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Loop; you've nailed it. Investment Banks/Brokerage Houses are largely interested in 'Fee based' business and their analysts are employed to forster that bussiness. Find companies who need to float debt and/or want to issue secondary stock offerings on which high fees can be earned. Analysts will promote them once they are clients.
IDCC did a minimum of such 'business' in the past and now the only fee generating business they provide is stock repurchases.
Maybe those institutions who are long IDCC right now have to get behind the story, but they are just waiting like all of us.
Has anyone related 'a $1 to $2 license fee' to NOK's gross profit margin on its phones or net income contribution per phone?
For a naked short this option play is a smart move. He always has the right to call the stock and pay $30 per share whether or not the stock price reaches this level. His flexibility extends to the fact that he can 'roll out' this option at a cost lower than the cost of the exercise. Here the critical point is could he purchase a similar call position at a reasonable price. If he can, he will let the older position expire. However, if the market were to tighten and a 'roll-out' is not possible, and he wants to be covered, then exercising an 'out of the money' call option would be a smart move.
The game here is who has the better information or instincts, the call seller or the call buyer? Either way, this is interesting to watch, particularely since we know that not many shorts were likely established at $30 or above.
EEEENOUGHHHHHHHH!
I try to read every post on this board, but this recent fixation on the '$20 million or $26 million and from whom' becomes tiring.
The 'finite' analysis practiced here, in my opinion, has long ago turned counter productive. Who cares about the amount and from whom? It is history, reflected in the finacial results, reported and commended on. The splitting of hair on this board or by 'finacial analysts' contributes very little real knowledge, as the corporation has sufficient leagal and regulatory lee-way to structure its reports to focus on what it wants to focus.
Here are the important fact as we all should see them:
SAM at the ITC is comming to a head (regardless of the Staff ATT's opinion);
NOK will have to face the ITC or settle before Then (most likely);
IDCC signed RIMM and AAPL;
We do not know either RIMM's or AAPL's rates or terms, However, neither SAM nor NOK have stated a public interest for a disclosure. Why? The simple answer is that such a disclosure would not help them, most likely hurt them.
We are (hopefully most of us) interested in IDCC's longterm, so daily swings are not important. Time is our friend.
As the old saying goes, we've gotten over the dog and all we have to clear now is the tail.
The shorts could move this stock higher before we see a move from results.
Relax;
Have some OT topics if posting you must;
most of all, don't take yourself so serious, I've met a number of you at past annual meetings, you are all nice people.
When dealing with unknown it is easy to get hung up on negatives. Two facts we know. Prior to the hearing IDCC challenged the STaff and IDCC prevailed before the commission (IDCC won that round). Then in the hearing Staff sided with SAM to no 337 violation, but IDCC had the opportunity to redress and it is open to how the ALJ will rule (still open).
Merritt and/or his lawyers were there during the full hearing and WM stated his confidence (ok, they always state their confindence even when we drew the short straw).
Remember all we can lose at the ITC is a full ban of SAM's products; the ITC will not invalidate our patents and the only thing SAM can win is what they are now claiming that this whole case is a royalty dispute (civil case). They agree with us that they owe, the dispute is how much and an ITC ban would help us forcing a settlement in our favor.
I feel SAM and NOK should be banned by the ITC simply to demonstrate to foreigners that our laws have meaning.
I agree. November is the month that's important. Either IDCC has the 'goods' or it does not. In this past turmoil I inhaled deep and doubled my position at an average cost of $25. My oldest position goes back to the IMMC days. Now I would like to increase my position further, but then I fear the continuation of my 50 year long marriage may ride on the success of those incremental shares. Maybe I get more currage as the time goes on. I'm tempted.....
The key point is that full disclosure of the reversal was made. Technically a claim could be made that finality became available on 7/1 and after the closing of the books on 6/30. This is a minor point, trumped by the importance of full disclosure.
More importantly what could it mean? In my opinion the UK case was never fully completed and cost allocations were not made. The expense split was most likely an agreement between KOK and IDCC that allowed closing all UK issues before confirmation of the Punfrey decision. In this process IDCC ended a legal battle that had no upside of a cash settlement with a 'legal recognition' of eccential patents, but it cost $4 million to do it. A PRICE WELL WORTH IT!
Now my WAG as to where from here. IDCC will collect the full boat on 2G through 2005 ($160 million+/-); then sign a 3G agreement effective as of 1/1/2006 and at the same time converts the '2005 settlement' to a paid-up 2G license. This would waive any 2g settlment for 2006 and beyond.
The 3G agreement would have back royalties to date that are payable and could be dicounted ,i.e, at 50%. Forward royalties could be set at 2% discounted 25 - 40% on prepayment.
NOK, how would you like that?
Once a CFO knows an existing reserve is no longer required, he must reverse it in the next reporting cycle as an adjustment. Such adjustments must be in the 'next' earnings release. This means as the redundancy was known after closing the book on the second quarter, but before the second quarter results have been released, it should be included in the second quarter report. If an election is made not to follow timely inclusion, then a charge of 'manipulation' would possibly arise.
The gain from 'playing games' with such items, relative to the risk, is not worth anything to the company and most certainly worth nothing to the CFO.
If IDCC's 3G patents are so weak that it would take a big concession of 2G assessments, then why should NOK/SAM sign under any conditions?
IDCC only gains the respect of the Market if it signs those two to 3G licenses on the merits of the 3G patents.
Lawyers may see the business conduct of NOK/SAM as normal, however as a non-lawyer but business executive, I see their conduct way beyond the bounds of what one may call responsible business relationships.
Even commercial activities need some basis of trust and respect for a longterm co-interestto be sucessful.
Another observation I failed to include in my prior post.
The ITC cases against both NOK and SAM should play out to conclusion or NOK's and SAM's concession. The only issue before the ITC is whether their products should be blocked from the USA market or not. In the SAM case the Staff lawyer came down on the side of saying the USA public is better served if there is no ban. The ALJ has a greater resonsibilty to judge if the USA patent system deserves the respect other nations give to their patents. The USA Court system is at the point where a patent system gives protection or not. These IDCC cases may be the most logical test cases and Judge Luckens my be the right Judge to confront this issue.
If our patent laws can be ignored and licensing fee negotiation dragged through the civil courts for multible years without risk of a market forclosing, then our Patent System, Copyrights etc will soon mean nothing and robbing our scientists of any incentives to invent.
We think in terms of IDCC and what it means to us, this ITC Judge has a much larger concern that impacts the longterm viability of this Nation's scientific pre-eminense.
We no longer live in an environment where NOK supplies most of the Phones, but we have a multitude of suppliers who rise on product merits and who live by the rules. Those players also need protection of a level playing field.
Lets start the 'Black Drum' roll - NOK, SAm can you hea.r the sound
Current Status.
I read every post and seldom fell as out of sinc as I do over the past two days.
First of all, IDCC had two significant victories putting us in our best position to date.
When NOK managed to escape (temporarely) from the ITC through the Batts ruling, IDCC stock got hammered, but not regained that loss since the reversal; that recovery will come.
The sammy award on 2G was reconfirmed once again and IDCC should collect every penny of it without conceeding anything for 3G. 3G should and will stand on its own merits. If we have the goods, we should aim to collect the full boat from both NOK and SAM. Giving up any penny of the 2G award to gain aceptance for 3G would be a sign of weakness telling the NOKs etc that hanging tough leads to their gaines in bargaining, whn the message should be there will be a price in contesting (besides it is unfair to those who play by the rules).
Now some feel that the market will give little recognition to a one time payment of $200 million for an 'expired' technology. I think those thinkers are wrong! Right now the market expects IDCC to be stupid enough to give up most of this gain for a 'quick' 3G license. That thinking must be destroyed by IDCC to make the industry and the market understand that IDCC intends to get full rewards for its contribution. This issue must be settled now in the 3G contest and can not be postponed, unless we aim to see the same pattern in 4G; 5G; 6G etc.
So friends, relax, let IDCC do what it must do and all who hold this stock will be rewarded beyond our dreams.
I still vote for the company to buy back all they can. Once the stock passes $40 then plan for a good dividend. Should the stock pass well beyound $100, then announce stock splits (rather than stock dividends) to keep parity of all the treasury stock. Do I hear an Amen?
Granted on the 8th 4.9 million shares were traded, however how much of that volume was churning? For shorts to have covered a significant amount (say 2 million shares) a major Institution must have taken the 'pipe'. My guess would still be for short position over 5 million shares, while my hope is that IDCC was smart enough to pick up a good amount of what actually changed hands. You are a good trader who knows how this is done.
We have 45 million shares out and over 7 million short and you still wonder?
IDCC, if you are confident in what you have, then buy up all the shares you can get at these low prices.
The only PR I want to see over the next weeks is how many shares were you able to purchase down here!
I doubled my holdings over the past two months, but during the past two days neither sold nor bought more. My investment is longterm and I am confident my trust in IDCC will pay off. Since I committed my money for the long term, it makes no difference to me where the price goes in this cycle, even if it goes lower.
However, I want IDCC go and buy as many shares here as they can and hope they can get all at current price levels. I do not want IDCC to buy here to push the price up! I want IDCC to buy here to take as many shares off the market to really make it tough on shorts to cover.
We all should encourage IDCC to buy now!
This price decline arose from factors outside of IDCC's control and the company therefore should not feel constraint to make use of this opportunity.
Let us all push the company to utilize this opportunity to reduce the outstanding shares to less than 40 million. That would be the best they could do for shareholders.
RIP! My condolences to you and your family. May God bless you and comfort you all.
Loop; Good Points!
I sense that our rush (on this board) to deciper opening statements may have led some to panic and sell before real facts were established.
Opening statements are only posturings and are still subject to challenges. If this case would have been an unquestionable 'slam dunk' on IDCC's behalf, then it would have never gotten to this stage.
At this current state, I would like to see the case just move along to wherever it will lead. Would like to see the company buy back more shares at the current price level.
ITC Hearing
Let me offer a non - Lawyer view: from some weeks ago we've learned that the 'staff' ruled against IDCC on the '791' patent, that IDCC challenged and the whole commission sided with IDCC.
Now 'staff' (Levi) opened the hearing with his 'non violation' that has us all in 'shock' and gave the shorts a second wind. So let me suppose that Levi simply stuck with his initial conclusion and did not revise his position based on the commission's over rule. This is a war that has three sides and on this first salvo staff was not on our side (as we opposed his initial finding). This story has to have its time to play itself out and it is not even over when the hearings conclude on the 15th.
IDCC knows it is in a fight and is fighting on many fronts. This happens to be the currently most active one.
As to what should we do? I am holding all I have (double from 3 months ago).
However, my suggestion for our Management is to complete its open buyback here at this level and do it as fast as possible. Once the buy back is complete announce a new one. Shrinking the number of outstanding shares at this price level would benefit all shareholders, whether or not the ITC ultimately rules in our favor or not (the ITC issue is simply one of banning imprts or not - not insignificant, but also not terminal to IDCC).
Font Size: PrintEmail The web is abuzz with the news that the latest iPhone 2.0 beta software revealed whose chipset was at the heart of the impending 3G iPhone. The fairly innocuous and cryptic word ‘SGOLD3’ embedded in the code points to Infineon’s SGOLD-3H baseband processor. While this is news for many enthusiastically expecting the 3G iPhone, it is only a confirmation of what I have been saying since last fall – Infineon (IFX) and InterDigital (IDCC) will be at the heart of the next iPhone.
The Infineon SGOLD-3H together with the MP-EH platform is a natural solution for Apple (APPL). Infineon’s SGOLD2 and the MP-EU platform form the basis of iPhone V1 and Apple has spent considerable time and energy optimizing it for performance, stability and power consumption. It makes sense to carry the good work forward with MP-EH which looks very identical to MP-EU rather than reset it with another new platform. You can read the rest of my prediction analysis from last fall here and here.
While Infineon’s SGOLD-3H appears to have been the default solution for the 3G iPhone, Apple definitely will not regret its choice. The Infineon solution is a Category 8 HSDPA solution, meaning that it supports incoming data rates (equals download speeds) of up to 7.2 Mbps. It has a fractionally spaced equalizer implementation of the receiver (which I think is predominantly InterDigital’s IP) that allows the realization of nominal data rates in mobile conditions. Not surprisingly, Infineon was one of the three companies picked as the 3G performance leaders by Signals Research.
It is also important to acknowledge the other winners if the MP-EH and SGOLD-3H are in the next iPhone. First and perhaps the biggest will be InterDigital. Infineon’s 3G solutions use InterDigital’s stack. InterDigital is bound to get per-unit royalty and its deal with Apple last summer is a good pointer towards this direction. The King of Prussia company is Infineon’s behind-the-scene partner for 3G. My extensive coverage of the InterDigital connection can be found here and here.
Marvell (MRVL), I think, will continue to supply the WiFi provided the interoperability issues it faced with its previous offerings are ironed out. With the Garmin Nuvifone around the corner, it is quite possible that iPhone will also have GPS. Broadcom (BRCM) is in a nice position to offer a bundle of its WiFi, Bluetooth and GPS offerings and may come out a big winner despite losing on the baseband front. As with the chipset itself, I expect Apple to retain most current component vendors who have met Apple’s serious performance expectations last time around. More on the iPhone 3G potential features can be found here.
I am glad that my iPhone 3G predictions are expected to be true. While the actual winners will not be determined until a tear-down, this is good intermediate information. Infineon is trading close at $7.37, close to its 52-week low of $6.26. InterDigital is trading around $20 today. If you have not read my InterDigital valuation series, perhaps this is a good time to read it. With the details of the iPhone 3G consolidating, now is perhaps a good time to pick this stock up even if you are looking at some quick short-term profits.
Disclosure: The author was long InterDigital at the time of writing.
Vijay Nagarajan
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A naked call is a short sale and the seller must maintain sufficient margin in his account for a buy-in when called. When a naked short receives a call (to deliver the stock) his firm usually allows him to buy back his short calls (at market!) before they buy-in the actual shares. If the client succeeds and closes his naked option, then the original call is served on the next client and the same process repeats. The caller ultimately gets his shares if he has the money to pay for them.
If he exercises his call in a margin account and the market for shares is tight, then most likely his shares are loaned out again - or his firm just gives him credit for the shares in his account, while holding an IOU for these shares from another broker.
Most importantly, here is what happens to the cash!!! The client exerising pays for the shares in full (either cash and or borrowings on margin), his firm receives his money, but because it received no stock from the other side, it holds on to the cash unti actual shares are delivered to it. Now you know why firms have no urgency to close out shorts.
The way I understand it, the differnce between the option price and the market price when exercised is recognized as ordinary income, subject to immediate taxation. The appreciation from that point forward, if held for a year before its sale, would be treated as capital gains.
Wanda; that's your best post so far. Keep it up and this board may warm up to you.
Would NOK like to buy IDCC? I would say YES! YES! YES!
Could they?
By now it should be clear to the whole world how NOK behaves in licensing. How many in this industry would like to see NOK holding all of IDCC's intelectual properties? My guess, no one would; matter of fact that would be a nightmare scenario. Neither would anyone want to see QCOM buying IDCC.
Every producer of wireless phones would be in the market buying as much IDCC they could buy, just to keep it out of the Q's or NOK's hands. Also IDCC holds 15 million+ shares in its treasury , it could sell to friendly holders (how about 5% to each of Microsoft, Apple, Google - or add your favorites). Such proceeds could be dividended out to holders of record two weeks later. I bet Shorts would fill their shorts with something other than enthusiasm.
No! IDCC's management is much smarter than to let this company be stolen from them, just when untold riches are within sight.
We all should just relax. We know what's knowable to the general public and it now is in the hands of the court.
In my opinion, if the courts go against IDCC here, then you can kiss goodby the United States primary position in INtelectual Properties. This case is this important and I would think this premise would be foremost on the mind of the ALJ.
Now for me, back to lurking.
Both you and revlis made good points that the short term investments include corporate paper.
Lets be practical; assume IDCC could purchase another $70 million of its stock, but had to take a loss on its short term investments to do so. How big a loss would it be to become a deal breaker? If I was the CFO and review the current financial position, consider cash burn rate at current leagal activity or with most leagal issues settled soon, around a 10% haircut would be a reasonable trade-off.
To our lawyers a question: over the past 10 years how much did NOK and Sammy cost us in fees?
http://finance.yahoo.com/q/bs?s=IDCC
When I asked the question in the past, was told cash equivalents are Treasury Bills and short term investments are Treasury Notes. Was told they invest for savety and liquidity, not for maximum gain. Do not think such strategy has changed.
As a followup to some other poster, at this time I believe the best strategy is to maximise buy-backs. Once we sign Sammy and/or NOK, then declare a dividend as quickly as possible and sufficiently large to be meaningful relative to today's share price.
Both.
Thanks! This board is awesome!!
Number of point:
If the stock is halted because of news (good news) and the halt is longer than a day, that means there is a imbalance of buys over sell that the market makers will not or can not fill. You can then expect the market to open significantly higher (we are not talking $5 0r $10!!!). If the stock price trades more than 33% above the strike price, then ina margin account this stock becomes a free exercise (no more money needs to be put up).
When a call option is exercised, the stock must be delivered to you - you are calling it. If you have it on margin, your broker could loan it immediatly.
If you sell an 'in the money put, the stock is either put to you or you get to keep the money. You can not demand a 'put'. Hope this helps.
Yes.
I do think there is more intelligence on this board than is in congress, unfortunately.
olddog; I speak from experience!
Have to trust them. It is in anybody's interest to be honest. You can prbably guess who is not.
If you have a margin acount, but have nothing borrowed on it, by the rule, your stock can not ne lend. If, for example, you hold $1 million of stock in a major company and hold $1/2 million in IDCC, all in a margin account and you have a margin debit of $1/2 million, then your broker can ignore the $1 million in the other stock, apply all the margin debit against the IDCC and now can take your IDCC shares and lend them out. You would never know it and your broker does not have to inform you.
To begin, one must understand the 'Market'. Brokerage houses/ Market Makers, as a rule and in my opinion, do not care about the companies whose stock they trade in, unless an investment banking relationship must be protected. To them, volatility means trading profits, either as commissions from you or I, or trading against the 'public'.
Just always remember, as far as the SEC is conserned, Market Makers have different rules than you and I. Market makers can short 'out of the....' and can then hide behind 'as in the line of making a liquid market'.
What is difficult to highlight or prove is when 'making a liquid market' ends and helping a naked hedge fund/ entity begins?
Again, two options are open to us:
1) Petition IDCC to list on the NYSE;
2) Get an idea as to how much voting power we have; Since no one can solicit this information, but we are free to proved this information, I suggest we pick one person and mail him the information. I would suggest J. Lurgio. He may not like it, but can't do any thing about it. He would be free to collect the info and could at some time say 'he received unsolicited info from i.e. 0.9% of the outstanding shares ( or 10.2% etc).
Hope this helps.
Hoping for relieve from the SEC is like waiting on Santa Claus. The SEC hides behind 'securing a 'liquid market', which is also the mantra of the Brokerage Houses/Market Makers. While we small investors are whining and small stock companies are hurt as their number of shares are inflated by shorts, market makers and hedge funds laud the current rules. Guess who has a greater impact in the ears of the SEC?
Just remember, if shorts sell i.e. 5 million shares of one company's stock, the Market has absorbed that extra paper, but the company did not get any benefit from that extra issue. What makes this worse overall, the shorts can inflate a company's shares on the quiet which are held by the public, while if the company wanted to issue more shares it has to jump through a lot of regulatory hoops that cost it losts of legal fees.
If IDCC has 65 million shares issued and holds 15 million in its treasury, it will mail out 45 million statements to the primary brokers and individuals on their shareholder's list and counts 45 million votes. If you have a margin account holding IDCC and your broker mails you a proxy statement for less shares than you own, then you have a good indication that all your stock covered by your margin, has been lend out.
Buying back stock is very effective. Unless there is a material fact, other than a close signing by NOK or Sammy, I believe IDCC (with its 8K out there) is free to buy its stock and it should do so. If IDCC's latest buy program is completed, they should announce it, state how many shares were bought back and announce a new program, even if it is only $50 million!
The difference would be that a put and call have specific expiration dates that force action. In a rough Shorting attack, such as in IDCC, a determined short can hold his position until forced to buy in. A Buy-in happens when his collateral runs out. Also, in a fight as we are in with IDCC, there may be some brokerages that a willing to flount the rules in order to protect a big account. Unfortunately, this happens more often in NASDAC/OTC stocks.
While we can ask our brokers not to lend our stock, they don't physically have to hand over certificates, but only have to confirm lendable shares are within the firm. The biggest step to fight the shorts (other than great results) would be for IDCC moving its listing to the NYSE. On the New York Stock exchange shorting rules are more strictly enforced and more likely to flush out naked shorts.
The question is how do our big institutions play this game? (On both sides of this issue????)
Why would anyone even contemplate an IDCC takeover by NOK?
With a potential settlement of Samsong's 2G and signing a 3G agreement, followed possibly in 3 years by a 4G (then 5G etc); NOK settling 3G and again followed by a 4G etc; the whole industry falling in line signing (maybe even QCOM having to fall in line), the potential value of IDCC is much in excess of numbers bantered about. I presume many of us made a longterm committment to this investment, as have most of the institutions holding this stock, therefore a double or low multiples of the current price are not what we aimed at. For me, and I trust for most of you, this investment has become a once in a lifetime expectation, an expectation I do not want to see trunkated by a premature sell-out.
Many of us did not sell in the $70ies years ago, or recently as high as $35! This is like high stakes poker, I've made my bet and I want to see it play out. This is a very knowledgable board, so we are not flying blind and NOK's shenanigans no longer scare me. Does anyone recall what QCOM's capitalization was at the time they settled with IMMC and what it is now? A potential growth like that is what I could see for IDCC in its future!
Now to the practical issue of Short Selling: IDCC has issued and outstanding approximatly 60 million shares, of which roughly 15 million are held in its treasury. WE have approximately 7 million short. So the total investment community (us longs) own right now 52 million shares while only 45 million exist. My broker is responsible to have my shares available for me and if he loaned them out, he still is responsible to get me my shares when I demand them. Any attempt to force me to take cash would lead to a court conflict (class action?). Besides, too many interested parties in this industry would fight 'tooth and nails' to prevent an 'one entity buy-out'.
The other big defense against an unfriendly take over attempt resides in the 25% of all shares held by IDCC. These shares are still free to be traded and could be sold to respectable opponents to a NOK buy-out. ( Even if someone managed to buy as much as 80% of all outstanding stock, the company could not be de-listed!)
So, for what it is worth, my instincts (developed in finance A&M) lead me to conclude that at worst the legal chain will play out or we get an early settlement. In my mind, the only discussion is on the definition of 'early'.