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Gamco, thanks.
scooby5, in case you didn't know, OLED and IDCC were founded
by the same person. It's quite an accomplishment to found two
multi- billion dollar companies. May he rest in peace.
https://www.businesswire.com/news/home/20221206006022/en/Universal-Display-Corporation-Announces-Passing-of-Founder-and-Visionary-Entrepreneur-Sherwin-I.-Seligsohn
https://www.interdigital.com/post/interdigital-mourns-passing-of-founder-sherwin-seligsohn
Here's more on Tesla. Did anyone here know this?
<<Tesla tells UK court it has Avanci 4G license but wants preferential 5G rate, estimates Avanci’s coverage at 80% January 3, 2024>>
https://ipfray.com/tesla-tells-uk-court-it-has-avanci-4g-license-but-wants-preferential-5g-rate-estimates-avancis-coverage-at-80/
https://ir.interdigital.com/news-events/press-releases/news-details/2016/InterDigital-Joins-Avanci-IoT-Licensing-Platform/default.aspx
Tesla doesn't want to pay:
<<Tesla
On December 5, 2023, Tesla and certain of its subsidiaries filed a claim in the UK High Court against the Company and Avanci. The claim alleges invalidity of three of the Company’s patents relating to 5G standards: European Patent (UK) Nos. 3,718,369, 3,566,413, and 3,455,985. Tesla sought, among other relief, a declaration that the patents at issue are invalid, not essential, and not infringed, revocation of the patents at issue, a declaration that the terms of the Avanci 5G Connected Vehicle platform license are not FRAND, and a determination of FRAND terms for a license between Tesla and Avanci covering its Avanci’s 5G Connected Vehicle platform. On March 8, 2024, the Company filed a jurisdiction challenge; a hearing on the jurisdiction challenge is scheduled to begin on May 20, 2024.>>
https://d18rn0p25nwr6d.cloudfront.net/CIK-0001405495/70413e4c-43fe-4e26-98be-1b8fa3a3ea6b.pdf
Did anyone know this? I heard something about this in the conference call yesterday,
but I'm not sure if it's this older news below - or new news more recently.
<< On December 21, 2023, the Munich Regional Court issued a decision finding infringement
and issuing an injunction against Oppo. Oppo filed an appeal of this decision on January 22, 2024, which is pending.>>
https://d18rn0p25nwr6d.cloudfront.net/CIK-0001405495/70413e4c-43fe-4e26-98be-1b8fa3a3ea6b.pdf
IDCC bought back almost 500,000 shares this year and
"they're not done yet."
German court issues injunctions against Lenovo and Oppo - the court also said
both companies were unwilling licensees.
Loren just said this in the conference call.
<<Moreover, IDCC also expects recurring revenue to increase throughout 2024. It has guided for a total revenue for the fiscal year between 620 and 670 million dollars. Excluding Samsung's catch-up payment, that leaves us with 460-510 million dollars in revenue. If that number includes another $50M in catch-up payments, which was the total for fiscal year 2022, recurring revenue is guided to be 410M-460M dollars. This equals a guided expected increase of 1-10% this year (and IDCC tends to beat, or at least meet the upper end of its guidance ranges).>>
------------------------------------------------------------------------------------------------------------------------------------------------------------
Gamco, thanks - that looks like a good analysis - sometimes Seeking Alpha can
be lame. It looks consistent with this from the earnings call transcript:
<< For fiscal year 2024, we have guided to total revenue in the range of $620 million to $670 million. We expect an adjusted even on margin of roughly 50% due to the revenue share associated with large catch-up revenue from recent CE licenses. With that, we expect non-GAAP diluted earnings per share of $7.45 to $8.76.
Longer term, our goal remains to achieve and sustain a 60% adjusted EBITDA margin on $650 million of annual recurring revenue from device licenses with upside from the greenfield opportunity in video streaming and cloud services.>>
<<With all that we accomplished in 2023, the most important thing is that we built on our strong foundation and have carried that momentum into 2024. The Samsung TV agreement Liren discussed is a significant step toward reaching our goals in CE and IoT. On the strength of the Samsung TV deal, we expect Q1 revenue will be in the range of $245 million to $255 million. This includes $152 million to
$160 million of catch-up sales, and almost $22 million of recurring revenue, or more than $85 million on an annualized basis from CE and IoT.>>
https://s25.q4cdn.com/626766191/files/doc_downloads/2024/02/2024-feb-15-idcc-oq-transcript-v2.pdf
IDCC repurchased $37 million of stock in Q4 of 2023 and $340 million
for the full year 2023.
They're down to 26.5 million from 30 million weighted
average diluted shares a year ago.
Very strong full year guidance from $620 to $670 million - that's the first time that
IDCC offered full year guidance. They appear to be confident now in their growth
potential:
https://s25.q4cdn.com/626766191/files/doc_presentations/2024/Feb/15/supplemental-materials-q4-23-draft.pdf
How thrilled was Cohen when he dumped his stock grants?
COHEN ERIC Officer 03/15/2023 Acquisition (Non Open Market) Direct 22,822 $0.00 67,120
COHEN ERIC Officer 03/15/2023 Disposition (Non Open Market) Direct 17,369 $73.43 49,750
COHEN ERIC Officer 03/15/2023 Automatic Sell Direct 7,597 $72.42 42,153
https://www.nasdaq.com/market-activity/stocks/idcc/insider-activity
This is why IDCC is upset. And I'm not happy either:
Mr Justice Mellor, in a significant and substantial judgment, examined and clarified the key principles applicable in global FRAND disputes as well as procedural issues which arise in such litigation.
The Court determined, among other things, the following key points:
(1) The Court set a FRAND rate under InterDigital’s portfolio of 17.5 cents per device (¶813), which was 65% lower than the rate being sought by InterDigital (¶23).
(2) The Court did so based upon a comparable licence analysis, rejecting the 20 licences relied upon by InterDigital as comparables and relying principally upon one of the seven licences relied upon by Lenovo (¶¶793-814).
(3) The Court rejected the utility of the top-down analysis put forward by InterDigital (¶¶815-885).
(4) The Court held that “by consistently seeking supra-FRAND rates, InterDigital did not act as a willing licensor” (¶928), whereas “for the most part, Lenovo did conduct themselves as a willing licensee” (¶¶931-932).
(5) The Court emphasised the need for transparency in this market: “the SEP universe would be able to converge on and agree FRAND terms very much more quickly if the basics of each SEP licence were made public (by ‘basics’ I mean the number of units covered, the royalty rates or total sum paid/payable and which standards are involved). In other words, the market for mobile telephony SEP licences would work very much more smoothly with transparency of what terms had been agreed in the past” (¶200) and this “has implications for how the SEP licensor should conduct itself as a willing licensor” (¶202).
(6) The Court decided that FRAND required Lenovo to pay royalties on sales from 2007 onwards (¶¶424-433, 450-451, 515-527, 532-537, 548, 554-555, 559-561).
https://www.blackstonechambers.com/news/interdigital-technology-corp-and-ors-v-lenovo-group-limited-and-ors/
An article that estimates / guesstimates what Apple paying.
The conclusion is that it's about 57 cents per phone -
much higher than the UK judge. If so, what's wrong
with that judge?
https://www.lexology.com/library/detail.aspx?g=e2b75269-4d7a-43f8-9328-d7da9db35c5c
<<idc offered 337myn for a six year license....which 6 years and when did they make that offer?.... and the 138myn is only through the end of the year......and lenovo will have to negotiate a new license>>
That looks to be the case that Lenovo / Motorola will need a new license
from 2024 forward. But it also looks to be the case that the new license
will required to be at 17.5 cents per phone if the ruling isn't overturned.
Also, don't forget, that IDCC might believe that there's also some non-
standards essential patents that the infringers might be using.
That's important question to ask because I remember that's what
Qualcomm said in their case against Apple.
Judge James Mellor said in a written ruling on Thursday that previous offers made by both Lenovo and InterDigital – which had offered $337 million for a six-year licence – were not made on FRAND terms.
He said Lenovo should pay a $138.7 million "lump sum" to cover past and future sales of mobile devices from 2007 until the end of 2023.
https://www.reuters.com/technology/lenovo-must-pay-1387-mln-interdigital-patents-london-court-2023-03-16/
vegas options, good point.
The interest alone could be $50 million going back to 2007. That's
assuming a 2.5% rate cumulatively. It's just a back of the envelope
number and I'm trying (just guessing) to use a conservative interest
rate number in what was a low interest rate environment since 2008
forward. It wasn't until recently that inflation and interest rates started going
back up.
I didn't say that IDCC was happy.
The PR is also confusing - it could have been more clear.
I could be wrong, but it does look like the past sales going
back to 2007 is included in the total - that's the way that I'm
reading it. And it makes sense assuming the 17.5 cents
per phone based on Lenovo's / Motorola's annual shipments
that I posted in my prior post.
I think that interest should be added - it almost always is:
<<The Court ruled that Lenovo should pay a total of $138.7 million for a license to InterDigital’s portfolio of 3G, 4G and 5G patents, and should pay in full for past sales dating back to 2007. The Court will decide in due course whether additional interest is due on the past payments.>>
https://ir.interdigital.com/news-events/press-releases/news-details/2023/UK-court-issues-decision-in-InterDigitals-FRAND-licensing-case-against-Lenovo/default.aspx
How many phones does Motorola sell per year?
Following a slight decrease in smartphone unit shipments between 2019 and 2020, Motorola shipped nearly 51 million smartphone units across the globe in 2021, representing a growth of around 18 million units compared to 2020, when it shipped around 33 million units worldwide.Oct 18, 2022
https://tinyurl.com/3yvmn6fu
Lenovo / Motorola offered InterDigital $80 million last year.
So at least this ruling is higher than that. But it looks like IDCC
isn't happy with the willing licensee aspect of the ruling as well
as the 17.5 cents per phone.
And important question is how does the 17.5 cents reflect on their
other licenses like Apple and the Samsung arbitration. It's
important for IDCC to hit their revenue targets.
Lenovo Makes $80M Play To Resolve InterDigital IP Dispute
https://www.law360.com/articles/1455185/lenovo-makes-80m-play-to-resolve-interdigital-ip-dispute
<<why are they keep reducing shares?>>
Because too many investors aren't smart enough to buy them!
And, as we know, those buybacks also boost EPS.
IDCC didn't get very smart Qualcomm veterans for nothing.
But if many people are too busy watching sports, etc., they
don't know that.
Here's our CEO:
https://www.interdigital.com/post/getting-to-know-you--interdigitals-new-president-and-ceo-liren-chen
And this man knows technology:
<<InterDigital, Inc. has appointed Dr. Rajesh Pankaj as its new Chief Technology Officer. This coincides with Dr. Henry Tirri moving into the role of Senior Advisor.
Dr. Pankaj joins InterDigital from Qualcomm where he most recently served as the Senior Vice President, Engineering and Head of Corporate R&D, managing a global team of engineers focused on Artificial Intelligence, Edge Computing and new technologies. Throughout his 25-year tenure at Qualcomm, Dr. Pankaj oversaw research in 5G, 4G LTE, augmented reality and other technologies, contributing to an industry-leading wireless and mobile computing patent portfolio. His team developed a software platform for drones that was implemented in Ingenuity, the first vehicle to fly in the atmosphere of Mars. Dr. Pankaj is also a prolific innovator and is an inventor or co-inventor on 230 patents worldwide.>>
https://www.pcr-online.biz/2022/06/24/interdigital-appoints-new-chief-technology-officer/
<<That reply works except they had over 800 million in the bank already before the new cash came in.
It’s not like they were short of cash when the stock was low.>>
Good point. But don't forget that IDCC also has $606 million in long-term
debt. I don't like companies that live on the edge so to speak and
let their net cash reserves dwindle too low.
Don't forget - it's not a sale until the check clears!
Just watch Glengarry Glen Ross!!
<<Why did they wait til now?>>
bim524:
In my view, smart companies (and people) wait until the cash is in the
bank until they go out and spend it! Remember when many bought
a different house before they sold their first house during the
real estate crash / financial crisis about 15 years ago?
I remember that well - they were regretting it big time holding two mortgages
with the prices crashing - they didn't 'book' that first sale into the bank first.
Or how about when the salesman thinks he's going to close a big deal and
he buys a new car with the anticipation that it's a done deal but they forget
the adage that a sale isn't a sale until the check clears?! The deal falls
through and he's paying for his / her new car without the cash on hand.
This was IDCC in their latest quarterly report:
<<<<Cash and cash equivalents, restricted cash and short-term investments are expected to total $1.2 billion as of December 31, 2022, and include approximately $400 million of customer receipts during fourth quarter 2022.>>
dws, thanks for the article. This is good to see:
<<Cash and cash equivalents, restricted cash and short-term investments are expected to total $1.2 billion as of December 31, 2022, and include approximately $400 million of customer receipts during fourth quarter 2022.>>
So the above must be the big cash payment(s) that they were predicting late
in the year.
Any thoughts as to where it came from?
5G - Everything stems from the 4G "trunk."
This is from Qualcomm's blog - I think that it shows that IDCC's 4G litigation still
means a lot for the future:
<<The trunk of this 5G tree is made up of technologies that are the foundation for 5G mobile broadband. Many of these technologies played a key role in 4G (also known as LTE) and gave us the mobile streaming, high-speed downloads, and massive numbers of connections that we all take for granted today.
Qualcomm’s innovators were the pioneering force behind 4G’s foundations, developing:
The fundamental radio transmission technique (based on orthogonal frequency-division multiplexing, or “OFDM”) that 4G is built upon
Multiple-access schemes that defined how phones connect to the 4G network
Carrier aggregation concepts that supercharged 4G data speeds by operating different pieces of spectrum simultaneously
The use of multiple-input multiple-output antenna technology frameworks called “MIMO” to vastly boost data rates and reliability and several others, including power control and multiplexing concepts, which themselves were rooted in our technologies that defined 3G
In 5G, Qualcomm once again played the role of technology innovation leader, contributing important new ideas and expanding on this 4G base layer. For example:
Using OFDM with greater flexibility and adaptiveness to network and spectrum conditions
Adding a scalable numerology framework to be able to use the same system for everything from tiny IoT devices to cars to everything in between
Using millimeter wave spectrum, never utilized previously for cellular access, for lightning-fast speeds and mobility
Advanced channel coding to further optimize how very large amounts of data can be sent over the radio waves and decoded efficiently by mobile devices
Evolving 4G’s MIMO framework to “Massive MIMO” techniques to greatly boost coverage, data rates, and reliability
These Qualcomm inventions at the core of the 5G standard underpin modern cellular communications in everything from the simplest connected parking meters to your smartphone, to the world’s most advanced autonomous factories. This is why we consider them to be the trunk of the 5G tree.>>
https://www.qualcomm.com/news/onq/2022/12/why-qualcomm-is-the-true-leader-in-5g
<<I agree I’m not greedy>>
rooster, thanks, that's good to know. But I'm also curious if you
know how to fly a F-18 fighter jet and play the piano.
Or could that be someone else? LOL!
PS: I just saw the movie on Paramount streaming and it's fresh in my mind.
To me, it was a good diversion from all of the difficulties in the world
right now with the tough markets, war in Ukraine (which will probably
make things worse as it gets worse in my view), etc., etc.
But I just sold some more puts on IDCC (in addition to my core stock
holdings) because I think that there's some sort of floor here regardless
of the markets at large. I'm the one who just sold the March 57.5 puts
for $3.70!
my3sons87, thank you.
I think that'll help us get a Samsung renewal :)
All joking aside, so far this year Samsung has been good at long-term
renewals with both Qualcomm and Rambus.
How about me? Do I get any wishes for luck?
I sold Dec 16, 2022 50 strike puts and took in $4.10 in premium.
So far, so good on that score!
That's just in addition to the stock that I own.
I'm glad that Jeffries agrees that IDCC's stock is on sale.
Liren - Apple is a "huge validation" if IDCC's IP portfolio.
AAPL will pay ~ $134 million annually for seven years - a
15% increase from the previous agreement.
Liren - UK judges FRAND decision could come at any time.
This could bode well for IDCC because Samsung doesn't appear to be
in a litigious mood - they extended their license early with Qualcomm
earlier this year as well.
https://www.qualcomm.com/news/releases/2022/07/qualcomm-and-samsung-extend-and-expand-broad-strategic-partnersh
Rambus and Samsung Electronics Extend Comprehensive Agreement
October 31, 2022
Ten-year agreement enables deep collaboration on products and broad access to Rambus innovations
SAN JOSE, Calif.--(BUSINESS WIRE)-- Rambus Inc. (NASDAQ: RMBS), a premier chip and silicon IP provider making data faster and safer, today announced it has extended its comprehensive patent license agreement with Samsung Electronics, a world leader in advanced semiconductor technology, for an additional ten years. The extension substantially maintains the existing financial terms and provides Samsung with broad access to the full Rambus patent portfolio through late 2033. Other terms and details are confidential.
“Samsung has been a trusted partner for many years, and we are very pleased to extend our strategic relationship,” said Luc Seraphin, president and chief executive officer of Rambus. “This extension enables deeper collaboration to deliver even greater value to the industry, and we are excited to continue working with such an innovative industry leader.”
J. "evolved Node B (eNB)" / "eNodeB" / "eNB" 12
Interdigital
a base station in a 4G/L TE network as opposed to the "Node Bs" of 3G/UMTS networks or the "BTS" of 2G/GSM networks
Court
a base station in a 4G/L TE network as opposed to the "Node Bs" of 3G/UMTS networks or the "BTS" of2G/GSM networks
This claim construction order (from the Delaware Court) came out
in May of 2021.
Check page 17 of 24 - at least InterDigital won this claim construction
term outright.
https://www.ded.uscourts.gov/sites/ded/files/opinions/19-1590.pdf
Did anyone else take a look at the above? It looks like
IDCC lost on a fair amount of clams but they won some
too.
But at least it only takes one valid and infringed claim to win!
<<InterDigital, Inc. (NASDAQ: IDCC), a mobile and video technology research and development company, today announced that it expects third quarter 2022 total revenue to be between $112 million and $115 million, up from its previous expectations of $96 million to $100 million.
The updated guidance includes approximately $100 million of recurring revenue and reflects continuing success in the core smartphone licensing program as well as new licensing agreements signed within our consumer electronics, automotive and IoT revenue category.>>
I think that Liani's most recent report (right after the Apple renewal)
was updated to a $50 price target for IDCC.
Thanks - I just checked QCOM's price on Nov 1, 2018 - it was $63.
Now that's a lousy analyst who didn't put take the litigation situation
into account. On the other hand, I did - I was snatching up QCOM
in that era at what I considered to be bargain prices because I thought
that their case against Apple and the FTC was strong.
I doubled my money - no thanks to BoA / Merrill Lynch's Liani.
And since QCOM is trading pretty cheaply right now (based on
their future products - $30 Billion automotive backlog, RFFE, etc.)
I will be making more money on QCOM over time - no thanks to Liani!
BoA bought Merrill Lynch during the financial crisis about 13 years ago.
The Merrill Lynch brokers used to be known as the "thundering heard" -
they could get their clients to move stocks based on Merill's analysts'
reports.
I imagine that the "thundering heard" still exits.
The ML analyst is one whose full of it. Anyone can say that, but here's
the back of the envelope math. IDCC had about $130 million in free cash flow last year. And this year, IDCC should equal or beat that. I think that it's a safe
assumption that Samsung renews by the end of the year - they renewed
with Qualcomm just last month in a big deal!
So the litigants (Lenovo, Oppo, Vivo) will eventually have to pay - I think that we can safely add in about $50 more million in free cash flow from them. So we're
looking at $180 million in free cash flow in about a year or so once we get
more clarity from the courts. And we also have room for growth in IoT
and consumer electronics.
So let's put a very fair 12.5X price to free cash flow on these shares to be
conservative. We're talking a market cap of $2.25 billion. On 30 million
shares, that's a $75 stock with room for growth. And that growth could
get us a 15X price to free cash flow = $90 per share.
So, believe me when I say this, this ML guy is a tool. I've seen these
scenarios multiple times and I've capitalized on every one! That means
that I'll be adding to IDCC here but I'm a bit scared of the market in general.
So I can wait a bit and be happy with my current and reliable dividends from
IDCC because I already have a good amount of shares.
I'm just a bit worried about how Ukraine will affect Europe's energy situation, etc.
If it wasn't for that I'd buy right now.
idccbjf, thanks for the helpful information. It looks like
IDCC increased the annual payments by about $23 million!
I'm just happy that they renewed without litigation. But an
increase is even better!
I agree - it's clearly stated in today's 8-K:
https://d18rn0p25nwr6d.cloudfront.net/CIK-0001405495/cec10dd8-d999-40a3-a86e-25eb0d67d3bc.html
The question is how much more is being paid by Apple compared to the last
five years or so?
I thought that BoA's price target was $60.
<<Any ideas as to what the Amazon license covers?>>
Video Compression?
<<Exploring core tech and IP that improve compression of current and future video content, the 2D Video Standards team develops novel video coding and transport technologies and IP to deliver multimedia content as well as low-latency codec solutions suited for video distribution and cloud gaming applications.
Priorities for the 2D Video Standards Group include:
Contributing to the JVET explorations of future 2D video codec standards investigating traditional as well as AI-based technologies
Establishing key partnerships to define low latency video codec standardization path
Participating in the standardization of system, transport and streaming technologies to complement our core coding standards>>
https://www.interdigital.com/video-lab