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OT Revlis, I subscribe to the Elliott Wave Financial Forecast.
In their last update Feb20 they predicted a bounce off of Friday's low to something like 800 to 814 in the near term. After that pattern has completed, they expect an intense major leg down which, if it breaks 754, could head towards 600.
If you believe this forecast you might want to sell after the short term correction.
OT --- News regarding the Uptick Rule
S.E.C. Chief Pursues Tougher Enforcement
New York Times:
By STEPHEN LABATON
Published: February 22, 2009
WASHINGTON — Less than a month after becoming the head of the Securities and Exchange Commission, Mary L. Schapiro is moving swiftly to reverse major decisions by her predecessor and to strengthen an enforcement program that missed several major frauds that cost investors billions of dollars.
..........
In the meantime, Ms. Schapiro has outlined an ambitious agenda for the coming weeks. She says she will work quickly to adopt rules to minimize the conflicts of interest at credit-rating agencies that many experts say contributed to the current crisis. She is exploring whether to impose restrictions on short-selling, a type of trade in which an investor profits on stock declines. One idea she is considering is the revival of the uptick rule, a regulation that prohibited short-selling while a stock is declining.
http://www.nytimes.com/2009/02/23/business/23schapiro.html?pagewanted=1&_r=1&partner=MARKETWATCH
IMO yesterday's price action was a BEAR RAID pure and simple. The clue that gives it away was the recent rise of about a Million shares in short interest at last count.
We have been bragging about how well IDCC has been holding up in both good and bad markets. We became over confident that their would be strong support if the stock prices dipped. Even though we knew that we were in a waiting pattern until the next good news came along, hardly anyone believed that the bottom could fall out on us again. However, in case it did happen, many longs, including institutional holders, put protective stop-losses into place.
As is typical near options expiry day the share price was "walked down" on light volume. No one became too suspicious as we have all seen this so many times. In fact it was expected that they might try to PIN $30 and render all of the out-of-the money February options worthless. Standard fare, nothing there. This was expected. However, at 2:30 pm the bottom fell out!
Because we are in a bear market, where a climate of fear was prevalent, and we were having a down day in the Market (DJIA broke 7500), the shorts planned on taking this one step further and cover much of their short interest before earnings were released that had a possibility of an "upward surprise". Many of the stop-losses got triggered and nearly 2 million IDCC shares changed hands on the day.
We will recover from this as many believe the fair value of this stock is $33 or more and will still support it at this level after options expiry day is behind us.
MOO
Congratulations to IDCC for this excellent PR statement!
MO
I like this part the best. TI is touting Interdigital SlimChip MID.
"TI is focused on advancing the mobile user experience, including support for advanced multimedia capabilities, as well as a variety of connectivity options, including 3.5G modem technology such as that offered by InterDigital," said Bill Crean, Strategic Marketing Manager, TI. "The flexible architecture of the OMAP 3 platform allows it to easily connect to InterDigital's SlimChip MID Module. The combination of these technologies provides OEMs with a powerful solution that will foster innovation and drive creative application development."
Now they need to fix the naked-short failed-to-deliver buy in rules as well.
MO
Can someone give an educated guess as to what extent IDCC IP is contained in the Spreadtrum 3200 chipset ? I think that they may have contributions in the TDCMA , HSPDA, power-saving patents, and maybe baseband protocol aspects. And maybe they can sell some engineering support deals as well.
MO
I'm sure that one item on their list of ways to save money might be to delay paying IDCC 3G royalties ! LOL !
MO
When would they be entitled to see them ? Can they ask for them before the hearings begin ?
That's what I meant. They want to peek at the Samsung settlement documents from the "601" case.
Maybe Nokia only wants to see the settlement documents !
In my opinion it is because the ordinate of the graph represents revenues from many sources (not just 3G) divided by the number of 3G handsets. It might go as far as to represent total corporate revenue from all sources.
MO
Micky, I think you are starting to get a handle on product revenues.
Shorts Tear Into Tech With a Vengeance
OT: January 27, 2009 article from 24/7 Wall St. by Douglas A. McIntyre
Shorts Tear Into Tech With a Vengeance (CSCO)(DELL)(NVDA)(MSFT)(ADBE)(ORCL)(QCOM)(BRCM)(NOK)(HPQ)(TXN)(EMC)(JPM)(C)(BAC)(WFC)(GM)(F)(M)(JWN)(HD)(LTD)(WAG)
Short sellers placed large bets against the stock of tech companies for the period ending on January 15, taking a series of positions to gamble that firms like Microsoft (MSFT) and Cisco (CSCO) would be the next sector hit hard by selling.
Shares short in Microsoft rose 18% to 92.4 million. Share sold short in Cisco were up 17% to 61.3 million. The short interest in Dell (DELL) rose 15% to 60.1 million. Shares sold short in Nvidia (NVDA) were up 67% to 43 million.
Shares short in Adobe (ADBE) rose 63% to 12.4 million. The short position in Oracle (ORCL) was up 10% to 49.6 million. Share sold short in Qualcomm (QCOM) rose 12% to 41.8 million, and shares short in competitor Broadcom (BRCM) were up 22% to 23.3 million.
Among tech companies traded on the NYSE, shares short in Nokia (NOK) rose 74% to 38.3 million. The Short interest in Hewlett-Packard (HPQ) rose 29% to 37.2 million. Shares sold short in Texas Instrument (TXN) were up 22% to 39.6 million. The short interest in EMC (EMC) was up 15% to 63.4 million.
Short interest in most big banks was relatively stable. Shares short in Citigroup (C) moved up only 9% to 167.8 million. Shares short in Wells Fargo (WFC) were down 12% to 125.9 million. The short interest in JPMorgan (JPM) was off 3% to 66 million. Shares short in Bank of America (BAC) fell 16% to 96.1 million.
There was no major change in the short interest in the two big car companies. Shares short in GM (GM) were down 10% to 97.3 million. The short interest in Ford (F) rose less than 1% to 270.5 million.
Short sellers increased bets on major retailers. Shares short in Macy's (M) were up 15% to 36.4 million. Shares short in Nordstrom (JWN) were up 26% to 27.4 million. Shares sold short in Home Depot (HD) rose by 10% to 65.1 million. The short position in Limited Brands (LTD) rose 32% to 16.3 million. Shares sold short in Walgreen (WAG) were up 16% to 27.1 million.
Douglas A. McIntyre
Jeffree - please don't give anybody ideas!
The Market dislikes uncertainty.
I regret that we are now having to discuss the pro's and con's of Nokia's new motion. This is likely to introduce some uncertainty in investor's minds and possibly dampen the enthusiasm being generated by our settlement with Samsung.
drbuilder, the comments and calculations were posted by 2001Cobra of the Motley Fool Advisor. They were not my words.
Some of those holding the $30 Calls may wish to exercise those options, if they can, on Tuesday morning should there be a pop in the price above $30.
Revlis, I think it is a good and balanced synthesis of many of the opinions that have been expressed here and in the analysts reports.
From Motley Fool Stock Advisor board:
(also David Gardiner reiterates IDCC as one of his 5 current Top Picks)
2001Cobra:
Hello everyone! I am sorry I haven't been on the boards for a bit. I have been moving and my house is full of boxes. I have a phone line, but no internet. It should be up and running within the next few weeks. In the meantime, I am at the library. Let me post some of my thoughts and give a few projections....
1.) IDCC is the Rodney Dangerfield of stocks. It absolutely gets no respect. None. Economy aside, I can't believe we are sitting at $27/share now that we have signed Apple, Giant, Rimm, iWOW, and now Samsung. We have now locked up 50% of the 3G market and are sitting just above the recommendation price by David and far short of the $35/share we were sporting a few years back just on pure speculation of a Samsung/Nokia signing.
2.) Anyone selling now, or thinking of selling, is stupid. I hate to be harsh, but you would be in my opinion. Do you really think Nokia will not sign? They will, and then IDCC will have 85% of the 3G market locked up and it will then just be a matter of going after the last remaining holdouts.
3.) Truth be told, I am disappointed with this settlement. It was NOT the $600-700M I expected and will drastically change my future shareprice forecast. More on that later. However, this is GOOD news. I would rather have a so-so settlement than go to the ITC and lose. That was a distinct possibility no matter how many cards we felt we had stacked in our favor. There is always that BLACK SWAN sitting out there. This settlement makes it very difficult for Nokia not to pay IDCC royalties on 3G. Damn near impossible I would venture to say.
4.) On the $400M dollar settlement. The 8K was crap. It was confusing to say the least. I think that $400M ends all disputes until 2012. Both 2G and 3G. There has been some discussion that IDCC will also get some future royalties for 3G. I HIGHLY doubt this. If they do, that is gravy. But, I think we all need to assume that $400M covers the whole ball of wax. The biggest problem is we do NOT know what Samsung paid for 2G. Did they pay $180M? Was a certain percentage forgiven? This is crucial to the 3G rate assigned and future revenue forecasts.
5.) Now the revenue forecast. Please see above. This is highly subjective and depends upon the rate. However, I will give it my best shot. If you look at IDCC's last 10K, 3rd Quarter revenue in '08 was $55.1M. We can now add approx $25M per quarter. So, we are up to approx $75M. This is $75M for only 50% of the 3G market. Fast forward to the signing of Nokia. What can we expect? Well, Nokia has TWICE the market share of Samsung. If, and when Nokia is signed, IDCC will have 85% of the 3G market. Although a WAG, I figure Nokia will pay at least $400M to settle because they are already paid in full for 2G and will get a discounted rate from Samsung's. I absolutely think $400M is the LEAST we will get. I cannot envision any scenario where we get less than that from Nokia. So, let's add another $25M per Qrt. We are now earning $100M per Qrt after we sign Nokia. We will likely earn some revenue from signing the last remaining holdouts and we have the product side of the house. I cannot even estimate what that might contribute to the bottom line so I will just assume zero. I am really trying to do WORST CASE here. No pie in the sky stuff....
6.) So, IDCC is now earning a predictable and stable $100M a Qrt (likely more) and will have a decrease in legal fees (I think) which should positively add to the EPS. So, $400M x .35 tax rate equals $260M. Then we have to subtract operating expenses. 3rd Qrt '08 was $42M. That is $168M. I think this will eventually be a lot less, but lets use this estimate anyway. So, that's now $92M. Divided by 43M shares outstanding and you have an EPS of 2.14/share. Now you can apply any multiple you want. 10? 20? 30? Qualcomm's is 18. So, let's use that. That is a shareprice of $38 dollars. In my mind, this company is worth at least that and we have a large margin of safety with the company currently trading under $27. Can you say BUY, BUY, BUY? That's a 40% return.
7.) The biggest question is, will IDCC rise to this price before the S&P and market in general recovers. When will investors and Wall Street get it and start buying shares in this Slam Dunk. Will IDCC out pace the S&P? I hope, and feel, like they will. Nokia should be signed within the year.
8.) IDCC has a lot going for it. It already has $187M in cash and NO debt. It has been aggressively buying back the float over the last two years. In a market where cash is king, IDCC has plenty of it.
I wish I understood why this stock isn't higher. I don't. All I can do is trust in myself and believe the market will come around. Just to let everyone know, I bought another $1K worth of shares today. I know own 440 shares. Waht I would like to see, is a split to add a little liquidity to IDCC and then an annoucement of another share buyback. Although, IDCC may have an aquisition in mind. This is a perfect market to take advantage of a company or product that could add to future EPS.
OK, I have to go. I am not sure when I will be able to get back to the library so it may not be until next week till I return. I hope you found my post useful and beneficial.
E-Trade had this Dow Jones news item:
Samsung To Pay $400M Royalties For InterDigital Licences
Last Update: 1/14/2009 10:55:03 PM
(MORE TO FOLLOW) Dow Jones Newswires
January 14, 2009 22:55 ET (03:55 GMT)
This may have been why Heartland Advisors' holdings in IDCC are down several million shares. Maybe they were writing huge amounts of calls and they got exercised and had to deliver them.
Machine to Machine (M2M) communications (which may include embedded solutions in vehicles) may need Media Independent Handoff (MIH) capability and this is probably some of what iWOW will be offering.
MOO
I am guessing that iWOW is now an IDCC Slim_Chip customer using them in 3G USB Modems.
MO
I didn't see the transactions but could it have been a spread = buy the 30's and sell the 35's to reduce the cost of holding the 30's?
You are right, they could have exercised them at any time. I don't know the pro's and con's of exercising earlier vs later. Maybe, by waiting, they were hoping for a price dip and being able to pick up some of their shares at less than the exercise price. What do you think? Do you think they should buy the call options and immediately proceed to exercise them?
On the flip side, I think that a large proportion of the Call Writers are covered call writers. The large hedge funds like to get their 3% to 5% monthly income by selling ATM next month out calls. You can't get that kind of return in fixed-income investments in today's financial climate.
When, the calls end up in the money, they have to deliver the shares (at $25.00 in this case) which affords them a chance to liquidate some shares without depressing the value of their remaining holdings. Many hedge funds are having to liquidate part of their equities these days to keep up with the large amount of redemptions they are facing.
So, I think your theory that the large number of shorts that will have to buy and "naked" call writers that will have to cover and cause buying pressure for January won't hold if the shorts are the call buyers and the call writers are large holders doing covered calls. They complement each other's objectives without putting price pressure in either direction.
(my opinion only)
I think that many of the Call buyers that did not cash out on Friday by closing their positions were shorts that wanted to cover their short position without overly impacting the stock price. We have seen the recent drastic decline in short positions.
I have been wrong many times before.
Correction - share price was at $26.25.
Possibly arbitrage by a Market Maker. For example I see that the last sale of the Dec 25 options was at $1.20 while the current share price was at $25.25. A Market Maker could pick up a thousand contracts, exercise them and sell the stock at a $.05 per share profit (x 100,00 shares = $5000.00 profit).
I can't believe my eyes. It's now $26.16 an hour-and-a-half before closing. I expected it would trend towards $25.00. Has something happened?
I have observed that, sometimes, the price-depressing activity carries over to the Monday after options expiry. So, if you don't get your buy-in price on Friday, you may get it on Monday.
+ 10 Ho Ho Ho !
I still expect the share price to be close to $25.00 on options expiry this Friday to maximize the profits for the Call Writers and to permit the Call Purchasers (shorts, among others) to acquire stock at $25.00 without pushing up the price.
Sinnet14 - Great logic !!!
By exercising calls, shorts can acquire shares without affecting the market share price. They have been covering systematically for awhile now as evidenced by the large volume of open interest in calls.
The "framework" described below from the CC by Howard Goldberg meant nothing more than a 'favorable climate' for 3G discussions. This favorable climate has not led to anything and, in my opinion, there never was any trigger mechanism in place.
Having said that, now, after settling with Samsung, the time is ripe to resume negotiations with Sony/Ericsson.
"But, more importantly, we're developing a framework of trust and a framework of - a relationship framework and the ability to talk through issues"
I seem to remember an old discussion about the constraint IDCC may have regarding stock splits. Something like they can only issue a maximum of 100 million shares. Therefore they could not do more than a 2:1 split without exceeding the maximum. Any comments from the accountants/attorneys about splits?