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Let's make it simple:
(1)IDCC issued $230 million in a convertible note, convertible to a total of 4 million shares @ $55 per.
(2)At the same time IDCC bought an option for 4 million shares at a cost of $42 million.
(3)Next it sold a warrant for 4 million shares @ $64 per share and got $30 million for it.
At the end where will it leave us:
(1) and (2) net out in the number of shares and leaves the company with $230 million, less $42 million in 'cash' in the bank and no change in the number of shares outstanding.
(3) the company will issue 4 million shares @ 64 per share and got paid already $30 million. Potentially (if the stock price exceeds $64) it must issue 4 million new shares but will receive an additional $256 million in proceeds. This part will be dilutive in the number of outstanding shares. However, since this is a transaction in the Company's equity account, it is a tax free transaction. Think of it this way; if IDCC settled this warrant with Treasury Stock ( purchased in the open market in the past at or below $40 /share), then the difference would also be a 'tax free' gain.
How many shares of Berkshire or Roche do you own?
This is the time for a Stock split and an increased cash dividend!
How about a two for one stock split (a stock split carries through to the Treasury shares) and a 12 cents quarterly dividend per new (split) shares (a 20% dividend increase).
Make the 'record' day the last trading day in December and the 'Shorts' will have 'ein guter Rutsch ins Neue Jahr'*
* this is Austrian for a great entry into the New Year.
p.s. To IDCC Management: you do not have to pay for this advise, its my gift to you!
Yesterday's trading and today's
Today may simply be a 'knee-jerk' reaction to yesterday's decline.
As to yesterday, early in the day market makers may have seen an opportunity to acquire some shares, seen an absence of 'Bids' and decided to 'slam the price down in the hope of scaring weak hands'. They sold lots of shares short between themselves ('selling form the left to the right pocket') and during the last five minutes of the open market reversed the process ('selling from the right to the left pocket')to clear out these short trades from the morning.
If any institution would have wanted to 'unload' a big position, I am confident, a call to IDCC and they would have bought the position in an 'at market' trade in the open market.
We, the public, are being played by the market makers. Have any of you observed how often the 'market' trades far away from the shown 'Bid and Ask'?
In these situations when you placed a limit order, how often have you been told 'you are away from the market' or with a market order found yourself with an adverse trade execution.
Remember, never try to sell into a panicking market.
Shorts may be feeling some heat and timing pressures.
Time is on the long's side.
Some times big holders write calls on their holdings or sell short against its position. often they generate extra returns, but sometimes they are wrong and lose their hedged shares. shorts often cover buying calls and exercising them. This may also explain declines in open interests on short positions.
OB; I generally like your posts and this one is such a teachable moment. in regard to estimates, forecasts or hints one usually is damned if you do and damned if you don't. personally I want BM to run IDCC as best he can and spare me forecasts or wish lists.
I worked for more companies than I care to remember, but all had one thing in common: they all had business plans, some for one year, others as far out as ten years. Most noteworthy, none ever even thought publishing them, eiven internally only distributed them on an as need to know basis.
johnS; sorry you did not catch the sarcasm in my post.However, you do make a good point directing attention to the list of largest holders. All of them are what one could call savvy and experienced investors who most likely do not wait with baited breath for a dinky-dinky analyst's half a$$ latest estimate based on information spoon fed to us all by management, who is restricted in what they can say after the books are closed and before results are reported - - phooey I am out of breath after this whooper of a sentence.
Now BM pulled in his horns from his $800 million target to a more conservative $500 million. This is now priced into the stock. What if his original target of $800 million is reached and he now misses his latest and lower target on 'the other side' - will the stock then sell off big time because of the miss?
Should I sell now in anticipation of this happening? Come guys, some help and advice.
Vg; thanks for your comments. As a retiree have lots of time and read this board,it gives me a sense of prevailing sentiments. Fortunately, for all of us on this board our combined holdings mean very little as far as influence goes. This is in regard to both stock price and management. Would not be surprised if Market Makers and their friends monitor this board as well to appraise the morale of the 'weak hands', namely 'us' the small guys. For them it must be fun to be able manipulating us as they do.
Wonder how often the 'scared hands' who sell in anticipation or on bad news or weakness and find themselves buying back at a higher price? Maybe they are 'traders' and see no value in 'long term' status of their investments.
PR, Guidance, expectations are different from actual performance. Unless you've been in management situations as is IDCC's management, this is hard to realize and easy to criticize from outside. When you deal with an industry giant, such as NOKIA, who rather destroys itself than become a reasonable business partner, you have a difficult hand to decipher the future. Will AAPL turn into a similar cut throat, who will destroy rather than act responsibly? Management has no superior knowledge who will settle next or at what terms, so any guidance is difficult or turns into pre-reporting a known fact. We've just seen it with the estimate, its reflection with subsequent actuals and how it was presented.
I am in absolute favor to forgo all guidance reports by Management. Report what you legally must report and nothing more; report financial results the earlier the better and let the chips fall as they may. The company can not control short term trading pattern in its stock, nor should it.
Like Loop and others, I am in IDCC since its 'settlement' with QCOM. Did I sell on either the two $80 peaks or on the bounce off the SAMI settlements? No, I did not and have no set plan to sell at any price or time in the future (unless circumstances force me). I am not on margin so can not be forced to sell (except in a take over). 74% of the stock is held by institutions, they are not selling, so why should I? Paulson wanted to unload 3 million shares and the market absorbed them - those were actual shares that became available. Of the day to day trading, even like today, how much volume is vapor created by market makers?
The problem with many on this board, they are either short term traders or tired longs waiting for a quick 'pop'. They verbalize - not often fair or pleasant.
IDCC has demonstrated staying power and the ability to advance.
As an investor, on my money in this stock the dividend return is around 4%, even for new money in it today it is around 2%; a heck better than Money Markets, Savings Accounts etc. and gives a chance for Capital appreciation - tough to beat!
What an analyst could have said this morning and gained some credibility:
"prior to the announcement of the Sami Signing I had no earnings estimate (had no clue), but after the company gave us its revenue projections and I assumed the Arima settlement was included in that projection, I published my earnings forecast of $2.11. This number far exceeded the levels of the first qtr and also the second qtr of last year, did it by huge margins.
Today, the company announced its earnings but excluded the Arima settlement as it is still under appeal. By excluding this settlement from my estimate of three weeks ago, my 'pro forma' estimate would be $1.71 and the actual earnings would have exceeded the estimate by over 10%.
Clearly, with such impressive earnings and revenue growth as just reported and a dividend yield of almost 2%, I must classify this stock as a 'Sell' in order to please my 'big institutional friends', or they won't do business with me in the future."
It does not matter what the numbers are;
The news wires reported an earnings miss of 18 cents per share!
[never mind the earnings estimate we fell short of was by two third string anal(ists), extrapolated based on revenue estimates given by MGT three weeks ago]
Flash!: third qtr will also be strong as they will have Arima in the back pocket!
Maybe the 'Market' heard Mickey's. ITS A SCREAMING BUY
Different day, same story.
the technical level IDCC operates at is way beyond my technical comprehension . I am A retired financial exec and Wall Street maven, know about PR and financial presentation. I concede our management is trying hard, but I can't figure out if they act on their own intuition or on ' advice' from outside gurus. if it's the later, ask for your money back.
Let's look at were we stand: They doubled the Dividend - good if they will have more of a follow up other than years from now; They announced $300 million in share buy back - almost 20% of the float - with a number of Institutions holding well over 5% of the stock such a buy back would increase their stake by 20% as well, without any action on their part (a buy back of that size makes sense only if it is designed to prevent future dilution, like from the Barkley deb); more recently we noted no announcements during options expiration week - good strategy with a pox on both sides of option speculation; the announcement of activity on infrastructure - like kissing you cousin; earnings announcement more than two weeks before the event with a date almost at the 45 day limit, when over the recent times the release date was near or under 30 days from the close - why?
Why give the market this time of speculation? Why no update to the earlier guidance with just a tightening of the range?
Is the company expecting a major announcement they would like to include in an earnings report?
I could go on.
This has been and still is a tough stock to hold, the institutions are hanging in there and so will I
(Too lazy to correct spelling as it would tempt me to erase the whole thing)
Data; have nothing but disgust for the ITC. In my charitable mood I think of them as ignorant hags, but when worked up my thoughts run along the line of them being as corrupt as corrupt can be.
The ITC has failed to help domestic commerce and is in the process of destroying the American Patent system!
I believe the American Patent should be paramount and it should be the violator's job to prove he is not violating. This should not even be an issue if a patent is part of a declared standard.
The ITC should be disbanded/eliminated.
We are stuck at the ITC right now and will have to wade on and complete the process - regardless of the outcome, but fight on wherever (not at the ITC). Our fight is not only personal/IDCC, but is for our economic system and personal property ownership (including Patents, Copyrights etc).
I happen to believe in fighting violators with a small number of patents in one court, fight them with another few patents in another court and another and another until we gain the recognition we deserve. Delaware, Texas (barefooted), any court will do, but no more ITC - in my opinion (with no proof) the have been bought and it would cost too much to re-buy them.
Delaware? Somehow still have a bitter taste in my mouth since the Motorola case!
It is not IDCC's style to make any announcements in the week of Options Expiration!
just settle in and watch the Market Makers drive the share price to $45 strike
Had plan to upgrade my computers and phones to all Apple products, but decided to hold off until they re-signed with IDCC. this has no impact on them, but makes me feel better (besides saving me money).
retail Broker analysts get paid for the business they bring to their firms.For examples they may bring a debt financing deal to their firm (Barkley did this with a 'useless to IDCC' issue); they may bring in a secondary stock offering to be run by their firm (IDCC is buying back it's stock) or for some reason create retail buying interest to generate commissions. (The problem here is retail commissions are so low, it would require huge trading volumes, BUT IDCC has only 40 million shares out and most of them are institutionally held.).
Besides, Brokerage Firms to not like holding large stock concentrations in retail accounts - legal, suitability etc.
As I often said before: split, split, split and split again and again. Through splits keep the stock price in the $ 20 to $ 40 range!
It suddenly dawned on me, the ITC will twist itself in an unlimited Prezel to not rule in favor of IDCC.
As punishment the ITC can only give a domestic market exclusion and in a 'Standard' driven product such a ban would have to apply to all unlicensed particants. The political repercussions would just be too great. In Federal Court cases each offender must be named specifically.
Therefore, the ITC will always find a way to rule against one like IDCC and is willing to punt it 'upstairs'and let 'them' make the call.
For IDCC the ITC is and will be a dry hole. We should realize this now. Driving the current cases to their conclusion (whatever the results will be)is the only solution and money still well spent, but new cases should be initiated in more than one court system. Each case should be against one offender and each case should have a slightly different pool of patents. This way consolidation of cases could be opposed.
p.s. I'm a financial guy, not a lawyer
Agree!
Without NOK, IDCC has done very well; without IDCC, NOK went into the Tank.
A NOK settlement/fair ITC ruling would have been gravy not on a Pot Roast, but gravy on a Beef Wellington.
Giving the ITC the benefit of doubt, one could rationalize their motivation as one not to give power to an 'insignificant' company like IDCC to control international commerce as reflected by an industry giant (former) like NOK.
Will be interesting to see how much Short covering was possible with this sell off, or if IDCC managed to do any buying (once the ITC announcement hit the tape, IDCC was free to buy!).
Read it again!
We have 827 visitors on this board today and at least that many opinions on anything pertaining to IDCC. Here is one of mine:
The cynic in me expects the ITC with another sharp spike for IDCC to sit on and rotate. So what?
If it turns out in IDCC's favor, then NOK/MSFT will appeal and if it is in their favor, then IDCC will appeal.
Here is what we need to keep in sight: since this battle with NOK started, NOK was the very top of this field and IDCC was on the ropes. Now years later, NOK had to pay us once before and has collapsed into next to nothing while we thrived into a dividend paying entity.
By taking up NOK's broken sword, MSFT may have taken its first step down the Primrose Path of designing inferior products just to avoid paying reasonable royalties to IDCC. In my opinion, Ethics was never a strong suit with MSFT, but stupidity would be a new one.
Tomorrow will be a non event in IDCC's long term saga for us longs.
Funny! That would be a four fold increase of the prior dividend.
However, how about assuming the split stock price would rise to $40+/share by January 2015, then split again two for one and be combined with another dividend increase?
Repeat every time the newly split shares go over $40 again?
In my post I wanted to add:
What do you folks think would have happened if today's announcement would have been a Two for One stock split with a dividend of 10 cents on each split share?
the stock price would have been about were it was two months ago, but now we would have twice the shares out standing which is the same dividend proportionately as they announced.
Now I tell you a market move from $24 to $48 is a hell of a lot easier than a move from $48 to $96!
You would be hard pressed to find a Retail or Institutional Broker who would dis agree.
p.s. IDCC Management if you read these posts: IT IS NOT TOO LATE TO STILL ANNOUNCE A STOCK SPLIT TO PIGGY_BACK THE DIVIDEND INCREASE!
So a stock who just doubled its dividend and now yields almost two percent, while it expects its recurring sales revenue to double over the next two to three years, should be considered a failure because its revenues will not increase by 150% over that timespan?
What world do you posters live in?
What's the value of all the 'Back Royalties' IDCC collects.
Even though they make more money than they need for current operations, they are willing to pass this extra cash to the shareholders as proper risk rewards - it is the way it should be.
All the concepts/ideas they have in their product pipeline are expected to provide opportunity in the future, even if it follows a 5 to 10 year planning horizon.
I wish they would turn to an active stock splitting program that expands by multiples the number of shares out in the market. That expanding pool of shares and increasing dividends will drive the stock price more than any other stock action commensurable with the superior operating performance.
What Value for IDCC?
Once the legal issues are resolved (you can exclude NOK here as a special situation) , a Reseach and Dev. Outfit like IDCC should/will demand a PE in excess of 30.
a rational value as acquisition on a current basis could be as follows:
$ 300 million recurring revenues @ 6 percent - equals $ 5 billion;
Add the cash on the books - $ 800 million;
A fully staffed and functioning research facility(s) @ current operating budget times 5 - $ 1 billion;
This gives a current valuation of $ 6.8 billion!j
Each additional 6% growth rate above base should add a similar valuation as the base. - $ 5 billion!
Conclusion:
base price. - $ 170 / share;
Any price below $ 170 would be an attempt of stealing;
Each 6% of extra growth expectation should add $ 75 / share value!
How fast will IDCC grow with M2M, 4G, 5G, ........ infrastructure, etc, etc......?
Do your own calculations.
Mickey, I am on your side, just not on this issue. For the executives too much is riding on the line. Just think how the shorts would jump with legal actions if they smelled just the slightest misstep. Management does not think in terms of day to day stock price wiggles. Give them a chance and let them do their jobs. Two actions they freely have and can control, changes in Dividends and Stock splits. Both of them are in our Short term and Longterm interests.
P.s. You live in Florida. I live outside of Orlando
IDCC has had success at the Federal court level and in arbitration, however mostly flamed out at the ITC. By now it may be a reasonable assumption that the ITC and particularly the Staff is highly corrupted.. Right now 'losses' at the ITC May irrelevant based on that assumption, but we are too deep
in that process and must continue it to the end.
In my opinion, Samsung signing makes the ITC moot.
Mickey, I generally like your thoughts, however with the buy backs etc you are barking up the wrong tree. As a former CFO and placing myself in the IDCC situation ( with its growth potential) , I would NEVER jepotice the company with any action even slightly on the questionable side. Kabish?l
Authorized shares are split along with outstanding shares, a simple BOD function.,
Yes, particularly if a counter is on the table below your demand and you can elect to accept it, while holding out for a better result.
Also as an example, AAPL May have agreed to renew when the old license expires, but asked to hold announcement until actual signing etc, etc.
Retail investors, the small guys, buy more aggressively in the twenty to forty dollar range, therefore to stimulate retail interest the company should split the stock OFTEN. As son as the stock gets to $60 per share split it three for one and keep splitting as soon as the stock goes over fifty.
A current capitalization ( outstanding share level) of forty million is ideal. A 3 for 1 split takes you to 120 million shares, another 2 for 1 slit to 240 million and a 4 for 1 split would take you to roughly a billion shares. Then you would become of real interest to funds and big boys. just think with a billion shares and a 10 cent dividend it would cost the corny $100 million per year and could give the current holder ( after the many split ) one heck of a return. To hell with a buyout down here.
If you think this is a pipe dream, look at the history of QCOM. Also look at the garbage like Facebook and the valuation it receives.
Mickey,if the company knows it is very close to another signing etc, it can not buy its own shares back.
Mickey, I like your thoughts!
lime, if the Three you mentioned formed a Syndicate to buy IDCC, Iwould expect someone who is left out to sue them for Collution.
My opinion, as often stated, is against a BuyOut. Would hope all Longterm Investors would agree with me. Why hold for ten or more years for a double or even a quardouble?
I like to see a long time and increasing Dividend return on my investment!
As to an individual Company buying IDCC, like MSFT, does anyone think AAPL Samsung , Amazon, Google, Intel, the Chinese etc etc would sit idly by and watch a competitor get in the catbird seat?
Folks, IDCC has not been taken over because no one wants it, no, they all much rather keep a level boat. Meritt et al knows this as well and now do you.
So all sit back, it may not happen by the ASM or the end of the year, but my money says Mickey sooner or later will be more right than most who have speculated around here.
One last thought about the trading and price action, market makers are part of the Shorting Cabal and desperately trying to shake the tree, but relatively small number of shares falling out. The volume is churning volume. Institutions know a short squeeze is coming and they will pounce. No need to start the war today or tomorrow.
I feel better now and return to lurching!
If anyone were to buy IDCC right now, it would not be for its current operating performance, but for its Patents and potential.
If Intel or any other 'biggy' were to make an offer for IDCC, would anyone believe the remaining 'biggies' would sit idly by and let a competitor gain advantage over them?
I think a bid by any 'biggy' would start a bidding war.
The 'last' time IDCC offered itself for sale, no bidder came forward. This kept the status qua and everyone was satisfied except us IDCC holders.
I still believe a surprise buy-out of IDCC is not in the cards and IDCC has to control its own future (which is fine by me).
p.s. If Apple were to offer one of its pre-split shares for a share of IDCC, then all bets are off and I would gladly admit of being wrong.
Random Thought on Apple;
Apple has and will always be very secretive about any agreements it signs with anybody. I think Apple will shortly sign with IDCC a license similar to the current one, but will pledge to utilize for its products only suppliers who are licensed with IDCC!
Apple reveals nothing but IDCC gets fully paid!
the Answer is: YES!
If we don't sell, the Shorts can't cover.
Notice 'our' institutional holders are not bailing (Paulson may have had other problems and his IDCC holdings were (may have been) his most liquid).
IDCC had a reasonably good first Qtr without any help from our new signee. That biggies like LG, Samsung and Nokia currently do not pay is 'old news' and has no relations to current performance. Apple looks better now that Pegatron pays on Apple's behalf, 'Apple' may turn out even better in the future.
Merritt may move too slow for some, but he moves steady and in the right direction.
My shares are not for sale, I do not want a buy-out. I'm with Mickey and the way our institutional holders hang tough, they appear to be with Mickey as well.
Your 'left' pocket sell to your 'right' pocket; now your 'left' is short and your 'right' is long. To keep 'Market Oversight' off your back, your 'right' pocket may be another entity next office or a phone call away. All needed is to repeat similar sales at progressively lower prices. Within the same trading day no shares are required or change hands (not until settlement day), nor a worry about an Up-tick rule. Sales can flow from 'left' to right' or also from 'right' to left'.
At the end of the trading day there may be an imbalance with (for example) the 'left' short and the 'right' with an equal amount long. Now with a 'close to close' trade 'right' sells its long shares to 'left' (to cover his shorts) and both end the trading day 'flat' (no settlement needed). One side may have a loss for the day equal to the gain of the other; so next day the same is done in reverse order and they are in balance again.
What makes this all possible is the absence of the 'Up-tick' rule and the Market Maker exemption of Short-Selling for 'market liquidity'.
Hope you can follow it.
I am opposed to short selling on principle, yet we have to disdinguish between naked and covered short selling.If in covered short sale the rightful owner (from whom the shared were borrowed) had to be notified a legal sale of his shares had taken place and he now owed taxes, the revolt by shareholders would set a quick end to selling borrowed shares.
Live in the land of the mouse - should form a Florida IDCC Fan club.