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Has anybody noticed the status of June options. Based on todays closing price, there are 30,566 put contracts in the money compared to only 4,916 call contracts in the money. The ITM put contracts are worth over $17M. The minimum pain for option holders is a share price of $41.
The question is how many of these put contracts were sold by shareholders versus the MMs? If the MMs hold the contracts, we should head closer to $40 by next week. If shareholders hold a majority of the contracts, we are screwed.
A favorable CAFC decision may provide an initial pop of 6 to 8 points but it should lead to additional licensing within the next six months that will take this stock to its previous highs. There is a lot riding on this decision. The stock is almost valued now based on a CAFC loss.
My only beef with management is that we should not have all of our eggs riding on this one decision because you can never trust our legal system to deliver a rational decision. If we currently had a parallel case navigating through the ITC with new and improved patents, we wouldn't be at the mercy of the shorts and momo players right now.
Not a chance! IDCC needs that CAFC reversal and remand for its future licensing agenda. IDCC was banking on a win at the ITC to give them some leverage in their licensing negotiations with all OEMs. When that didn't happen, they took an appeal to the CAFC with the firm belief that they will prevail. IDCC attorneys were actually dumbfounded with the decision by Luckern and rightfully so, given the questions and topics of discussion during the appeal (lest we forget). IDCC wants this decision reversed more than ever to show the world they have the goods and a litigation win to back it up. Only then will they prevail in licensing at reasonable terms. I do not believe any company will license until the CAFC decision is made public because the rate depends on the outcome. If IDCC wins, they get the existing rate and if IDCC loses, they get a highly discounted rate. If you were an OEM, what would you do in this situation?
The shareholders are frustrated at the fact that the MMs, momos and shorts have this stock by the balls. They play into no CAFC decision every day dropping the stock early and then buying back later in the day. The only thing that will reverse this trend is a published decision by the CAFC.
Another problem is the number of shareholders that sold puts. As the stock continues to drop, those puts must be covered and some are probably having to sell shares to cover those put buybacks. That is also causing unneeded pressure on this stock. We will continue to slide until the CAFC decision is rendered or until we reach fair value based on existing revenues which is pretty close.
Or maybe they are using the same marketing plan for 4G that they are using for 3G. Hence, they'll give them "six years" to come to the table and then sue them if not successful.
After the ITC decision was rendered and in addition to the appeal at the CAFC, IDCC should have filed a follow-on case against Nokia using several of its patents with revised claims language resulting from Nokia's arguments in the first proceeding. We should have kept the pressure on Nokia and choked off their air supply.
IDCC is banking its credibility on a win at the CAFC. That is a pretty daring move in my mind and one that I don't think is totally warranted. If they lose at the CAFC, a subsequent proceeding will cost us another two years minimum and will utterly destroy IDCC's credibility on Wall Street. I would then expect BM to be replaced for his inability to carry out IDCC's mission.
He says we are well respected in the 4G arena but I don't see anyone anxious to license with us.
The Wave sales team must be sitting at their desks waiting for the phones to ring!
rmarchma and Bulldzr,
The single most important reason to buy a stock is if you think it is undervalued at the current price. If I were a stock planner, that is the first and foremost question to ask and answer. If a stock is undervalued, a purchase recommendation is warranted. If you can't tell whether a stock is undervalued, a purchase recommendation is not warranted. If the stock price is overvalued, a sell recommendation is warranted.
Most insider sales occur when the insiders think their stock is undervalued regardless of the number of shares they own and they are not shy in telling you that. They won't tell you the reason they sell. Sometimes it is to meet obligations and sometimes it is because they don't see any near term appreciation in price and then it is wise to diversify.
Suppose you are an executive with an investment portfolio. If you thought your company's stock was going to double in the next year, what would you do? Would you sell a non-performing stock and buy some of your own company's stock?
The simple fact that IDCC insiders are not buying IDCC stock tells me that they do not believe it is undervalued or do not know what the fair value is. I believe in the latter and hopefully that will change when the CAFC decision is rendered. That puts them in the same boat as all of us non-insiders.
I would like them to consider selling their pool of patents but stay in the bandwidth consolidation business. The future of that business could be substantial. Let someone else use the phone patents for defensive purposes. They are worth a lot more money if you don't have to litigate them.
The bummer from today's meeting is that AAPL is not the company that converted to a per unit license. It must be an old Japanese company that is in a downward spiral. IDCC's licensing department needs to be reorganized from top to bottom. I was hoping for a question about Motorola and ERICY. Are these companies tied to the Nokia litigation?
Apple is not the customer that converted to per unit royalties! That customer is a ten year customer.
Did BM just say the Pantech deal was worth $100 million? Was that information made public previously?
miller, the sale is only worth $5 per share before taxes. Nokia's most profitable business segment was their handset business. I asked the question, what is left after the sale? Sure, they will have a lot of cash afterwards but what can they possibly do with it that will build its stock price? After taxes on the sale, Nokia will have cash to sustain its current market cap but it is still a sinking ship. I hope they save $.5 billion for IDCC past infringement.
Incredible...then Elop was only a plant to bring all of this to fruition. That represents only $5 per share before taxes. What else does Nokia have besides NSM which isn't really worth anything? Nokia self imploded in a matter of two years.
M3S,
With Levi now gone and the ITC attorney in the CAFC appeal distancing herself from Levi's arguments, I don't see why they would want to appeal a CAFC decision if it is against them. Even Luckern seemed to have some reservations over his claims interpretations in his final opinion. I really think the ITC is lookding for guidance from the CAFC here and will follow that guidance if it is specific enough.
It may be that the CAFC is developing its own interpretation of claims construction in this case and that is why the decision is taking so long.
I really wish we would get an opinion soon. We are suffering a slow death every morning when the CAFC opinions are released and we are not mentioned.
Max Pain theory. This is only the second time I can remember in the past couple of years that the MMs didn't close the stock price within $0.10 to $0.15 of the maximum pain stock value for options. And it is even more interesting that they didn't manipulate the price on such light volume as IDCC is currently experiencing.
I don't trade options because they are losers more than 90% of the time but I did expect a little pop in the price to get closer to $45.00 today. Oh well, wonders never cease. It looks like the MM's are going to get nipped by the shorts at the end of the day today. Maybe that will light a fire under them next week to give a little retribution to the shorts.
If we get a favorable CAFC decision, let the fireworks begin. It won't happen overnight, but at least it will put a better time frame on a future settlement with Nokia and their cheating cohorts.
When do the new short interest numbers come out?
I'm still betting that AAPL is the company in transition from fixed fee to per unit. They are the only existing fixed fee licensee that is sensitive to their name being used in public disclosure documents. I believe any other company would have been named in the news release.
I also believe there was a volume threshhold in their agreement with AAPL that either caused or allowed the conversion to per unit royalties. I believe that because BM indicated early on that IDCC furnished Nokia the equivalent per unit rate from the AAPL agreement and said IDCC would be happy to get that rate from Nokia.
I guess we will find out when IDCC gives its guidance for third quarter revenues in late July or early August. I'm holding firm until then.
Data,
Since they continue to pay on the chip, it appears to be a matter of amount per chip rather than whether a payment should be made. It may be that IFX is saying your royalty for Release 7 gets diluted because of all the new technology in Release 7 and IDCC is saying no, we want the same amount as in Release 6. If that is the case, how do the two sides come together? It appears to be a Mexican stand-off that has so far lasted at least nine months or more. It is getting really frustrating with this management team because they can't seem to get anything resolved.
If Apple does not have any patents to use in a cross-license deal with Nokia and other OEM's, they will need to agressively bid for Nortel's patents or maybe pursue IDCC for its patents. Nokia, et. al will try to collect 2% or better on royalties from Apple and that will cause a lot of pain for Apple. Without cross-licensing capabilities, Apple may end up with royalty payments of approximately 20% on their I-phone and I-tablet sales. What would that cost them and how valuable will that make independent patent owners like IDCC? Apples' "annual royalty costs" could amount to anywhere between $2 billion and $4 billion. At that rate, what would IDCC's patent portfolio be worth to Apple?
Let's see, the present value of a $2 billion annual royalty payment over 10 years at 8% is about $14 billion. Can you say mega-dollars?
I don't think any 4G license could be considered material in terms of dollars at the present time because the new phones are just beginning to roll. IDCC's conditions for reporting licenses appear to depend on the dollar amount associated with the licenses so I don't expect any 4G licensing announcements until the dollar amounts become significant.
When QCOM began its licensing activities in ernest back in the mid to late 90's, they announced every deal (regardless of size) just to get press. Announcements were being used as a marketing tool. I wish IDCC would look at it that way because we all know how successful QCOM was in their licensing efforts.
If an analyst continually overestimates because of an hidden agenda, can't IDCC request them to lower it or ask that their estimates be removed from the site? These sites should not be a platform for hedgies and shorts to cheat but I can see where it could be.
Major institutional coverage will come when Waves gets major predictable revenues and not one minute before. It's quite possible that we will see $0.01 earnings for Q1. All Wave has to do is free up a little of that old deferred revenue account. Is any of the BASF revenue to be recognized in Q1?
You can see the typical 10:00 am sell-off after the CAFC results are posted for the day followed by the usual block purchase at the end of the day. The only difference today is that the stock didn't recover hardly at all from the low. Somebody is playing this stock like a fiddle.
I noticed the MMs have the stock right below the max pain for options expiration which is $45. The good news is that there are more puts at $45 than calls so they can't let the stock go any lower without incurring losses on the puts. Let's see if they can peg the stock at $45 on the nose this Friday.
HeavyDuty,
The charts are going to tell you "after a significant event occurs" that a significant event occurred because the stock blew through its 50 DMA up or down. The charts don't predict significant events, they merely react to them usually after all the hedge bets are laid down plus or minus.
I suppose you could trade short term based on the charts but there is a good chance you could get caught with your pants down when an expected significant event happens. The CAFC decision or the signing of a major licensee will rewrite IDCC's chart plus or minus based on its expected monetary value to the company but if you wait to see it develop through the charts, it will probably be too late.
It appears there is some daily trading based on the CAFC decision. I have noticed a rise in price early and then a fairly sharp sell off every day around the time the CAFC decisions for the day are released. The sell off usually triggers the lowest price for the day and then it rebounds a little later and stays flat for the remainder of the day. Based on these trading patterns, it will be interesting to see what happens when the CAFC order is issued.
So is the counterparty Barclays Bank PLC?
NJ, how long would it take to deal with a Nokia request for a rehearing in the event IDCC wins at the CAFC? It is relatively assured that Nokia will request one if it is available even though it is unlikely that one would be granted. I guess they could also request a Presidential review but that is unlikely as well.
Looking at that same link provided by Data, go to the 4G Smartphone Trends and it shows that IDCC is second to QCOM in total patents for LTE with 147. The top five are listed as follows:
QCOM - 250
IDCC - 147
Nokia - 94
LG - 73
Samsung - 67
If you go to the site provided by Data (post 316451), it shows the essential patent holders for LTE. Go to the site at the bottom of the post (http://www.techipm.com/) and then select the patent holders for LTE.
For LTE RAN patents, IDCC has 17 and Nortel has 3.
For LTE baseband modem patents, IDCC has 5 and Nortel has 2.
For LTE Protocol SW patents, IDCC has 12 and Nortel has 1.
IDCC is in the top five for patent holdings for all classifications of LTE per Techipm. It seems these patents ought to be worth a lot more than what the market is currently giving them credit for at the moment. However, IDCC still needs to show the market that they can monetize their LTE patents. So far, I believe IDCC only has a couple of agreements that include LTE.
IQ, I felt really positive about all of your comments until you mentioned the notion of using "Common sense" in arriving at a conclusion by the Court. Now I think we are screwed.
Hock, I think your scenario is pretty close. When IDCC and Nokia entered into their strategic partnership back in the 90s, Nokia and its law firm thought they were going to get a free ride on 3G going forward. When IDCC pressed Nokia for additional 3G royalties, Nokia upper management went balistic and they along with their law firm vowed to fight IDCC to the grave. They settled all 2G claims in the 2005/2006 time frame after the ERICY settlement in 2003 and agreed to cancel their 3G agreement and sever all ties with one another. It has been in the courts or ITC ever since. The lead counsel for Nokia's law firm will easily retire on this case.
I would like to have seen IDCC file a follow on case with the ITC which included some of the new patents that addressed the issues raised in the initial case. If they win the initial case, they could simply agree to drop the second case as part of the settlement agreement. I don't believe the initial cost of filing a second case would hve been that significant and the clock would already be rolling while the first case is still pending. A second case with stronger patents might have also provided a greater incentive to settle knowing that two cases were now on parallel tracks and IDCC was not going to give in. If IDCC loses at the CAFC, another case will undoubtedly be filed but that will be another two-year process. Samsung will be the next hold out if Nokia is not resolved by 2012. We could have cut one of those years out with a follow on case. (I'm assuming the ITC would have accepted a follow on case while the first case was still pending at the CAFC.)
I am also pretty upset that IDCC has not brought suit against ERICY or Motorola unless those parties are somehow tied to the Nokia case. We have been told that they are not but then why have we not gone after them in all these years especially since we supposedly have had a framework already in place with ERICY since 2003. It looks like IDCC is just waiting for a rate and that appears to be tied to Nokia.
IDCC management needs to understand that it really is all about Nokia and they need to use every weapon in their arsenal to bring that copmpany to its knees in the shortest amount of time possible.
Jim,
I thought I read an article earlier this week that gave Nokia about 20% of the 3G smartphone market worldwide. Obviously, their sales in the American market are pretty dismal so these sales have to be mostly in Europe.
Nic,
It is a canned template with different names and numbers. That's why he should just be exposed and ignored. TMF will give him space because he gets attention with his crap and that means more advertising dollars for TMF. It's all a phony game for advertising $$ but that's the same business plan for everything on the Net. We just have to know how to wade through and separate the iron pyrite from the real gold. With this board, we have the expertise to do just that. Seth was exposed immediately on this board as a phony.
vtem, I'm afraid it is probably protected under the American axioms of "Free Speech" and more importantly "More Advertising $$". We'll never be able to get rid of crap like this so it's best to ignore it and not give it any air time.
To All: This Motley Fool article is a canned report that the author can issue with any company's name on it. It surfaced on a couple other companies I follow several months ago. It is a marketing gimmick and should be ignored. It is not based on any real fundamentals. The language in the report is usually identical for every company it has been applied to.
I didn't check to see if it is the same author or if the canned report can be picked up by anyone and published based on a whim.
Data,
This is a sort of form letter that surfaced several months ago on the internet. It has come out with dozens of companies names on it. It is a marketing gimmick and pure BS.
With any landline infrastructure severely damaged in the affected areas, wireless sales could be robust as the Japanese will need to reinstate their communication needs in short order. I would also assume most of the property that was damaged has been insured so the Japanese economy should be enhanced during the reconstruction cycle.
The remaining significant unknown is the impact and status of the nuclear power plants and the long-term impact on northern Japan. If there is a total melt down, there will be no reconstruction in northern Japan for thirty years. That's the part I fear the most.
You were pretty much right on with your estimate of 4th quarter 2010 revenues and earnings. I too wish they would push into the black for a quarter. We do need a nice surprise on the conference call tomorrow. The fourth quarter net billings increase looks good though.
The Apple fixed fee license is a joke. When does this agreement expire? Also, do you think the new licenses signed in 2011 are included in the first quarter revenue guidance?
Earnings released on Yahoo - $0.76
There are approx 15K option contracts in the money that will expire tomorrow. Some of those positions will be cashed out and many others may be exercised. How many of those contracts are naked I wonder? We may see some demand to replace lost (called) shares next week.
The March numbers are staggering and represent triple the volume over February. This is wound pretty tight and is set to explode. Now I can see why the MMs are constantly raising the price, the demand is constant and they don't want any additional exposure to losses if any positive news appears.