong and weak ties—of family, friends, business colleagues, advisors, acquaintances, and complete strangers —-- are three times more likely to innovate than entrepreneurs stuck within a uniform network. "Diverse networks and sources of information encourage the diffusion of non-redundant information and thus stimulate creativity," says Ruef. In terms of the entrepreneurial team itself, "the more entrepreneurs you have, the more likely you are to have innovation because people come in with different backgrounds and perspectives." Ruef cautions, though, that even if complete strangers spend a lot of time together, the ties among them soon will be the equivalent of strong ties and drown out the benefits of non-redundant information.
Ruef also has found that people tend to be more creative and innovative when they are new to an industry. "When I examined the sources of career experiences," he says, "I found strong evidence to suggest that the longer entrepreneurs have been in the industry in which they seek to make a creative contribution, the less innovative they are." Career tenure is not a bad thing necessarily, he points out, because extensive experience can contribute to more profitable business in other ways. "Veterans just don't come up with wacky or creative ideas that can really spark a new industry.
"The relevance of this study to entrepreneurs," says Ruef, "is that it helps them identify how they can be creative and innovative, which in my mind is a goal for a lot of entrepreneurs, who often seek creativity for its own sake, independently of material gain. The value of the study to society is that it identifies patterns of socialization that may contribute to innovation and wealth creation."
http://www.gsb.stanford.edu/news/bmag/sbsm0305/ideas_ruef_networking.shtml
MARY PETRUSEWICZ
Research Paper:
Strong Ties, Weak Ties, and Islands: Structural and Cultural Predictors of Organizational Innovation, Martin Ruef, Industrial and Corporate Change, 11: 427-49, 2002
Additional Reading:
Burt, Ronald, Social Contagion and Innovation: Cohesion Versus Structural Equivalence, American Journal of Sociology, 92: 1287-1335, 1987
Granovetter, Mark, The Strength of Weak Ties, American Journal of Sociology, 78: 1360-1380, 1973
Getting a Job: A Study of Contacts and Careers, 2d ed., Chicago: University of Chicago Press, 1995
Strang, David, and John Meyer, Institutional Conditions for Diffusion, Theory and Society, 22: 487-511, 1993
That's it?!? You mean to say that all that information was readily available in the sworn filings at the SEC?
Amazing.<g>
I follow several companies that have tried to hold web-only shareholder meetings. You'd be surprised at the kind of people who come out of the woodwork to protest this type of common sense move. Some people just gotta have their stage!<g>