Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Bulldzr re royalty dispute being over end devices you said:
...."I do have a related question for Ronnie or other accountants. Many here have speculated the dispute may be over the rate for our chip royalty on the type of device the chip is going into... for instance someone said a $.30 cent rate vs. IDCC wanting $.40. Maybe the rate difference between the Apple i3G vs. the i4G for instance."
I don't think the dispute has anything to do with the end product at all, but with the chip release version being sold. From a repost to Rox as follows:
rmarchma Share Friday, February 25, 2011 12:06:05 PM
Re: Data_Rox post# 312674 Post # of 314195
Rox re the $9m deferred revenue
I think you might be correct that the dispute with Infineon lies with the chip release version and not the specific products that the chips go into. From the CC as follows:
"Charlie Anderson – Dougherty & Company
And then just one more from me. The dispute over the product classes, does that refer to the chip or the end product, like a handset versus tablet?
William J. Merritt
It’s the chip solution.
Charlie Anderson – Dougherty & Company
Chip solution. Okay. Thanks so much."
(My Note: Now whether there is a royalty rate difference between different chip versions or different products that the chips go into, I have no idea. I do believe that IDCC recorded some chip royalty from Infineon in Q3 and Q4 though. Perhaps up to about $2m for each quarter judging by total technology revenues. Therefore, it appears to me that only the "disputed" chip royalties with Infineon are not being recorded into earned royalty revenues, but the "undisputed" chip royalty is. From the Q4 CC:)
"All right. Now, the $10.1 million in tech solutions does that include the same payment as well?
Scott A. McQuilkin
It does. The $10 million or so includes about $8 million of revenue from deals where we were delivering engineering services, which are now substantially complete.
Ron Shuttleworth – M Partners
Right. Now, I know you can’t provide guidance on that, but the trajectory on your tech solutions revenue streams, is that going to go up or down in subsequent quarters. I know you’ve delivered the solution to current customers, are there other customers in the pipe that in which you will be delivering in subsequent quarters? And then the follow on I guess maintenance or whatever fees are associated with the current clients what does that add up to? Does that add up to a declining trajectory in that area or an increase in trajectory?
Scott A. McQuilkin
Yeah. I think at a minimum, you can take the $10 million and assuming that none of that $8 million that we recognized in the fourth quarter repeats itself, you’re down to two. But that doesn’t take into account any new deals that are in the pipeline right now. We’re aggressively going after new deals which would generate revenue very quickly.
From the Q3 10Q as follows:
"Technology solutions revenue in third quarter 2010 of $5.8 million..... The increase in technology solutions revenue was attributable to agreements signed during first nine months 2010, which collectively contributed $3.7 million of revenue in third quarter 2010."
(My note: the remaining difference of $2m in technology revenues in Q4 and Q3, are most probably from the recurring chip royalties, which is almost exclusively Infineon. Which other technology customer could account for the remaining $2m of technology revenues each quarter? Also total revenues from German licensees were $10.3m for the year of 2010. I estimated that $9.6m of this was from Infineon and the other $.7m was from Cinterion. BTW Infineon's estimated revenues did drop off some what in Q3 and Q4, compared to Q1 and Q2).
Slocat re disclosures and earnings estimates you commented:
...."Knowing that the price of the stock would take a big hit in failing to meet its quarterly estimate why would managemnt not disclose the information?"
IDCC only gives guidance as to revenues, but not expenses and earnings. IDCC had not included the disputed deferred revenues in its revenue guidance. Therefore, the analysts missed earnings due to underestimating expenses, not misestimating revenues. However, the actual quarterly revenues and earnings would have been more, if the disputed deferred revenues had been included in earned revenues. IDCC did disclose that information with the earnings press release and CC. (BTW those Q4 expenses that were missed by the analysts were primarily nonrecurring sub-license expenses of $4.6m associated with 4th quarter final deliveries of technology solutions, and $2m associated with an adjustment to the long-term incentive compensation plan).
I wish that IDCC had given a heads-up to the analysts regarding those nonrecurring 4th quarter expenses before the fact. It would have certainly helped them estimate Q4 earnings better. I think IDCC might have learned a lesson from that, and did give a little forewarning in the CC that operating expenses in the 1st quarter of the year run about $4m higher than other quarters during the year. I certainly hope the analysts pick-up on that and include it in their estimates for the 1st quarter earnings. From the CC as follows:
"Going forward, we will continue to aggressively manage our expenses. In the first quarter 2011, we expect that our expenses will not include these non-recurring items mentioned in the release. However, we do expect to see some normal seasonal increases related to personnel and trade show expenses. Of course, expenses associated with intellectual property enforcement will vary in accordance with the level of activity.
Operator
Our next question comes from Ron Shuttleworth of M Partners.
Ron Shuttleworth – M Partners
Good morning, folks. I apologize about my voice, but I’m dealing with a little bit of a cold, so if I’m not clear, please help me and ask for clarity. So I just wanted to confirm that the $6.7 million fee – sort of the sublicense fee, is that in your R&D line item?
Scott A. McQuilkin
There’s two components to that, about 4.6 is a sublicense fee that would be included in the development line.
Ron Shuttleworth – M Partners
Okay.
Scott A. McQuilkin
There is another approximately $2 million or so that relates to an adjustment to the accrual for a long-term incentive plan and that’s split by each of the lines, probably SG&A maybe a million, patent licensing, I would say most of that is probably in development.
Ron Shuttleworth – M Partners
Okay. So if you back out the $4.6 million of R&D from 21.5, you should be in the $17 million range. Is that correct in terms of sort of normalized R&D?
Scott A. McQuilkin
Yes. There is a few other adjustments. I think if you look at that number, it’s probably been running in $16 million to $17 million range, I think. Something in that range is a reasonable kind of normalized level of expenditures for Q4.
Ron Shuttleworth – M Partners
And should we expect that to continue for the next couple of quarters in that range?
Scott A. McQuilkin
I’d say generally yes in terms of the level of resources that we have planned. The only qualifier I’d put on there is at the first quarter of every year we normally have an uptick in our expense levels. That’s due to personnel costs and trade show costs. So vacation accrual, fringe benefit accrual and such go up normally every quarter and we have to merit increases as well. That’s probably a $4 million increase in aggregate and I guess about $2 million or so of that applies to development.
Ron Shuttleworth – M Partners
For Q1?
Scott A. McQuilkin
Yes sir."
eagle re missing estimates you said:
...."Based on Merritt's comment that 5M was for Q4 then that would add $0.11 to the bottom line for the quarter and we would have beat estimates by 7-8 cents instead of missing by 3 cents."
You forgot the income tax associated with $5m of extra revenue. Technically net income would have increased by a net after-tax amount of $3.2m [5m x 64% (100% - 36% income tax rate)] or 7 cents per share (3.2m increased net income / 45.4m shares), not 11 cents, on $5m of additional Q4 revenue.
h48 re the deferred revenue issue:
You are very correct in your comments. I should have said:
"I am fairly certain that the $9m dispute is with Infineon", rather than "we are". That was a bad choice of words on my part.
Now as to why I believe the $9m dispute has to be with Infineon from my following repost:
rmarchma Share Tuesday, March 01, 2011 5:37:00 PM
Re: Data_Rox post# 313355 Post # of 314167
Rox re the $9m deferred being from Infineon
Yes, I'm almost certain that it is Infineon also. Not anything from the 10K, but from the CC as follows:
"Our technology solutions revenue has also been affected by discussions with one of our customers regarding the royalties owed on specific product classes. While this customer continues to pay us the entire amount owed under the agreement, we are deferring revenue recognition on royalties for these product classes until we resolve the discussion. Through December 31, 2010, we have deferred approximately $9 million in related revenue.
Ron Shuttleworth – M Partners
Okay. All right. Now, the $9 million in deferred revenues, that’s a longstanding customer, correct?
William J. Merritt
It is."
Brett Simpson – Arete
Okay. And just looking at your tax (should be tech, not tax) solutions business, if we back out what you sometimes disclose around the same, it look likes your Infineon business has dropped off in the last few quarters and you’ve also suggested that the $9 million deferral is related to tax (tech) solutions, so I’m sort of putting two together, but can you just give us a bit of backgrounds in terms of why we’re seeing this drop-off at Infineon?
William J. Merritt
Well, we kind of gave you the number for Q4 for the IP licensing activities associated with engineering services. So you can back that out and future revenues from that activity will depend on additional deals through the sale of additional services to those customers.
In terms of the deferred revenue that we backed out, we’d say approximately $9 million or so, that reduction came in the third and fourth quarter, so there’s about $4 million or so backed out in Q3, close to $5 million backed out in Q4. So that gives you an idea of the cash that’s coming in that we are not choosing, not to recognize as revenue at this point. Conservatively, I believe that probably it provides a pretty good explanation for why you see that going down over time.
Brett Simpson – Arete
And this is a technology solutions deferral essentially?
William J. Merritt
It is.
Charlie Anderson – Dougherty & Company
And then just one more from me. The dispute over the product classes, does that refer to the chip or the end product, like a handset versus tablet?
William J. Merritt
It’s the chip solution.
Charlie Anderson – Dougherty & Company
Chip solution. Okay. Thanks so much."
(My note: The only long-standing technology solutions customer that could be involved in a $9m dispute for just two quarters has to be Infineon; it can't be anyone else.)
Fish re accounting issues and the $9m deferral, your comments in quotes and bolded as follows:
...."As far as 'cooking the books' (as someone called it earlier today), there are 2 different ways to 'cook the books'.....One way is to overstate earnings or understate expenses to make your results look better than they actually were, had all revenues and expenses be properly accounted for. We have all heard of companies (many no longer in busines) that did this."
Over the years IDCC has been very conservative in its accounting, much preferring to understate earnings and assets, rather than overstate them. Therefore if there is some doubt over the proper accounting treatment of a certain item, they will almost always chose the more conservative approach.
...."A second way is to structure your income so that you look good but not look great.
1. You 'defer' sales (income) into the next quarter (if you haven't received it, its not income);
2. You set up 'reserves' in this quarter for expenses that you will incur in the next quarter (or future);
3. You increase your loss reserves (expense)
You maintain 'cookie jars' that you dip into if you need them or put more accruals into if you have more income than you want to report. I've seen that done in my history of accounting for a certain 'industry'. In the end, it usually comes out in the wash but it helps you to 'level out your results'."
First, IDCC's "deferred" revenues are just the opposite of what you indicated. In IDCC's case, deferred revenues represent monies that have actually been received by IDCC from its licensees that have not yet been earned. Thus, cash receipts from prepayments, advances, and disputed royalties all first go into deferred revenues (a liability account) rather than earned revenues (a revenue account). However, I do understand what you are meaning by deferring income in your general statement above.
As to leveling out results, I think most every company would prefer level over lumpy results, if possible. IDCC did change at least one of its accounting methods in the past to help level-out results. IDCC use to record prepaid royalties and advance royalties as earned income in the quarter received, which caused very lumpy results from quarter to quarter. More than several years ago, IDCC changed its accounting treatment for prepayments and advances. IDCC now treats prepayments and advances as deferred revenue in the quarter received. Then they transfer the earned amount of the prepayments and advances each quarter into earned revenues, based upon the per-unit licensees' quarterly sales reports or time earned for fixed-fee licensees' advances.
....."1. DID THE PAYING PARTY TAKE THE EXPENSE AND THE RECEIVING PARTY DEFER THE INCOME?"
In the case of the $9m disputed royalty, Infineon could have treated the disputed amount as either royalty expense (expense account) or possibly prepaid royalty (an asset). IDCC could have treated the disputed royalty as deferred revenue (a liabilty) or earned revenue (revenue account). I would think that Infineon probably expensed the payment, whereas IDCC chose to defer. How one company treats a given item, does not dictate how the other company has to treat the same item accounting-wise. Infineon would be practicing conservative accounting by expensing the disputed amount, whereas, IDCC would be practicing conservative accounting by deferring the disputed amount.
...."2. IS THE AMOUNT MATERIAL ENOUGH THAT IT WOULD REQUIRE DEFERRAL?
$9 million deferral versus $95.2 million quarterly revenues
$4.5 million per quarter over 2 quarters?
$9 million compared to $394 million in annual revenue?
...Ron, perhaps you (as an accountant) could comment on the MATERIALITY aspect."
I certainly think the $9m was a material amount for the 4th quarter. The $9m total represented almost 10% of 4th quarter revenues, but 17% of 4th quarter earnings per share (13 cents after tax eps impact / 76 cents reported eps). It made a difference as to whether IDCC missed consensus earnings estimates or significantly exceeded estimates. Therefore, it needed to be disclosed. One might argue that the $4m dispute in the 3rd quarter might not be material, but by the time the cumulative amount got to $9m in the 4th quarter, it was a material amount. Since financial reporting is done on a quarterly basis, then materiality has to be determined on a quarterly basis also, even though it may not be material on an annual basis.
...."3. IF IT WERE TAKEN INTO INCOME, WOULD THE REVERSAL REQUIRE RESTATEMENNT OF THEIR INCOME?"
Nope, restatement of earnings would not be required. I explained in an earlier post this morning how things would be treated accounting-wise when the dispute is resolved. It would only impact the given quarter in which the issue is resolved. From that previous post as follows:
If the dispute is subsequently resolved in IDCC's favor, then IDCC will record Infineon's deferred revenues into earned revenues in the quarter of the resolution. IDCC will probably characterize these earned revenues as "past sales" in its various earnings disclosures.
If the dispute is subsequently resolved in Infineon's favor and they really didn't owe the disputed money, then IDCC will -0- out the deferred revenues with a cash refund payment back to Infineon. This would not involve any income/earnings impact to IDCC in the quarter resolved, because the transaction would only involve a liability (deferred revenue) and an asset (cash), but not any revenue or expense. However, had IDCC previously recorded the disputed royalties into earned revenues, rather then deferred revenues, then the hypothetical transaction I just described in the previous sentence would cause a negative impact upon IDCC's earnings when resolved.
Net re the deferred revenue you asked:
...."Ronny, could it be the defer revenues are actually the per-unit (licensees') sales in Q4 that will be recorded as earned revenues in Q1; One Q lag for the Per-unit sales."
We are fairly certain that the $9m dispute is with Infineon over certain chip royalties. Infineon is a per-unit chip licensee. Therefore, its chip sales reports to IDCC lag by one quarter, the same as every other per-unit licensee. The dispute evidently arose over some of Infineon's chip sales in the second quarter, which were reported and paid to IDCC in the 3rd quarter. The dispute continued with some of Infineon's chip sales in the third quarter, which were reported and paid to IDCC in the 4th quarter.
The deferred revenue treatment arose because IDCC chose to not record Infineons' disputed royalties, which they nonetheless paid to IDCC, as earned revenues. If it is subsequently determined that Infineon really didn't owe the disputed revenues, then IDCC will have to refund the disputed monies back to Infineon. I think IDCC will continue to defer any future royalty receipts from Infineon over sales of the disputed chips, until such time as the dispute is finally resolved.
If the dispute is subsequently resolved in IDCC's favor, then IDCC will record Infineon's deferred revenues into earned revenues in the quarter of the resolution. IDCC will probably characterize these earned revenues as "past sales" in its various earnings disclosures.
If the dispute is subsequently resolved in Infineon's favor and they really didn't owe the disputed money, then IDCC will -0- out the deferred revenues with a cash refund payment back to Infineon. This would not involve any income/earnings impact to IDCC in the quarter resolved, because the transaction would only involve a liability (deferred revenue) and an asset (cash), but not any revenue or expense. However, had IDCC previously recorded the disputed royalties into earned revenues, rather then deferred revenues, then the hypothetical transaction I just described in the previous sentence would cause a negative impact upon IDCC's earnings when resolved.
Infinite re the $9m deferral
I agree that the deferral is certainly puzzling. However, I doubt the decision to defer was made at the last minute. As you stated, IDCC had known about Infineon's dispute for at least two quarters, since it began back in the third quarter. Therefore, there was plenty of time to look into the merits of Infineon's dispute and to also run it through IDCC's auditors.
Even though Infineon was in some way disputing whether they actually owed the disputed chip royalties, they still nonetheless mailed the royalty checks to IDCC for two consequtive quarters including the disputed amounts. This implies to me that although there might be something to Infineon's dispute, there is a greater probability/possibility that they really owe the money to IDCC, since they are still PAYING. BTW I think that some of the Infineon chip royalty is not in dispute, and that the part not in dispute, is still being recorded as earned revenue by IDCC. Thus, I believe that only the disputed amounts are being deferred.
Jim re the $9m deferred you asked:
...."Earnings. I may have missed the post but if the 9 million wasn't deferred what would have IDCC beat estimates by? Would it be about 17 cents?"
IDCC's Net Income would have been $5.8m more [$9m x 64% (100% - 36% income tax rate)] or 13 cents per share more ($5.8m increased net income / 45.4m diluted shares outstanding). Since IDCC was 3 cents under consensus estimate, they would have been 10 cent over consensus estimate had IDCC recorded the $9m into earned revenue in the 4th quarter, rather than deferred revenue.
It appears that IDCC received the money from Infineon, but with a stipulation that Infineon/Intel was not sure that they actually owe the money to IDCC. This is very unusual, in that in a most disputes, the licensee would not send in the "disputed" money at all. Evidently because there is some probability/possibility that Infineon might not actually owe the disputed money, IDCC chose not to record it as earned revenue. It seems to me that the accounting for this transaction was ultra-conservative though.
Questions from the 10K about licensing activity
First some necessary background info from the 10K:
"2010 Patent License Activity
We entered into a non-exclusive, non-transferable, worldwide, royalty-bearing, convenience-based, patent license agreement with Casio Hitachi Mobile Communications Co., Ltd. (“CHMC”) covering the sale of end-user terminal devices designed to operate in accordance with 2G and 3G Standards for a term ending June 1, 2010, the date of the completion of CHMC’s merger transaction with NEC Corporation.
We entered into a non-exclusive, non-transferable, worldwide, royalty-bearing, convenience-based, patent license agreement with Enfora, Inc. covering the sale of M2M modules and devices and PC Cards designed to operate in accordance with 2G and 3G Standards for a designated term.
We expanded our non-exclusive, non-transferable, worldwide, royalty-bearing patent license agreement with Inventec Appliances Corp. (“IAC”) to include IAC’s Chinese subsidiary, Inventec Appliances (Jiangning) Corporation, for a designated term. The expanded agreement covers the sale of certain wireless products, including products designed to operate in accordance with 2G and 3G cellular standards and products sold in China.
We entered into a non-exclusive, non-transferable, worldwide, royalty-bearing, convenience-based, patent license agreement with SII Mobile Communications Inc., a subsidiary of Seiko Holdings Corporation, covering the sale of M2M modules designed to operate in accordance with 2G and 3G Standards and PC Cards designed to operate in accordance with certain 3GPP HSPA specifications for a designated term.
We also entered into a number of other non-exclusive, non-transferable, royalty-bearing, patent license agreements in 2010, some of which were in connection with technology transfer agreements."
"Patent License Agreements
In first quarter 2010, we entered into a worldwide, non-exclusive patent license agreement with Casio Hitachi Mobile Communications Co., Ltd. (“CHMC”). The patent license agreement covers the sale by CHMC of all wireless end-user terminal devices compliant with 2G and 3G cellular standards through June 1, 2010. In 2010, we recognized revenue totaling $33.0 million, including $28.8 million related to past sales, in connection with the CHMC agreement."
The next paragraph in the 10K is where I have my questions:
"Also in 2010, we signed three additional patent license agreements and expanded an existing patent license agreement. In connection with these agreements, we have received or will be due a total of $47.3 million. In addition, in 2010, we entered into a number of non-exclusive, non-transferrable, royalty-bearing patent license agreements in connection with technology transfer agreements."
My Questions:
(1) Does the "total of $47.3m" also include the $33m from Casio Hitachi in the preceding paragraph, or is the $47.3m a completely separate amount?
(2) Is it correct to assume that the $47.3m total only includes patent license agreements, and NOT any technology transfer agreements? (If so, then Beceem would be excluded from the $47.3m total).
(3) It appears that Inventec is the "expanded" license. Who are the three additional patent licenses agreements signed in 2010 with that could generate either $47.3m or $14.3m, if Hitachi Casio's $33m is included in the $47.3m total? Certainly not Enfora and SII Mobile, the only other two new patent license agreements mentioned in the 10K.
(4) If this $47.3m total also involves renewed licenses with Kyocera and possibly Lucent, and the amended fixed-fee licensee who increased its fixed amount by $1.5m per quarter, then why can't IDCC mention them by name under the 2010 Patent Licensing Activity section of the 10K?
Rox re the NEC/Casio/Hitachi merger
"NEC, Casio and Hitachi Merger
As noted here last spring, 3 major players in the handset business are finally - officially - coming together under one roof, Eng: http://bit.ly/a8gPzQ
NEC Casio Mobile Communications Ltd., the joint venture to be launched in June by NEC Corp., Casio Computer Co. and Hitachi Ltd, aims to become the dominant player in the domestic mobile phone market in fiscal 2012 while also increasing its presence in promising overseas markets, the company said.
The new company will merge the three firms’ handset manufacturing businesses. It will be a consolidated subsidiary of NEC, which will hold a stake of about 70 percent in the new firm, with Casio holding 20 percent and Hitachi about 9 percent.
The three companies’ respective brands will be retained for the time being. The new firm hopes to capitalize on the firms’ respective expertise in product development. NEC is adept at making thin handsets, Casio is known for its high-precision cameras, and Hitachi is credited for its high-resolution displays.
According to the business strategy, NEC Casio hopes overseas markets will account for 40 percent of its total sales in fiscal 2012. The company plans to focus on boosting sales abroa, especially in North America, where Casio already has made inroads. It will consider entering markets in Europe and Australia. Via: Yomiuri Shimbun
Posted: 31 May 2010"
http://wirelesswatch.jp/2010/05/31/nec-casio-and-hitachi-merger/
glenny re new Chinese chip companies signed in 2010
IDCC licensed two new Chinese chip companies in 2010: CapiSemi in Q2, and an unnamed Chinese company in Q3. These two Chinese chip companies generated $6.2m of revenues to IDCC in 2010.
From the Q3 10Q as follows:
"Technology Solutions
In third quarter 2010, we entered into a technology license agreement to provide our SlimChip TM 2G and 3G modem technology to a mobile chipset manufacturer in mainland China. Under the non-exclusive, royalty-bearing technology delivery agreement, InterDigital will license a dual mode core with 2G and 3G physical layer — inclusive of HSPA, compliant with the UMTS 3GPP Release 6 standard — and provide engineering support. InterDigital will receive milestone-based payments and will be compensated on a per-unit royalty basis on sales of products containing the delivered technology.
From the Q2 10Q as follows:
"Technology Solutions
In second quarter 2010, we entered into a strategic relationship for 3G technology transfer and a licensing agreement with Capital Semiconductor Limited (“CapiSemi”), whereby we will deliver our SlimChip modem core for integration into CapiSemi’s chips for 3G mobile devices. We will also provide comprehensive engineering support for the efficient integration of the SlimChip modem core into CapiSemi’s products for the 3G cellular market.
Breakout of IDCC's 2010 Revenues
Total Revenues = $394.5m
Past Sales = $41.3m (Casio Hitachi= $29m, Kyocera= $4.9m, True-Up Audit= $6.7m, Other= $.7m)
Technology Solutions = $24.3m (New 2010 Tech licensees= $14.7m: Capisemi and another new unnamed Chinese Chip Company $6.2m, Beceem $8.5m, including $4.3m termination fee; Infineon= $9.6m)
Fixed-Fee royalty of $195.8m as follows:
Samsung ...$102.8m ($25.7m per quarter)
LG .........$57.4m ($14.35m per quarter) Expired 12/31/10
Pantech....$15.6m ($3.9m per quarter)
Apple......$8.4m ($2.1m per quarter)
Amended fixed-fee License 2nd qtr...$3.5m (Q2:$.5m, Q3:$1.5m, Q4:$1.5m)
Lucent ....$2.8m ($700,000 per quarter)
Unidentified fixed-fee Licensee $5.3m ($1.35m per quarter, arising from Q3, 2008 conversion from per-unit to fixed-fee license)
= Subtotal Fixed-Fee Licensees....$195.8m
Per-Unit royalty of $133.1m as follows:
RIM.... $38.8m (Q4 actual: $10.4m + other 3 quarters estimated: $28.4m = Canadian revenues)
Sharp estimated.....$37.1m (Q3 actual: $10.1m, other 3 quarters estimated: $27m)
Casio Hitachi....$4.2m ($33m total - $28.8m past sales). Now part of NEC.
Other Japanese per-unit licensees....$46.1m (includes NEC, Panasonic, Toshiba, Kyocera recurring; $121.1m total Japan
- $37.1m Sharp estimated - $33m Casio/Hitachi - $4.9m Kyocera past sales)
Taiwan per-unit licensees....$21.6m (includes HTC, Quanta, Arima, Inventec, Asustek)
Other per-unit estimated...$1.5m
*Less: true-up audit (6.7m) and other unidentified past sales (.7m) -7.4m
*Less: unidentified fixed-fee licensee -$5.3m
*Less: amended fixed-fee licensee -$3.5m
= Subtotal Per-Unit Licenses....$133.1m
Total Revenues....$394.5m
*these subtractions from the per-unit total are necessary to keep from double-counting these amounts. I now believe that these unidentified revenue sources are from licensees in Japan and/or Taiwan. Since I used the totals for Japan and Taiwan in my per-unit calculations, they have to be subtracted because they were previously included in the unidentified past sales number and in the unidentified fixed-fee numbers.
A further reconciliation of 2010 revenues to the chart of revenues by country in the 10K:
Korea....$175.6m (Samsung: $102.8m; LG: $57.4m; Pantech: $15.6m)
Japan....$121.1m (Sharp estimated: $37.1m; Casio/Hitachi: $33m; Kyocera past sales: $4.9m ; all other Japanese licensees: $46.1m)
Canada....$38.8m (RIMM)
Taiwan....$21.6m (IDCC has never furnished any info to break-out this total among the various Taiwan licensees. I would think that HTC provides the greatest revenue amount from among the Taiwan licensees)
*US....$18.9m (Apple: $8.4m; Beceem: $8.5m??; Lucent: $2.8m)
Germany....$10.3m (Infineon: $9.6m; Cinterion?: $.7m)
China....$6.2m (Capisemi and unnamed Chinese chip maker in Q3)
*Other Europe....$1.9m (unsure could be Phillips/ST Ericy or some portion of Lucent/Alcatel)
Other Asia....$.1m (very insignificant only $100,000)
Total Revenues by Licensee’s Country....$394.5m
I’m having some problems reconciling US revenues to the component licensees for both 2010 and 2009. I think 2009 US amounts should be Apple at $8.4m and Lucent at $2.8m = $10.6m versus the US chart total of $9.4m for 2009, or a $1.2 difference. I think 2010 US amounts should be Apple at $8.4m, Beceem at $8.5m, and Lucent at $2.8m = $19.7m, or a difference of $.8m from the $18.9m chart total.
Why I think Beceem’s 2010 revenues were $8.5m linked as follows:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=60458552
I think perhaps Lucent’s $2.8m annual fixed-fee revenue is somehow being split between the US and "Other Europe" due to Lucent’s parent company now being Alcatel (French). However all of Lucent’s annual $2.8m is not going into “Other Europe”, because “Other Europe” only totaled $1.9m in 2010 and $1.2m in 2009. Also I believe IDCC is getting some royalty from Philips/ST Ericy, which would be classified as other Europe too.
OT Jim thanks for the kind words, much appreciated. There are MANY posters on this forum that provide very valuable information on IDCC and the wireless industry, certainly not just me and some others. I've said on several occasions that I think you have created one of the best investment forums on the entire web.
I know that people will get into the "pissing matches" that drive you crazy and distract from the stated goals of this forum. However, that's just part of our human nature, especially when one disagrees with another's opinion. I know that over the years I have got into some very heated debates and arguments with other posters over numerous issues. When people lashed out at me, I lashed back at them. I suppose you have to take the good with the bad. Hopefully, we will all try to increase the good and decrease the bad, and make this forum an even better place to learn and to share.
drweinO re the $9m deferred revenue with Infineon
I tend to agree with most of what you are staying in your referenced post. It appears that IDCC received the money from Infineon, but with a stipulation that Infineon/Intel was not sure that they actually owe the money to IDCC. This is very unusual, in that in a most disputes, the licensee would not send in the "disputed" money at all.
You concluded with the following
...."Do you agree that there is a potential downside, possibly of significant proportions, ($9 million over two quarters is serious money), if IDCC is in the wrong?"
Well I would tend to agree that losing chip royalties from Infineon on the newer version of 3G chips would be pretty significant. However on the other hand, it appears that if Infineon owes on the newer chips, then there would be significant revenue of approximately $5m per quarter due from Infineon. You have to look at both sides of the coin.
BTW the best explanation that I have read re this dispute with Infineon is from Data Rox reposted as follows:
Data_Rox Share Friday, February 25, 2011 8:11:37 AM
Re: Rakitno post# 312624 Post # of 313393
Rakitno - we need to remember that the IFX royalty to IDCC is based upon the sale of the Comneon protocol stack that is used with the baseband, not the baseband itself. Our stack development work with Comneon ended in 2008 (per the company) with the release 6 stack.
Since last Summer when Comneon announced their release 7 stack.... I've been curious as to the treatment of our arrangement with them (and thus our royalty). We've also seen recent releases from the Intel Wireless group that indicates release 8 is coming. Janet's reply on the topic last year....that you can't do release 7 without release 6 ....leaves some real room for interpretation IMO.....and is probably the point of contention.
I'm sure Intel was happy that they got their $4.6M sublicense dollars from IDCC in Q4 for the IFX 2G portion passed through in one of IDCCs recent completed projects (Beceem, CapiSemi)....but I think there will be further refinement to the ongoing compensation.
2010 revenues from Infineon should include some 46M iPhones, I think around 6M 3G iPads, Samsung Galaxy S and Tab (3GSM versions), maybe a bit of LG, Panasonic, etc.
IMO, it's not unreasonable to assume that the $9M in dispute would be from IFX's reporting in Q3 and Q4 2010 (of certain units with Release 7 stack vs release 6).....when you view the growth of the market they've been covering, and their historical revenues recorded by IDCC.
From IDCC's reporting - total revenues from Germany ....Infineon is the only one I can think of there with exception of maybe a small payment from Cinterion in Q4 of 2009
2007 - $1.255M
2008 - $6.106M
2009 - $10.393M
All JMO
Rox re the $9m deferred being from Infineon
Yes, I'm almost certain that it is Infineon also. Not anything from the 10K, but from the CC as follows:
"Our technology solutions revenue has also been affected by discussions with one of our customers regarding the royalties owed on specific product classes. While this customer continues to pay us the entire amount owed under the agreement, we are deferring revenue recognition on royalties for these product classes until we resolve the discussion. Through December 31, 2010, we have deferred approximately $9 million in related revenue.
Ron Shuttleworth – M Partners
Okay. All right. Now, the $9 million in deferred revenues, that’s a longstanding customer, correct?
William J. Merritt
It is."
Brett Simpson – Arete
Okay. And just looking at your tax (should be tech, not tax) solutions business, if we back out what you sometimes disclose around the same, it look likes your Infineon business has dropped off in the last few quarters and you’ve also suggested that the $9 million deferral is related to tax (tech) solutions, so I’m sort of putting two together, but can you just give us a bit of backgrounds in terms of why we’re seeing this drop-off at Infineon?
William J. Merritt
Well, we kind of gave you the number for Q4 for the IP licensing activities associated with engineering services. So you can back that out and future revenues from that activity will depend on additional deals through the sale of additional services to those customers.
In terms of the deferred revenue that we backed out, we’d say approximately $9 million or so, that reduction came in the third and fourth quarter, so there’s about $4 million or so backed out in Q3, close to $5 million backed out in Q4. So that gives you an idea of the cash that’s coming in that we are not choosing, not to recognize as revenue at this point. Conservatively, I believe that probably it provides a pretty good explanation for why you see that going down over time.
Brett Simpson – Arete
And this is a technology solutions deferral essentially?
William J. Merritt
It is.
Charlie Anderson – Dougherty & Company
And then just one more from me. The dispute over the product classes, does that refer to the chip or the end product, like a handset versus tablet?
William J. Merritt
It’s the chip solution.
Charlie Anderson – Dougherty & Company
Chip solution. Okay. Thanks so much."
(My note: The only long-standing technology solutions customer that could be involved in a $9m dispute for just two quarters has to be Infineon; it can't be anyone else.)
Olddog re Beceem's possible revenues
After some more research in the 10K and 10Qs, I'm now inclined to agree with you and Rox that Beceem's revenues for 2010 is more than the $4.3m termination fee in the 4th quarter. I now think Beceem's recorded revenues for 2010 could probably be $8.5m ($14.7m technology revenues from new technology licensees signed in 2010 - $6.2m total 2010 China revenues, composed of Capisemi in Q2 and a new unnamed Chinese Chip maker in Q3. There were no China revenues and licensees in 2009.) If Beceem, a US company, total revenues for 2010 does in fact equal $8.5m, then that may also blow my theory that Apple was the licensee that increased its fixed fees in 2010.
From the 10K as follows:
"Modem IP
In 2010, we entered into several strategic relationships under which we delivered our SlimChip modem core for integration into our partners’ chips for 3G and multimode mobile devices. In connection with these relationships, we also provided engineering support for the efficient integration of the SlimChip modem core into our partners’ cellular products. During 2010, we recognized $14.7 million of technology transfer and engineering services revenue in connection with these agreements.
The increase in technology solutions revenue was attributable to technology solutions agreements signed during 2010, which collectively contributed $14.7 million of revenue in 2010."
(My note: the new technology agreements signed in 2010 were with Beceem in Q1, Capisemi (a Chinese chip company signed in Q2), and an unnamed Chinese chip maker signed in Q3).
From the Q3 10Q as follows:
"Technology Solutions
In third quarter 2010, we entered into a technology license agreement to provide our SlimChip TM 2G and 3G modem technology to a mobile chipset manufacturer in mainland China. Under the non-exclusive, royalty-bearing technology delivery agreement, InterDigital will license a dual mode core with 2G and 3G physical layer — inclusive of HSPA, compliant with the UMTS 3GPP Release 6 standard — and provide engineering support. InterDigital will receive milestone-based payments and will be compensated on a per-unit royalty basis on sales of products containing the delivered technology.
The increase in technology solutions revenue was attributable to agreements signed during first nine months 2010, which collectively contributed $3.7 million of revenue in third quarter 2010."
From the Q2 10Q as follows:
"Technology Solutions
In second quarter 2010, we entered into a strategic relationship for 3G technology transfer and a licensing agreement with Capital Semiconductor Limited (“CapiSemi”), whereby we will deliver our SlimChip modem core for integration into CapiSemi’s chips for 3G mobile devices. We will also provide comprehensive engineering support for the efficient integration of the SlimChip modem core into CapiSemi’s products for the 3G cellular market.
In first quarter 2010, we entered into a technology transfer and license agreement with Beceem Communications Inc. (“Beceem”). Beceem was granted non-exclusive, worldwide licenses to certain 2G and 3G signal processing technologies to develop, implement, and use in multimode 4G chips.
Technology Solutions
Technology solutions revenue in second quarter 2010 of $6.1 million more than doubled from $2.2 million in second quarter 2009 due to total contributions of $3.1 million from customers added during first half 2010, Beceem Communications Inc. (“Beceem”) and Capital Semiconductor Limited (“CapiSemi”)."
Rox re US revenues of $18.9m
Last year's US revenues were $9.4m, of which $8.4m was from Apple. I'm now almost certain that Apple's license was amended in the second quarter of 2010, which raised its fixed-fee from $2.1m per quarter to $3.6m per full quarter. My attempt at reconciling to the $18.9m US revenues for 2010 as follows:
Apple = $11.9m (Q1:$2.1m, Q2:$2.6m, Q3:$3.6m, Q4:$3.6m)
Beceem/Broadcom termination fee = $4.3m
Lucent = $2.8m ($700,000 per quarter x 4)
Total US = $19m
Although, Lucent is now owned by French company Alcatel, I think that IDCC still classifies Lucent as US revenues, or IDCC is splitting Lucent between US and "Other Europe". "Other Europe" has to include Phillips/ST Eric, as IDCC is receiving chip revenues from them. Since the total of "Other Europe" is only $1.8m, then all of Lucent's revenues of $2.8m can't be classified in "Other Europe", perhaps some or none. (BTW I agree with you that Kyocera's revenue is being classified as Japan, not US).
The following PR previously furnished by Olddog, substantiates the Beceem termination fee:
"KING OF PRUSSIA, Pa.--(BUSINESS WIRE)-- InterDigital, Inc. (NASDAQ: IDCC) today announced financial guidance for fourth quarter 2010. InterDigital® expects fourth quarter 2010 revenue to be in the range of approximately $92 million to $94 million. This range includes approximately $4.3 million in technology solutions revenue associated with a modem core customer whose agreement is expected to terminate as a result of the pending acquisition of that customer by a third party."
The following reposts, provide additional info as to why I'm now virtually sure that Apple increased its fixed fee.
rmarchma Share Saturday, October 30, 2010 8:02:45 AM
Re: rmarchma post# 297980 Post # of 308735
Could increase in fixed-fee revenues be Apple
From the latest 10Q as follows:
...."The increase in fixed fee amortized royalty revenue was driven by a full quarter of revenue from our September 2009 patent license agreement with Pantech, compared to a partial quarter of revenue in third quarter 2009, and our second quarter 2010 amendment to our patent license agreement with an existing customer."
Excerpt from my referenced post as follows:
...."(5) Quarterly fixed-fee revenues of $49.6m have increased from previous quarters. Fixed-fees were $48.1m in the last quarter of 2009 and the first quarter of 2010, and $48.6m last quarter. Evidently there is a new fixed-fee licensee that has not yet been disclosed by IDCC, or an existing licensee's fixed-fees got increased, which would be unusual and unique."
This is the first time to my knowlege that an existing IDCC fixed-fee contract got amended and the fixed royalty fee increased. This explains the unidentified $.5m increase in the second quarter 2010 for a partial quarter, and a total $1.5m increase for a full third quarter ($49.6m total current fixed fee - $48.1m base fixed fee first quarter 2010).
Now as to the possible identity of this existing fixed-fee licensee who amended and got increased by $1.5m per quarter, I think it's a good chance this could be Apple. I doubt it is Samsung, who is a fairly recent licensee. I doubt it is LG whose license comes up for renewal on Jan. 1. LG had a threshold provision, but that was in the existing contract, ie the license would not need to be "amended". I don't think it is Pantech, whose license already includes LTE. (BTW one possible way an existing fixed fee license might be amended is to include an additional standard, such as LTE, that is not part of the original fixed-fee license).
I seriously doubt that the amended fixed-fee license is with Lucent, whose license expires at the end of this quarter. If it were Lucent, it would be a license "renewal" rather than a license "amendment". It can't be Kyocera, who renewed its license as a per-unit license rather than a fixed-fee license. That only leaves two more possibilities: Apple and the previously unidentified fixed-fee licensee.
The unidentified fixed-fee licensee was an existing per-unit licensee, who switched to a combination fixed-fee and per-unit license in the third quarter of 2008. The name of this particular licensee was never identified by IDCC. The fixed-fee part of this unidentified licensee is $1.4 per quarter. I can't rule out this particular licensee, as they may have amended their license a second time to drop the per-unit portion and go exclusively fixed-fee. If so, it would increase this unidentified fixed-fee licensee to $2.9m per quarter.
The other viable possibility is that Apple amended its fixed-fee license from $2.1m per quarter to $3.6m per quarter. They might have added LTE to the existing license, or there may have been some other provision in the license that triggered an amendment. As everyone knows, I have battled many posters over this Apple license being fixed-fee at only $2.1m per quarter for a long time. Now I will be one of the first to admit that finally at last the Apple license MIGHT currently be more than the initial fixed-fee amount.
rmarchma Share Wednesday, February 02, 2011 8:23:36 AM
Re: The Count post# 308747 Post # of 313214
Count thanks for the kind remarks. As to whether or not Apple is definitely the fixed-fee licensee that amended its license, resulting in an increase in the fixed fee amount, I think should be readily determinable after the Annual 10K report comes out. Hopefully, IDCC will once again break-out its total revenues by country. If so, then the key to unlock the mystery re Apple will be in the US revenue amount.
A recap of fixed-fee licensees and fixed amounts per licensee for 2010 linked as follows:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=60268167
Rox re the Lucent expiration date
I'm not sure where I got that Oct 1, 2010 Lucent expiration date from. I quickly looked back at the 2005 10K and couldn't find any exact expiration date re Lucent. I might have just assumed it expired in October since the license apparently started in November 2005, and was for approximately 5 years.
Rox re Lucent
If a fixed-fee contract expires within a quarter, then the fixed-fee amount is prorated based upon the number of actual days that the license was in effect during that particular quarter. The same type of proration occurs when a fixed-fee license is intially signed also. That's why Samsung's fixed-fee license had a lower prorated fixed amount in its initial first quarter than any subsequent quarter. In regard to Lucent, it appears to me IDCC earned a full quarter of fixed-fees in the fourth quarter amounting to $700,000, the same as the third quarter. Therefore, it implies to me that the Lucent license was in effect during the entire fourth quarter.
Rox re Lucent being a current licensee you said:
...."We (Tantivy) had a license with Lucent in 2005 for CDMA2000 infrastructure that expired last year, maybe something new will happen?"
The Lucent license was set to expire on Oct.1, 2010. However, I think Lucent renewed at the same fixed-fee amount of $700,000 per quarter. The reason I believe this is because IDCC's total fixed-fee revenue was exactly the same $49.6m in both the third quarter and the fourth quarter of 2010. Therefore, each fixed fee licensee in the third quarter had to extend into the fourth quarter also to reach the same exact amount.
I know the transcript shows Merritt using the term "was" instead of "is" in re to both Lucent and Alcatel. The transcript could be wrong, or Merritt could have just said the wrong verb tense re Lucent, since Alcatel definitely "was" a licensee but is one no longer. When there is a conflict between words and numbers, I go with the numbers. A recent repost of mine on IDCC's 2010 fixed-fee revenues as follows:
rmarchma Share Thursday, February 24, 2011 9:54:29 AM
Re: None Post # of 312753
IDCC's 2010 fixed-fee revenues by quarter and licensee
From the 4th quarter earnings press release as follows:
...."Fixed fee royalty revenue of $49.6 million in fourth quarter 2010 increased $1.5 million, or 3 percent, over fourth quarter 2009......Fixed fee royalty revenue of $195.8 million in 2010 increased $14.1 million, or 8 percent, over 2009, primarily due to amortizing fixed payments from 2009 agreements with Samsung and Pantech over a full year in 2010 compared to a partial year in 2009."
The First Quarter 2010 total fixed-fee of $48.1m is composed of the following licensees:
Samsung ...$25.7m per quarter
LG .........$14.3m per quarter
Kyocera......0
Apple......$2.1m per quarter
Pantech....$3.9m for a full quarter
Lucent...$700,000 per quarter
Unidentified Licensee $1.4m
Total Fixed Fee 1st 2010 $48.1m (same as the 4th quarter of 2009)
The Second Quarter 2010 total fixed-fee of $48.6m is composed of the following licensees:
Samsung ...$25.7m per quarter
LG .........$14.3m per quarter
Kyocera......0 (renewed in second quarter, but as a per-unit license)
Apple......$2.1m per quarter
Pantech....$3.9m per quarter
Lucent...$700,000 per quarter
Unidentified Licensee $1.4m
Unidentified Increase over previous two quarters $ .5m (partial quarter, perhaps Apple)
Total Fixed Fee 2nd 2010 $48.6m
The Third Quarter 2010 total fixed-fee of $49.6m is composed of the following licensees:
Samsung ...$25.7m per quarter
LG .........$14.3m per quarter
Kyocera......0 (renewed in second quarter, but as a per-unit license)
Apple......$2.1m per quarter
Pantech....$3.9m per quarter
Lucent...$700,000 per quarter
Unidentified Licensee $1.4m
Unidentified Increase over first quarter $1.5m (full quarter, perhaps Apple)
Total Fixed Fee 3rd 2010 $49.6m
The fourth Quarter 2010 total fixed-fee of $49.6m is composed of the following licensees:
Samsung ...$25.7m per quarter
LG .........$14.3m per quarter
Kyocera......0 (renewed in second quarter, but as a per-unit license)
Apple......$2.1m per quarter
Pantech....$3.9m per quarter
Lucent...$700,000 per quarter
Unidentified Licensee $1.4m
Unidentified Increase over first quarter $1.5m (full quarter, perhaps Apple)
Total Fixed Fee 4th 2010 $49.6m (same as third quarter)
Total Fixed Fees 2010 = $195.9m
Some comments on the above fixed-fee amouunts:
(1) Lucent's license was set to expire in the third quarter of 2010. Apparently Lucent renewed its CDMA 2000 license at the same rate of $700,000 per qurter.
(2) LG's existing 2G/3G license expired on Dec. 31, 2010. As of today, LG has not yet renewed its 3G license. 2G is fully paid-up for LG at the expiring of its current license.
(3) There is an unidentified increase of $.5m in the second quarter's fixed fees that increased to $1.5m for the third and fourth quarters of 2010. I think there is a very good chance that this unidentified increase is due to an Apple amendment to its existing contract. If so, Apple's current fixed-fee amount would total $3.6m per quarter ($2.1m + 1.5m increase). A repost of mine on this issue as follows:
rmarchma Saturday, October 30, 2010 8:02:45 AM
Re: rmarchma post# 297980 Post # of 312355
Could increase in fixed-fee revenues be Apple
From the latest 10Q as follows:
...."The increase in fixed fee amortized royalty revenue was driven by a full quarter of revenue from our September 2009 patent license agreement with Pantech, compared to a partial quarter of revenue in third quarter 2009, and our second quarter 2010 amendment to our patent license agreement with an existing customer."
Excerpt from my referenced post as follows:
...."(5) Quarterly fixed-fee revenues of $49.6m have increased from previous quarters. Fixed-fees were $48.1m in the last quarter of 2009 and the first quarter of 2010, and $48.6m last quarter. Evidently there is a new fixed-fee licensee that has not yet been disclosed by IDCC, or an existing licensee's fixed-fees got increased, which would be unusual and unique."
This is the first time to my knowlege that an existing IDCC fixed-fee contract got amended and the fixed royalty fee increased. This explains the unidentified $.5m increase in the second quarter 2010 for a partial quarter, and a total $1.5m increase for a full third quarter ($49.6m total current fixed fee - $48.1m base fixed fee first quarter 2010).
Now as to the possible identity of this existing fixed-fee licensee who amended and got increased by $1.5m per quarter, I think it's a good chance this could be Apple. I doubt it is Samsung, who is a fairly recent licensee. I doubt it is LG whose license comes up for renewal on Jan. 1. LG had a threshold provision, but that was in the existing contract, ie the license would not need to be "amended". I don't think it is Pantech, whose license already includes LTE. (BTW one possible way an existing fixed fee license might be amended is to include an additional standard, such as LTE, that is not part of the original fixed-fee license).
I seriously doubt that the amended fixed-fee license is with Lucent, whose license expires at the end of this quarter. If it were Lucent, it would be a license "renewal" rather than a license "amendment". It can't be Kyocera, who renewed its license as a per-unit license rather than a fixed-fee license. That only leaves two more possibilities: Apple and the previously unidentified fixed-fee licensee.
The unidentified fixed-fee licensee was an existing per-unit licensee, who switched to a combination fixed-fee and per-unit license in the third quarter of 2008. The name of this particular licensee was never identified by IDCC. The fixed-fee part of this unidentified licensee is $1.4 per quarter. I can't rule out this particular licensee, as they may have amended their license a second time to drop the per-unit portion and go exclusively fixed-fee. If so, it would increase this unidentified fixed-fee licensee to $2.9m per quarter.
The other viable possibility is that Apple amended its fixed-fee license from $2.1m per quarter to $3.6m per quarter. They might have added LTE to the existing license, or there may have been some other provision in the license that triggered an amendment. As everyone knows, I have battled many posters over this Apple license being fixed-fee at only $2.1m per quarter for a long time. Now I will be one of the first to admit that finally at last the Apple license MIGHT currently be more than the initial fixed-fee amount.
A recap of fixed-fee licensees and fixed amounts per licensee:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=54801956
Rox re the $9m deferred revenue
I think you might be correct that the dispute with Infineon lies with the chip release version and not the specific products that the chips go into. From the CC as follows:
"Charlie Anderson – Dougherty & Company
And then just one more from me. The dispute over the product classes, does that refer to the chip or the end product, like a handset versus tablet?
William J. Merritt
It’s the chip solution.
Charlie Anderson – Dougherty & Company
Chip solution. Okay. Thanks so much."
First Quarter 2011 Revenue Guidance
I pretty much got this one correct in the referenced post before the CC. From the CC as follows:
"Brett Simpson – Arete
Okay. Okay, super. And one other question, your absolute royalties in the quarter fell excluding technology solutions despite the boost from smartphone. Can you just maybe tie up what was the puts and takes here, because you can clearly see (inaudible) in the next and HTC is doing well of late, but what’s been declining in there?
William J. Merritt
Yeah, well, you know, actually I think the royalties for the quarter were very, very strong. The way I would think about it is, we had about – we reported total revenue 95.3, okay. Take out LG, which is 14.4, take out the IP licensing, which is 8.2 and you get 72.7, okay. That excludes, any credit for LG, any credit for IP licensing, any credit for new deals we do this quarter. So you start with about a base of 73.
I’d say as a perspective, I would compare that with our guidance right now which again doesn’t give credit for any of those new activities we might do of 76 to 77. So the way I think about it is our guidance on an apples-and-apples basis excluding those items is up four to 5% sequentially for the quarter. So we’re seeing good solid growth there."
From my referenced post #312394 as follows:
Actual 4th quarter revenues = $95.3m
- LG expired quarterly fixed fees -$14.3m
- Technology final deliveries -$8.2m
= Subtotal current existing agreements =$72.8m
+ 5% sequential increase in existing + $3.6m ($72.8m x 5%)
Indicated 1st quarter revenues = $76.4m (Guidance $76m to $77m)
dclarke re how many quarters the $9m deferred revenue represents you commented:
...."Question 1 for me tomorrow would be how many quarters that $9m in deferred revenue covers... If just one that is HUGE."
Answer: Two quarters, the 3rd and 4th quarters. From the CC transcript as follows:
"Brett Simpson – Arete
Okay. And just looking at your tax (should be tech, not tax) solutions business, if we back out what you sometimes disclose around the same, it look likes your Infineon business has dropped off in the last few quarters and you’ve also suggested that the $9 million deferral is related to tax (tech) solutions, so I’m sort of putting two together, but can you just give us a bit of backgrounds in terms of why we’re seeing this drop-off at Infineon?
William J. Merritt
Well, we kind of gave you the number for Q4 for the IP licensing activities associated with engineering services. So you can back that out and future revenues from that activity will depend on additional deals through the sale of additional services to those customers.
In terms of the deferred revenue that we backed out, we’d say approximately $9 million or so, that reduction came in the third and fourth quarter, so there’s about $4 million or so backed out in Q3, close to $5 million backed out in Q4. So that gives you an idea of the cash that’s coming in that we are not choosing, not to recognize as revenue at this point. Conservatively, I believe that probably it provides a pretty good explanation for why you see that going down over time.
Brett Simpson – Arete
And this is a technology solutions deferral essentially?
William J. Merritt
It is."
Jim re earnings, revenues, and cash you asked:
...."Question if we had positive earnings why did our cash balance go from $563.6 million in the 3rd quarter to 541.7 in this quarter?? ....Where did that 11.9 million go??
Net income does not equal net cash. First, earned revenues for a given quarter are NOT the same as cash receipts from licensees in a given quarter. The main reason is that IDCC receives cash in advance from some per-unit licensees' "prepayments" and some fixed-fee licensees "advance" payments. IDCC received two very large per-unit prepayments in the second and third quarters of 2009 amounting to $77m and $105m. These prepayments were cash receipts in the second and third quarters of 2009, but probably represented several years of estimated unit sales by the prepayers. Thus, they will be recorded as earned revenues by IDCC over time as the quarterly sales reports are received. In other words the cash was received in 2009, but the earned revenues in 2010 from these two prepayers represented no more cash receipts to IDCC in 2010, and will not involve any future cash receipts to IDCC until the prepayments are all used-up.
Also some fixed-fee licensees like LG and Samsung paid their fixed fees in advance. Samsung licensed for 4 years paying a total of $400m in four six-month installments of $100m each, with the last installment payment being received in July 2010. However, IDCC will be recording $25.7m per quarter of earned revenue through 2012 on Samsung. Therefore, the recorded Samsung earnings from 3rd quarter 2010 through the 4th quarter of 2012 will not involve any more cash receipts from Samsung.
Prepayments and advances go into deferred revenues, and are transferred from deferred revenues to earned revenues over time. IDCC mentioned in today's CC that of the $95m 4th quarter recorded revenues, only about $20m to $25m represented actual cash receipts from licensees during the 4th quarter. The remaining recorded earned revenues of $70m to $75m was from deferred revenues.
Other than revenue differences, another reason that net income does not equal net cash for a given quarter deals with expense differences. Some quarterly expenses are accruals, which do not represent actual cash payments in that particular quarter but in a future quarter. Some recorded expenses, such as income tax expense, can be very different from the income taxes actually paid. For most corporations, there is usually a big difference between income tax expense accrual and income tax cash payments. Finally, some quarterly expenses, such as, depreciation and patent amortization do not involve future quarterly cash payments at all. Also bonus and salary expense involving stock options and RSU's, do not involve cash payments.
Warbil re Apple questions you asked:
..."When does this (Apple)agreement expire?
Apple entered into a 7 year fixed-fee license with IDCC effective in June 2007, which expires in June 2014.
...."Also, do you think the new licenses signed in 2011 are included in the first quarter revenue guidance?"
New licenses signed in the first quarter of 2011, such as Acer, will not be included in IDCC's first quarter revenues, if they are per-unit licensees. IDCC has a lag of one quarter with per-unit licenses, because IDCC records the revenue in the period that quarterly unit sales reports are received by IDCC, not in the period earned by the licensee. Per-unit licensees would be reporting their 4th quarter 2010 sales to IDCC in the 1st quarter of 2011, which will be included in IDCC's 1st quarter revenues. New first quarter per-unit licensees would not report their 1st quarter unit sales to IDCC until the 2nd quarter.
If any new licensees are fixed-fee licensees, then their revenue will be prorated in the quarter that they signed based upon the effective date of the new agreement. Thus, there is NOT a one quarter lag for fixed-fee licensees. Fixed-fee licensees do not even file quarterly unit sales reports with IDCC, because their agreements are time-based and not unit-based.
IDCC's 2010 fixed-fee revenues by quarter and licensee
From the 4th quarter earnings press release as follows:
...."Fixed fee royalty revenue of $49.6 million in fourth quarter 2010 increased $1.5 million, or 3 percent, over fourth quarter 2009......Fixed fee royalty revenue of $195.8 million in 2010 increased $14.1 million, or 8 percent, over 2009, primarily due to amortizing fixed payments from 2009 agreements with Samsung and Pantech over a full year in 2010 compared to a partial year in 2009."
The First Quarter 2010 total fixed-fee of $48.1m is composed of the following licensees:
Samsung ...$25.7m per quarter
LG .........$14.3m per quarter
Kyocera......0
Apple......$2.1m per quarter
Pantech....$3.9m for a full quarter
Lucent...$700,000 per quarter
Unidentified Licensee $1.4m
Total Fixed Fee 1st 2010 $48.1m (same as the 4th quarter of 2009)
The Second Quarter 2010 total fixed-fee of $48.6m is composed of the following licensees:
Samsung ...$25.7m per quarter
LG .........$14.3m per quarter
Kyocera......0 (renewed in second quarter, but as a per-unit license)
Apple......$2.1m per quarter
Pantech....$3.9m per quarter
Lucent...$700,000 per quarter
Unidentified Licensee $1.4m
Unidentified Increase over previous two quarters $ .5m (partial quarter, perhaps Apple)
Total Fixed Fee 2nd 2010 $48.6m
The Third Quarter 2010 total fixed-fee of $49.6m is composed of the following licensees:
Samsung ...$25.7m per quarter
LG .........$14.3m per quarter
Kyocera......0 (renewed in second quarter, but as a per-unit license)
Apple......$2.1m per quarter
Pantech....$3.9m per quarter
Lucent...$700,000 per quarter
Unidentified Licensee $1.4m
Unidentified Increase over first quarter $1.5m (full quarter, perhaps Apple)
Total Fixed Fee 3rd 2010 $49.6m
The fourth Quarter 2010 total fixed-fee of $49.6m is composed of the following licensees:
Samsung ...$25.7m per quarter
LG .........$14.3m per quarter
Kyocera......0 (renewed in second quarter, but as a per-unit license)
Apple......$2.1m per quarter
Pantech....$3.9m per quarter
Lucent...$700,000 per quarter
Unidentified Licensee $1.4m
Unidentified Increase over first quarter $1.5m (full quarter, perhaps Apple)
Total Fixed Fee 4th 2010 $49.6m (same as third quarter)
Total Fixed Fees 2010 = $195.9m
Some comments on the above fixed-fee amouunts:
(1) Lucent's license was set to expire in the third quarter of 2010. Apparently Lucent renewed its CDMA 2000 license at the same rate of $700,000 per qurter.
(2) LG's existing 2G/3G license expired on Dec. 31, 2010. As of today, LG has not yet renewed its 3G license. 2G is fully paid-up for LG at the expiring of its current license.
(3) There is an unidentified increase of $.5m in the second quarter's fixed fees that increased to $1.5m for the third and fourth quarters of 2010. I think there is a very good chance that this unidentified increase is due to an Apple amendment to its existing contract. If so, Apple's current fixed-fee amount would total $3.6m per quarter ($2.1m + 1.5m increase). A repost of mine on this issue as follows:
rmarchma Saturday, October 30, 2010 8:02:45 AM
Re: rmarchma post# 297980 Post # of 312355
Could increase in fixed-fee revenues be Apple
From the latest 10Q as follows:
...."The increase in fixed fee amortized royalty revenue was driven by a full quarter of revenue from our September 2009 patent license agreement with Pantech, compared to a partial quarter of revenue in third quarter 2009, and our second quarter 2010 amendment to our patent license agreement with an existing customer."
Excerpt from my referenced post as follows:
...."(5) Quarterly fixed-fee revenues of $49.6m have increased from previous quarters. Fixed-fees were $48.1m in the last quarter of 2009 and the first quarter of 2010, and $48.6m last quarter. Evidently there is a new fixed-fee licensee that has not yet been disclosed by IDCC, or an existing licensee's fixed-fees got increased, which would be unusual and unique."
This is the first time to my knowlege that an existing IDCC fixed-fee contract got amended and the fixed royalty fee increased. This explains the unidentified $.5m increase in the second quarter 2010 for a partial quarter, and a total $1.5m increase for a full third quarter ($49.6m total current fixed fee - $48.1m base fixed fee first quarter 2010).
Now as to the possible identity of this existing fixed-fee licensee who amended and got increased by $1.5m per quarter, I think it's a good chance this could be Apple. I doubt it is Samsung, who is a fairly recent licensee. I doubt it is LG whose license comes up for renewal on Jan. 1. LG had a threshold provision, but that was in the existing contract, ie the license would not need to be "amended". I don't think it is Pantech, whose license already includes LTE. (BTW one possible way an existing fixed fee license might be amended is to include an additional standard, such as LTE, that is not part of the original fixed-fee license).
I seriously doubt that the amended fixed-fee license is with Lucent, whose license expires at the end of this quarter. If it were Lucent, it would be a license "renewal" rather than a license "amendment". It can't be Kyocera, who renewed its license as a per-unit license rather than a fixed-fee license. That only leaves two more possibilities: Apple and the previously unidentified fixed-fee licensee.
The unidentified fixed-fee licensee was an existing per-unit licensee, who switched to a combination fixed-fee and per-unit license in the third quarter of 2008. The name of this particular licensee was never identified by IDCC. The fixed-fee part of this unidentified licensee is $1.4 per quarter. I can't rule out this particular licensee, as they may have amended their license a second time to drop the per-unit portion and go exclusively fixed-fee. If so, it would increase this unidentified fixed-fee licensee to $2.9m per quarter.
The other viable possibility is that Apple amended its fixed-fee license from $2.1m per quarter to $3.6m per quarter. They might have added LTE to the existing license, or there may have been some other provision in the license that triggered an amendment. As everyone knows, I have battled many posters over this Apple license being fixed-fee at only $2.1m per quarter for a long time. Now I will be one of the first to admit that finally at last the Apple license MIGHT currently be more than the initial fixed-fee amount.
A recap of fixed-fee licensees and fixed amounts per licensee:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=54801956
IDCC's 1st quarter 2011 revenue guidance
From the earnings press release as follows:
...."Total revenue in fourth quarter 2010 totaled $95.3 million,...Technology solutions revenue more than doubled to $10.1 million in fourth quarter 2010 from $3.8 million in fourth quarter 2009, driven by the recognition of $8.2 million associated with the final deliveries of technologies under existing engineering services agreements....We continue to negotiate new agreements, extensions and renewals, including the renewal and expansion of our license agreement with LG, which expired on December 31, 2010"
...."InterDigital expects first quarter 2011 revenue contributions from existing agreements to be in the range of $76 million to $77 million. This range includes an increase in current patent licensing royalties from the same set of patent customers of 5% over fourth quarter 2010 and 15% year over year. The significant increase in current patent licensing royalties is due to increased royalties relating to our customers' sales of smartphone products."
IDCC's actual revenues were $95.3m in the 4th quarter 2010, and guided to be between $76m to $77m in the 1st quarter 2011. A quick calculation recap for this guidance as follows:
Actual 4th quarter revenues = $95.3m
- LG expired quarterly fixed fees -$14.3m
- Technology final deliveries -$8.2m
= Subtotal current existing agreements =$72.8m
+ 5% sequential increase in existing + $3.6m ($72.8m x 5%)
Indicated 1st quarter revenues = $76.4m (Guidance $76m to $77m)
Olddog re RIMM's indicated per-unit royalty rate
You calculated an 82 cents per unit royalty rate from RIMM based upon 12.8m extrapolated units sold to correspond with IDCC's own calender quarter, rather than RIMM's own fiscal quarter basis. This may be true as RIMM might report its June through September sales to IDCC in the 4th quarter.
However, RIMM might just use its own fiscal quarter when reporting to IDCC. As you indicated, RIMM sold 12.1m units in its 2nd fiscal quarter covering essentially June through August, and 14.2m units in its 3rd fiscal quarter covering essentially Sept. through November. Therefore, RIMM's indicated royalty rate might either be 87 cents ($10.48m RIMM royalty / 12.1m units), or 74 cents ($10.48m / 14.2m units) based upon reporting its fiscal quarters to IDCC.
The basic question is which of RIMM's fiscal quarters would be included in IDCC's 4th quarter revenues, if RIMM reports its fiscal quarters rather than calendar quarters to IDCC? IDCC's policy is to report per-unit royalties in the quarter that the royalty report is actually received from the licensee. IDCC may have received RIMM's third fiscal quarter report ended on Nov. 27 before Dec. 31. If so, RIMM's indicated royalty rate would be 74 cents per-unit based on 14.2m units sold. However,if IDCC received RIMM's 2nd fiscal quarter report ended on August 28 after Sept.30, and did not receive RIMM's 3rd fiscal quarter report ended on Nov. 27 until after Dec. 31, then RIMM's indicated royalty rate would be 87 cents based on 12.1m units sold.
Jim re IDCC's dividend you asked:
....."Given that in your opinion at this price level what might be a proper dividend? .....One poster said it's a 0.07 % dividend we are getting."
Jim IDCC's current dividend yield based upon today's closing price of $58.25 and a 10 cents per quarter or 40 cents per year dividend, = .69%, (40 cents / $58.25), not .07%. (I think the .07% amount was due to not moving the decimal point two places to the right, which is necessary in order to calculate a percentage). Many technology company's are paying between 1% to 2% dividends. When IDCC stated that they would pay a dividend on Oct. 17, 2010, the dividend yield was 1.28% based upon a closing price on that date of $31.28. The dividend yield was reasonable at that point in time. It is somewhat low now due to the rapid increase in IDCC's share price.
From a repost of mine on Dec 20 as follows:
rmarchma Share Monday, December 20, 2010 4:53:59 PM
Re: JimLur post# 303175 Post # of 311529
Jimlur re dividend yield you asked:
..."Ron I have a question RE the dividend and would like you to do the math for me......IMO on 10/27/2010 when they announced they will be paying a dividend I believe at that time the dividend amount was decided on the closing price of the stock the day the news came out..... We closed at $31.28 that day so what % is that? I'm curious if it's 1 1/2 or higher.......It was also mentioned here that some might want to base what % they get be based on their cost basis which is a good point."
Jim the formula to calculate a stock's cash dividend yield as follows:
Annual Cash Dividend per share / Stock Price per share
If you use the equal key on your calculator, then you will need to move the decimal point to places to the right to convert to a percentage yield. However, if you do not use the equal key, but rather use the % key on your calculator, then the final number is already stated as a percentage. The big variable is what you choose as the stock price, ie, the ending share price on a certain date in the past, the ending share price today, or the share price that you actually paid for the stock. For example:
(a) using IDCC's ending share price on Oct 17, the day IDCC said that they would pay a cash dividend, the dividend yield is 1.28% ($.40 annual dividend per share / $31.28 IDCC ending share price on Oct 17).
(b) using IDCC's ending share price on Dec. 13 , the day IDCC announced the amount of the cash dividend, the dividend yield is 1.02% ($.40 annual dividend / $39.09 IDCC ending share price on Dec. 13).
(c) using IDCC's ending share price today, the dividend yield is .94% ($.40 / $42.63). I attribute much of IDCC's share price increase today of over 9% to the Cramer promotional segment. BTW published dividend yields on sites like Yahoo Finance use the latest closing share price of the stock for the current dividend yield figure.
(d) now assume that someone purchased IDCC shares for $20 several years ago. Then the dividend yield using the shareholder's original cost price would be 2% ($.40 / $20 assumed cost basis).
Bulldzr re available shares for employee stock options exercises you commented:
....."but it seems to me the company would still need to have those add'l 1000 shares authorized and available to sell him, therefore they would have to be accounted for."
You are correct that a company needs to be cognizant of possible available shares needed in the future to take care of employee stock option exercises, vested RSUs, stock bonuses, etc. All these would require the issuance of additional shares of stock. This available stock for future issuance can come from any unissued shares and treasury shares owned. If a company runs out of available shares, then they would need shareholder approval to authorize additional shares, or BoD approval to purchase additional treasury shares in a buyback.
Bulldzr re employee stock options and stock splits you asked:
....."So the unexercised options would not be eligible for the stock split? In other words, and employee or board member holding options would see the value basically cut in half? Would the exercise price of the option be cut in half?"
No unexercised stock options are not part of the outstanding shares. Therefore, these unexercised options would not be eligiable for additional shares in the stock split. However, the stock options would normally be adjusted to reflect the split. For example, assume an employee had unexercised stock options to purchase 1,000 shares at a $20 strike price before the split. After a 2 for 1 stock split, the employee's unexercised stock options would be adjusted to 2,000 shares at a $10 per share strike price.
Jim re issued, outstanding, treasury, and stock splits
IDCC's capital structure as of 9/30/2010, the latest available figures, is as follows:
Authorized shares = 100m (total shares that can be legally issued)
Issued shares = 67.8m (outstanding shares + treasury shares)
Outstanding shares = 44.2m (voting shares owned by the public, eligiable for any cash dividends, stock dividends, stock splits, and weighted outstanding shares used in earnings per share calculations).
Treasury shares = 23.6m (repurchased shares owned by IDCC that have not been cancelled. Treasury shares have no voting rights, nor are they eligiable to receive cash dividends, stock dividends, or stock splits while in the company's treasury. However, treasury shares can later be resold or reissued in stock splits, stock dividends, stock bonuses, or stock option exercises, restricted shares, in which case they would turn back into outstanding shares).
Unissued shares = 32.2m (Authorized - Issued. These shares can be later sold or issued in stock splits, stock dividends, stock option exercises, restricted shares, etc).
I think the basic question being asked about IDCC's current capital structure is whether IDCC could have a 2 for 1 stock split without requiring stockholder approval. BTW they would need shareholder approval to increase the authorized shares, if they do not have enough available shares to implement the split. So the answer revolves around whether IDCC has enough unauthorized and treasury shares that could be used to accomplish a 2 for 1 split within its existing capital structure. I'm fairly sure that they do.
If IDCC were to do a 2 for 1 split, then they would need to issue another 44.2m shares, so that after the split there would be 88.4m outstanding shares (44.2m current outstanding shares x 2). IDCC can use a combination of its 32.2m unissued shares and its 23.6m treasury shares to accomplish the split. Since these two sources add up to 55.8m available shares, then they have more than enough to issue an additional 44.2m shares in a 2 for 1 split. Hope this helps.
Count thanks for the kind remarks. As to whether or not Apple is definitely the fixed-fee licensee that amended its license, resulting in an increase in the fixed fee amount, I think should be readily determinable after the Annual 10K report comes out. Hopefully, IDCC will once again break-out its total revenues by country. If so, then the key to unlock the mystery re Apple will be in the US revenue amount.
As to my recovery from recent shoulder surgeries, it is coming along very well and thanks for asking. Got my right shoulder out of the sling two weeks ago. Rehap is coming along nicely, as I almost have my full range of motion. I'm now starting to do exercises to get the strength back in the shoulders beginning with isometric exercises, light weights, and resistance tubes. Hope things are going well with you and yours!
Jim re the Apple license and possible increase thereto
I don't want to give anyone false hopes about a possible increase in Apple's fixed fee amount, but I think there is a possibility that it might have happened in the second quarter of 2010. From a repost of mine at the end of October following the release of the third quarter 10Q as follows:
rmarchma Share Saturday, October 30, 2010 8:02:45 AM
Re: rmarchma post# 297980 Post # of 308735
Could increase in fixed-fee revenues be Apple
From the latest 10Q as follows:
...."The increase in fixed fee amortized royalty revenue was driven by a full quarter of revenue from our September 2009 patent license agreement with Pantech, compared to a partial quarter of revenue in third quarter 2009, and our second quarter 2010 amendment to our patent license agreement with an existing customer."
Excerpt from my referenced post as follows:
...."(5) Quarterly fixed-fee revenues of $49.6m have increased from previous quarters. Fixed-fees were $48.1m in the last quarter of 2009 and the first quarter of 2010, and $48.6m last quarter. Evidently there is a new fixed-fee licensee that has not yet been disclosed by IDCC, or an existing licensee's fixed-fees got increased, which would be unusual and unique."
This is the first time to my knowlege that an existing IDCC fixed-fee contract got amended and the fixed royalty fee increased. This explains the unidentified $.5m increase in the second quarter 2010 for a partial quarter, and a total $1.5m increase for a full third quarter ($49.6m total current fixed fee - $48.1m base fixed fee first quarter 2010).
Now as to the possible identity of this existing fixed-fee licensee who amended and got increased by $1.5m per quarter, I think it's a good chance this could be Apple. I doubt it is Samsung, who is a fairly recent licensee. I doubt it is LG whose license comes up for renewal on Jan. 1. LG had a threshold provision, but that was in the existing contract, ie the license would not need to be "amended". I don't think it is Pantech, whose license already includes LTE. (BTW one possible way an existing fixed fee license might be amended is to include an additional standard, such as LTE, that is not part of the original fixed-fee license).
I seriously doubt that the amended fixed-fee license is with Lucent, whose license expires at the end of this quarter. If it were Lucent, it would be a license "renewal" rather than a license "amendment". It can't be Kyocera, who renewed its license as a per-unit license rather than a fixed-fee license. That only leaves two more possibilities: Apple and the previously unidentified fixed-fee licensee.
The unidentified fixed-fee licensee was an existing per-unit licensee, who switched to a combination fixed-fee and per-unit license in the third quarter of 2008. The name of this particular licensee was never identified by IDCC. The fixed-fee part of this unidentified licensee is $1.4 per quarter. I can't rule out this particular licensee, as they may have amended their license a second time to drop the per-unit portion and go exclusively fixed-fee. If so, it would increase this unidentified fixed-fee licensee to $2.9m per quarter.
The other viable possibility is that Apple amended its fixed-fee license from $2.1m per quarter to $3.6m per quarter. They might have added LTE to the existing license, or there may have been some other provision in the license that triggered an amendment. As everyone knows, I have battled many posters over this Apple license being fixed-fee at only $2.1m per quarter for a long time. Now I will be one of the first to admit that finally at last the Apple license MIGHT currently be more than the initial fixed-fee amount.
A recap of fixed-fee licensees and fixed amounts per licensee:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=54801956
Jimlur re dividend yield you asked
..."Ron I have a question RE the dividend and would like you to do the math for me......IMO on 10/27/2010 when they announced they will be paying a dividend I believe at that time the dividend amount was decided on the closing price of the stock the day the news came out..... We closed at $31.28 that day so what % is that? I'm curious if it's 1 1/2 or higher.......It was also mentioned here that some might want to base what % they get be based on their cost basis which is a good point."
Jim the formula to calculate a stock's cash dividend yield as follows:
Annual Cash Dividend per share / Stock Price per share
If you use the equal key on your calculator, then you will need to move the decimal point to places to the right to convert to a percentage yield. However, if you do not use the equal key, but rather use the % key on your calculator, then the final number is already stated as a percentage. The big variable is what you choose as the stock price, ie, the ending share price on a certain date in the past, the ending share price today, or the share price that you actually paid for the stock. For example:
(a) using IDCC's ending share price on Oct 17, the day IDCC said that they would pay a cash dividend, the dividend yield is 1.28% ($.40 annual dividend per share / $31.28 IDCC ending share price on Oct 17).
(b) using IDCC's ending share price on Dec. 13 , the day IDCC announced the amount of the cash dividend, the dividend yield is 1.02% ($.40 annual dividend / $39.09 IDCC ending share price on Dec. 13).
(c) using IDCC's ending share price today, the dividend yield is .94% ($.40 / $42.63). I attribute much of IDCC's share price increase today of over 9% to the Cramer promotional segment. BTW published dividend yields on sites like Yahoo Finance use the latest closing share price of the stock for the current dividend yield figure.
(d) now assume that someone purchased IDCC shares for $20 several years ago. Then the dividend yield using the shareholder's original cost price would be 2% ($.40 / $20 assumed cost basis).
Wow Cramer's piece on IDCC was compelling
I haven't watched Jim Cramer in quite a while, but I do believe he still has a faithful following. To do a 6 to 7 minute promo, but rather accurate, session on just IDCC was pretty impressive. Cramer is correct in that IDCC has quietly been delivering the goods lately, but its lack of national exposure has limited the share price appreciation.
The initiation of the cash dividend should help draw more needed attention to the stock. Cramer stated that the cash dividend was the catalyst that motivated him to do the promo piece on IDCC. If IDCC could garner more analysts coverage, bigger institutional investors, and hopefully a prestigious Wall Street institution's recommendation along the way, then the stock could really be off to the races.
If IDCC can keep delivering the goods in the future, and can keep increasing the dividend each year, then significant share price appreciation can and should be sustainable for the longer term. I believe Cramer thinks that IDCC has adequate room to keep increasing the dividend, as they started rather low at 1% of share price, rather than a more typical 2% to 3%. Increasing the cash dividend from 1% to 2% to 3% over time could do wonders for the stock price, as that would represent dividend increases of 100% to 200%.
OT Nuke re "where's Rmarchma been lately"
I'm recovering from recent shoulder surgery. My second shoulder surgery since the middle of this year btw. Thanks for the kind words about missing my posts. Hopefully, I can start back posting again relatively soon.
IDCC licensee Pegatron to ship 15m CDMA iphones in 2011 according to the following article (suggest you read thelurker's referenced post that I am replying to first before reading this article):
"Wednesday, October 27, 2010
Foxconn could join Pegatron in producing Apple's CDMA iPhone
By Josh Ong
Published: 11:10 PM EST
Apple partners Foxconn and Pegatron have both received orders for a CDMA version of the iPhone 4 due out in 2011, a new report out of the Far East claims.
Industry sources told Taiwan Economic News that Foxconn, a subsidiary of Taiwan-based Hon Hai Precision Industry Co., will ship a CDMA edition of the iPhone 4 to Apple in 2011. Sources also suggested that Apple's attempt to tap into the CDMA market would bring the CDMA iPhone to Verizon Wireless and China Telecom.
Foxconn, Apple's biggest contract supplier, will reportedly share production evenly with Pegatron Technologies, with Foxconn's share of the order adding up to 15 million units in 2011. In May, Pegatron was rumored to have won the contract for the much-rumored CDMA iPhone, with production allegedly slated to begin in November.
The report may indicate that pent-up demand for a CDMA iPhone 4 would exceed either Foxconn's or Pegatron's manufacturing capacity. Apple sold a record 14.1 million iPhones last quarter, up 91 percent year over year, and analysts believe millions of customers are presently waiting for a CDMA iPhone.
Rumors of an early 2011 release of a CDMA-enabled iPhone 4 were bolstered earlier this month when The Wall Street Journal reported that production of the handset would begin by the end of 2010.
According to recent rumors, Apple could make an iPhone that works on both GSM and CDMA by using dual-mode chips from CDMA inventor Qualcomm. A report from Gigaom published Wednesday claims Apple is working with chip manufacturer Gemalto to develop a multi-carrier SIM card solution for the iPhone.
Also of note, the Taiwan report claims that Foxconn has already invested $299 million in constructing a factory in the Chinese city of Chengdu for production of the iPad."
http://www.appleinsider.com/articles/10/10/27/foxconn_could_join_pegatron_in_producing_apples_cdma_iphone_report.html
NukeJohn re blowout handset sales in third quarter you said:
...."RMarchma, the blowout sales of smartphones in Q3 is one of the reasons that I think IDCC's Q4 quidance (which will come from Q3 sales) will jump above 100M. Several of IDCC's variable licensees (HTC and RIM particularly) had record sales in Q3."
Just read where HTC had another record quarter at 6.8m handsets sold in Q3. RIM sold 12.1m smartphones in Q3, which might help them finally break the 10% of revenue threshold in IDCC's upcoming fourth quarter. Apple exploded from 8.4m iphones in Q2 to 14.2m iphones sold in Q3.
Although Apple is still a fixed-fee licensee as far as we know, IDCC will receive per-unit royalties from Infineon for the iphone chipsets. BTW for those who might have missed it, I posted earlier this weekend that I think Apple may have recently significantly increased its fixed-fee amount to IDCC linked as follows:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=56106193
However for IDCC to really have a break-out quarter, they need for its Japanese per-unit licensees to do well. Sharp, NEC/Casio/Hitachi, Panasonic, Toshiba, and Kyocera are all Japanese per-unit licensees. I firmly believe that these Japanese per-unit licensees pay a much higher per-unit royalty rate to IDCC than its non-Japanese per-unit licensees. I read that Japan experienced a rather nice growth of 12% in handset sales for the latest six-month period April through September. All of these forementioned items should bode very well for IDCC's Q4.
WoW check-out Apple and Rim smartphone sales in third quarter
"Apple Overtakes Rim in Total Smartphone Handset Sales
October 24, 2010
A few weeks ago we talked about the mobile phone market and how Apple’s market share was slipping according to second quarter figures. Happily for Apple the third quarter figures seem to be a lot rosier as they have now passed RIM (Research in motion) and is making in-roads on catching market leaders Nokia.
Research Company Strategic Analytics published a report on Thursday that showed Apple shipped 14.1 Million compared to the 12.1 Million that Rim shipped during the third quarter of 2010. That’s almost a 15% difference which is due to Apple doubling the number of phones shipped since 2009.
Rim also enjoyed an increase since 2009; last year they shipped 8.5 million which means they increased their shipments by 45% in the same quarter of 2010. When you measure this up to the 77.1 million total handsets, Apple now has 18.3% of the market compared to Rim’s 16.1%. A marked improvement from last year.
“RIM continues to be hampered by a limited presence in the high-growth touch screen segment and consequently its global smart-phone market share has edged down from 20 percent to 16 percent during the past 12 months,” says a statement from Strategy Analytics.
Apple may have the proverbial silver medal in the market share stakes but they have a way to go to knock the dominant Nokia off their pedestal. Nokia actually sold 10 million extra handsets compared to last year but actually lost 3% of their market share –a trend they will hope to reverse with the N8.
That said, when you weigh up the total sales you can see how dominant Nokia are, their 26.5 million handset sales is almost double of Apple’s 14.1 million. So overall all the brands have something to celebrate, they all have done better ‘sales wise’ compared to last year. We will have to wait and see what the final quarter of the year brings."
http://www.gadgetsandgizmos.org/apple-overtakes-rim-in-total-smartphone-handset-sales/