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Infinite: So do you think IDCC will wind up "in play" so to speak? If we win at the CAFC, any remaining doubts should be erased and valuation assessed. Google? Apple?
I think if you did a survey you would find that while some individuals sell puts, not many do percentage wise. Thus the most logical answer to your comment/question is we’re oversold and headed higher with a market summer rally starting soon--hopefully.
Based upon a historical perspective, how far out could this ruling go? For instance do you see this dragging out another couple of months? Is that within a “reasonable” realm, or could it go out any further? Your input is appreciated.
RE: Janet Pointe’s input
Fwiw, I asked Janet a question today via e-mail and already received a response. I just wanted a simple clarification from some of the comments I’ve read, so I asked her if IDCC could legally sell puts. Her response was succinct--the company and its executives are not allowed to trade options. I doubted it anyway, but it never hurts to confirm.
GE_ Jim:
Good to see you posting again—thanks. I have one question regarding technical analysis vs. Elliott Wave Theory logic. My understanding is that EWT logic doesn’t factor in resistance points, yet it has a seemingly large number of adherents. Do you have any idea why both TA and EWT both appear to offer good analysis, but seem to be different in their logic?
Whizzer:
RE: Responsibility
Knowing that many on this board felt IDCC would be granted a review by the Commission, did this ruling pass the smell test? Does A&B have excessive clout or Nokia that much reach in the federal court system? I’m just interested in your viewpoint (opinion only).
PS: Thanks to the individual who gave the link to “But They Can’t Do That” by Martin A. Armstrong. This wasn’t very flattering regarding federal judiciary.
Thanks also for the knowledge you consistently convey--appreciated as always.
Danny --a separate question that I recently posed to Janet (paraphrased): "One question that concerns me is regarding payment to IDCC in U.S. dollars. Many individuals (including myself) foresee a potential dramatic decline in the value of the dollar in relationship to other currencies in the future. If this occurred, Interdigital might continue to receive dollars, however they would have lost a great deal of their value. Do you have any trigger mechanisms or built-in contingencies in place whereby you would receive a "relative" value either in a changed amount number of dollars, or simply convert payment to be in the equivalent of another currency (i.e. Euro)? My obvious point is that Interdigital could potentially accrue huge sums of dollars, only to have most of that value evaporate in a currency crisis. Your thoughts are always appreciated."
What are your thoughts on the dollar and the scenario I posed?
Thanks in advance if you have the time.
Even if the Commission decides to review our case, doesn’t this show that unless a Markman is done, normal, intelligent seasoned judges, plus staff, are not especially going to be able to effectively rule in this area? Simply put, hasn’t the technology gone beyond the current legal system (completely ignoring other possibilities such as greasing palms)?
Thanks to the great work you constantly do. And Infinite Q has provided great insight for years.
Jim--if none of these Commissioners have engineering backgrounds, how will they be able to comprehend the intricate details of this case? Do they consult with engineering experts on the side? Just asking...
Unless Judge Luckern had a virtually outstanding grasp of current wireless technology, how would he be able to discern whether or not there was patent infringement simply from testimony? Wouldn’t he have to have what amounts to an expert (s) critique it from a reverse engineering aspect to truly comprehend and verify what is being used to do what? In other words, testimony is fine and serves a purpose, but to truly identify and verify if infringement is taking place, I would think objective outside counsel (i.e. engineers) should be sought to validate that testimony from both sides. Correct? For that matter, how would appeals judges be able to rule on something this technical without obtaining Markman type of expertise to guide them? Your thoughts are appreciated.
Thanks for what you have contributed throughout this saga.
Romuluss: Assuming the settlement or ITC decision is good, do you plan on selling your September calls or exercising them and taking a long stock position? I’m just curious since I’m sure the options would be worth a lot in this scenario, but taking the stock could/should ultimately be worth more. Your thoughts?
M3S: Three quick points: a) Would it not be credible to believe the ALJ has given some “subtle” guidance on how he might rule to both parties at this point in time? b) Do you believe Interdigital has drawn somewhat of a line in the sand regarding “pay me now, or pay a higher rate?” I say this since if they haven’t, why wouldn’t Samsung role the dice if they can honestly get the same rate after the ruling (i.e. no risk)? c) Do you think there may be an agreement by both parties where the rate becomes either “x” or “y” based upon the ruling?
Whizzer: If you were looking at this case through Samsung’s eyes, do you believe they will settle on or before 11-25? From a strategic perspective, do you believe IDCC has given its final “drop-dead” offer to settle or is something possibly being held back until the last moment to come to an agreement? Lastly, if no settlement is reached and Samsung is found in violation, will they indeed likely pay a higher rate, or merely pay the rate that is being presently offered? I’m making an assumption that this would be resolved before any type of embargo situation would occur. Your input is very much appreciated.
Bulldzr:
This was one of your better posts and I concur 100%. Both Jim and Ronnie deserve a lot of credit for numerous contributions they’ve made throughout the years, so I’m certainly not being dismissive of their efforts. However, when management is telling you they are very happy with the agreement, I’ll believe them until shown otherwise; Janet came across as credible in her assessment of the business agreement/relations with Apple when I previously talked to her about that question. As far as Ed, Data, or anyone else--I would remind new investors to come to their own conclusions regarding the credibility and agendas of posters; this can be done, by assessing statements made over a period of time. All of us long timers have wealth at stake here and should question comments made with assumptions (i.e. tea leaves). If anyone reads this board and doesn’t wonder about the motives, verbiage, and timing of some posters, then perhaps they should consider visiting at a later time. Usually if you’re a lightning rod, it means that you’ve struck a nerve—telling.
Loop: Here are a few questions if you have time--a) How involved do you think carriers such as AT&T are under the present circumstances? Do you believe any phone calls are being made, or advice given by them? b) From a strategic (resolution) perspective would it be better for IDCC to be making phone calls right now, or would they be better off holding firm and not contacting Samsung or Nokia? c) Perhaps Nokia will finally settle, but if they don’t, I would think standing beside Qualcomm and discussing Project Stockholm and the Rico Act might shake up the wireless industry, the business community, and government officials. Now that this stock has turned into a saga, should this approach be an option if there isn’t a near-term agreement? d) Different topic--could we ask to be paid in Euros, or at least have a currency formula to overcome the devaluation of the dollar? Do you think this topic has been addressed in the existing contracts?--all IMO. Thanks as always for you and your colleagues’ wisdom and insight—most appreciated.
Eneerg: As a lurker, I’ve followed your excellent commentary for a long time. I do have one question regarding what you’ve written where I’m unsure of the logic. Why exactly has the DOJ been so hesitant to investigate this arrangement of capping IPR? I believe you’ve stated there is a type of “agreement” with the EU, but is there anything formal? Obviously this approach could hurt American companies, and not just in the wireless field. It seems hard to believe any group within the US could announce what amounts to a not so subtle form of price fixing without the DOJ investigating. So what do you believe is behind the DOJ's inaction? I could bring up some conspiracy or “globalist” theories, but perhaps that is a reach. Your thoughts and insight are appreciated. Thanks. MO
Danny: Danny: If you have the time, I would appreciate your insight into these questions/comments, based upon your background. Let’s say that a Tier 1 licensee is signed in January and the obligatory announcements are made—synergies, future for both parties, good working relationship, firm with integrity, yada, yada… Likely the pr announcement from IDCC will say something vague like “this meets our expectations,” and may not give specifics to quantify future earnings.
Knowing the institutions will move this stock, how will they assess the valuation? In this case would they estimate prox. 1.50 per phone without further knowledge? Could they contact IDCC and get a clarification that would still fall within full disclosure but may not be known by us (i.e. nuance, oral emphasis)? Also, in assessing IDCC’s value, there seem to be two trains of thought—one that each signing will be the equivalent of a stair step upward with the earnings from that company, the other being that one tier 1=the others will follow (domino), thus the valuation would immediately have a steep rise upward factoring in future licensees. How would WS purchase shares after news hits in this “mixed” environment? Also, how do they internally calculate (and justify) what PE ratio to assign for a company such as this? I thank you in advance for any insight.
Merry Christmas
PS I: If you were an institution who was shorting, wouldn’t you be aware of the current situation and cover in the near future--just in case positive news was to hit? In other words, why not take a profit and reduce their risk?
PS II: To the comments that dclarke and you have made, many on this board can assess the credibility and slant (positive or negative) some posters display over time through their verbiage. I thank the many qualified posters who have contributed in a logical manner, without spin.
IMO: The long term still looks good, but the short term remains oversold.
Forbes Article Relating to “Raw Sewage” – Foothills Stock Sold Fraudulently
http://www.forbes.com/2007/03/01/pipes-fraud-lawyer-biz-cz_cc_0301pipes.html?partner=yahootix
Other news related to financial fraud (i.e. naked short selling – failure to deliver)
Illegal Scheme relating to Goldman Sachs
http://sec.gov/news/press/2007/2007-41.htm
Special Report: Phantom Shares Bloomberg Television premieres a half-hour Special Report called "Phantom Shares" on Tuesday, March 13, 2007 at 7:00pm, 9:00pm, and 10:00pm ET.
Millions of shares of stock are being sold that may not exist. How? Through an obscure trading strategy known as naked short selling. Bloomberg Television's Special Report hosted by Mike Schneider explains what the strategy is, how it's executed, which companies are targets, and what the SEC is trying to do to control it.
Here is the 25 minute clip on You Tube.
OT: Naked Short Selling:
Special Report: Phantom Shares Bloomberg Television premieres a half-hour Special Report called "Phantom Shares" on Tuesday, March 13, 2007 at 7:00pm, 9:00pm, and 10:00pm ET.
Millions of shares of stock are being sold that may not exist. How? Through an obscure trading strategy known as naked short selling. Bloomberg Television's Special Report hosted by Mike Schneider explains what the strategy is, how it's executed, which companies are targets, and what the SEC is trying to do to control it.
In case this hasn't been posted off You Tube (Apple's new phone)
Jiff:
To me that question would be best answered by someone like Ronnie Marchma who is incredibly astute in this area.
The decline continues and nothing I see in the technical indicators shows a near term reversal. The distribution must be from significant shareholder (s) who are willing to sell at all costs to get out.
Is it reasonable to believe Foothills will be able to make some of these (i.e. 70) projects successful? The debt from purchasing these wells was high and thus the question may be did Foothills pay too much for what they received?
Dear Ghors: imo for Saturday musings. I must tell you that your input and knowledge is very much appreciated regarding your posts about Interdigital. You and many others contribute so very much on an ongoing basis--please allow me to thank you.
The one area where we may disagree is while I see a wealth of information from this talented, respected, and knowledgeable legal group, I also see “justice delayed is justice denied” in our legal system. From my perspective, this has gone from an interesting story to a saga. For us to spend untold millions of dollars in legal fees, have OEM’s use our talent while making their corporations wealthy, blatantly declare caps on IPR percentages, and then simply not pay for what they are obviously using leaves me aghast. All the while, legal resolution “seemingly” goes at glacial speed and at a high cost.
My question to you is do you see this unfolding story as reasonable in its time frame working its way through the American judicial system? Knowing the Markman hearings, arbitration, numerous suits and endless appeals, does it seem logical to you to take the length of time it has taken? How many other companies or contributions have capitulated against the likes of the Ericsson/Nokia/Samsung’s of the world because they weren’t lucky enough to have the time to wait, or have a significant enough war chest to tap into? Does our judicial system sound like world class due process--or rather is it a weak institution that can be manipulated by major corporations who understand it and exploit its ineffectiveness? Note—I’m not saying it hasn’t done anything correctly, more that it may be outdated and too slow for today’s global competitiveness and complex issues.
A last question—if you knew of a company very similar to Interdigital with the same business model that had valuable IPR but not a war chest, would you consider investing in that company knowing what you know?
Thanks for all that you do.
Data: imo: RE: Q vs. Nok--Let’s say for the sake of argument that Qualcomm is able to muster its legal talent and essentially defeat Nokia in their ongoing battle. The relatively high IPR % (i.e. 5%) would then remain, which would then put even greater pressure upon the OEM’s to not pay Interdigital. Conversely, let’s say Q loses and reduces its rate--is there not the impetus for Nokia and cabal to then believe they could further reduce or not pay Interdigital’s proposed rate as well? My question, therefore, is there any way the Q vs. Nokia litigation could help resolve remaining IDCC issues in a good way? If nothing were resolved for IDCC by say April, how might WM resolve this 3G stalemate other than an injunction and or more years of costly litigation with the major OEM’s? If IDCC can get no movement on obtaining the licensees, do you think they will ultimately be hunting for a suitor?
A secondary question is if Nokia winds up having the EU play an active role in this dispute, do you see Qualcomm lobbying for a political settlement from this side? In other words, might we see congressional hearings or the justice department looking into international collusion, in possibly in a tit for tat venue? TIA.
Are there any reasons on why there's been such a dramatic drop recently? The t/a still looks pretty negative, even though natural gas and oil futures have risen.
OT: Article on Illegal Trades -- Danny Detail, if you have the time and could comment on this, I would appreciate it.
Thanks.
http://www.investigatethesec.com/20061108.htm
STOCKGATE TODAY
An online newspaper reporting the issues of Securities Fraud
Illegal Trades; where do they originate – November 7, 2006
David Patch
The US stock market is touted as the greatest capital market in the world. This distinction is based on the perception that the US capital market is one of the safest to invest in and that continued growth in these markets is evidenced by the success of the financial institutions that operate these markets.
“If you protect us, we will come.”
But somewhere along the way, perception and reality have diverged.
In 2003, Regulation SHO was heralded as the most sweeping reform to short selling in over 60 years. Such acclaim comes after the SEC admitted that illegal shorting [naked shorting] existed in our markets and that leverage from such illegal trades was being used to manipulate our publicly traded securities.
By 2005 the SEC again admitted that problems persisted in the short selling process and that the illegal trading remained due to loopholes placed in Regulation SHO. While the SEC analysis of the extent the problem remains differs greatly from that of economists, the fact remains that the problem exists and that public companies and private investors are paying the price.
And while some $6 Billion in unsettled trades exist on the books each trade day, who originated these trades and who ultimately executed these trades remains unknown. While a persistent fail is recorded, the owners of such a fail remain anonymous because the regulators apparently are unwilling to investigate or unwilling to prosecute those that manipulate our markets.
According to documents obtained under the freedom of information act, on January 3, 2005 nearly 589 Million shares remained unsettled over a distribution of 1886 companies. That averages out to over 310,000 shares per company. Fifteen months later on May 31, 2006 the level of unsettled shares had grown to a level exceeding 670 Million shares distributed over 1992 companies for an average of 336,000 unsettled shares per company.
While the SEC considered this a success, the reality is, unsettled trades continued to dominate trading in localized public companies and the market values of these companies reflected such a condition.
In July 2006 SEC Chairman Chris Cox went so far as to say "While preliminary data indicates that Regulation SHO appears to be significantly reducing fails to deliver without disruption to the markets, there continues to be a number of threshold securities with substantial and persistent fail-to-deliver positions that are not being closed out under existing delivery and settlement guidelines."
Mr. Chairman, and why are these persistent fails not being forced closed out by the agency?
According to SEC spokesman John Heine, the SEC does not force the settlement of such fails because the SEC is not in the business of enforcing contracts and a trade is a being considered nothing more than a contract between two parties by the agency. Or maybe, just maybe, the SEC does not force trades to settle according to the present securities laws because the SEC does not want to disrupt the profitability of those that take advantage of such illegal and disruptive trades.
When two interpretations of the law can come into conflict the SEC, the top regulator for these markets, has decided to err to the side of fraud over investor protection. Illegally executed contracts between two broker-dealers, representing third party investors, apparently taking precedent over the laws passed down by Congress decades ago requiring that all trades settle promptly. Why, because the SEC believes in a theoretical Wall Street honor system. An honor system dependant on Wall Street putting aside the conflicts of interest between securing bottom line profits and investor rights when the two may clash.
Yet, Investors somewhere must be benefiting from the fact that “naked short sellers enjoy greater leverage than if they were required to borrow securities and deliver within a reasonable time period, and they may use this additional leverage to engage in trading activities that deliberately depress the price of a security.” [SEC Release No. 34-48709; File No. S7-23-03]
Simply consider who it is that can get away with selling more than 600 Million shares without being forced to make good on the contract. Do you really think a broker would allow the average retail investor to place a sell order for unlimited shares they could not make delivery on to the buyer?
No way, such privilege requires power and money and those people require protection if our markets are to continue to grow.
Fact is, the SEC has the power and the authority to research exactly who it is that is responsible for the failed trades but choose not to look under that rock in order to protect the “profitability and growth of our capital markets.” The SEC operating under the belief that it takes disinformation to expand our capital markets and the biggest segment of disinformation is that our markets are safe and that Wall Street revenues stem from fair, sound, and ethical business practices.
Over the past five years the Commission has moved from the opinion that illegal shorting abuses does not exist to admitting it exists but only to a finite level to finally admitting it is a serious problem. During these same five years, literally hundreds of billions of shares in unsettled trades have been illegally executed representing tens of billions of dollars. And over this span, the SEC has failed to come clean with who it is that keeps executing these trades.
If the books of Wall Street are such that those that execute trades illegally can not be identified, how safe can our markets really be? How can the US promote globally the safety in placing your private wealth or public companies future into our markets when the top cops can’t even follow billions of failed trades and understanding where the abuses are originating?
For more on this issue please visit the Host site at www.investigatethesec.com .
Copyright 2006
Jim:
RE: Working Hard to Avoid the Labor Shortage
This article goes into some detail regarding retirements, pending shortages of the work force, a breakdown of generation characteristics, and what companies may be attempting to do to handles these issues. Note: according to this article “more than 25% of the working population will reach retirement age by 2010, resulting in a potential shortage of nearly 10 million workers.” The article comes from Inside Supply Management March 2006.
http://www.ism.ws/pubs/ISMMag/ismarticle.cfm?ItemNumber=14249
RE: The Next Great Bubble Boom
Also, for the technical and fundamental groups, this book I recently purchased appears to offer some thoughtful discussion regarding investments, the retirement of baby boomers, and the affects on the stock market. While visiting Fidelity, I heard several of their representatives talking about this book and inquired about it. For the record, nobody at Fidelity stated this book was endorsed by their firm. However, it was quite interesting and telling to hear the logic behind why this book may foretell the future. Bottom line—Harry S. Dent, Jr. has apparently done well forecasting the market and orients his beliefs around demographics and some technology trends. For instance, he believes we’re headed for a super market in the near-term years, going upwards to 35-40m on the Dow by late 2009 or early 2010. This, however, is followed by a “devastating crash” between 2010 and 2012, which will likely entail a 13 year bear market. His logic is that predictable spending peaks around 45 (I believe), which propels consumption, and products, thus stocks and profitability. With age, this spending then drops, thus demand drops as well, meaning companies could see severe stock price declines. With baby boomers’ spending declining, the stock market may very well correlate to predictable behavior (i.e. spend a lot in the early years, little in the later years). I haven’t finished the book yet, so this is the general synopsis from the introduction and covers. The book may be very relevant for investors looking ahead.
http://www.amazon.com/exec/obidos/tg/detail/-/0743222997?v=glance
While I am a hopeful long, I don’t believe anyone should underestimate Nokia’s reach. This group may be despicable but they’re armed with substantial money and influence-- they are both a powerful and formidable opponent. This next unfolding chapter may be telling in many respects. Hopefully we’ll have a watershed event that really is a watershed event.
Bulldzr: Excellent post, fwiw. -- eom
Loop: A few questions if you have the time –
Some on here as well as AB believe IDCC will ultimately be bought out-- prematurely. Knowing the current leadership, recent success such as Kyocera, another licensee to be named near term, and the long term outlook, do you believe this would this seem like a reasonable option to the current board of directors?
Knowing the great lengths to which Nokia has gone to thwart this process, do you have any logical reason as to why they have behaved in this manner? Delay, delay, delay…Yes, I know it’s about 3G, they want to stamp out the “little” IPR firms, and I have no doubt that one of the many conspiracies may be true. Having said all that, something here with Nokia doesn’t seem logical. Do you have any thoughts on this you could share? Do you find Teecee’s theory credible relating all of this to pending issues with Qualcomm?
As always, I appreciate your insight. TIA.
OT: Here's a prescient article from '01 with regards to New Orleans.
Houston Chronicle 12/01/01
KEEPING ITS HEAD ABOVE WATER
New Orleans faces doomsday scenario
By ERIC BERGER
Copyright 2001 Houston Chronicle Science Writer
New Orleans is sinking.
And its main buffer from a hurricane, the protective Mississippi River delta, is quickly eroding away, leaving the historic city perilously close to disaster.
So vulnerable, in fact, that earlier this year the Federal Emergency Management Agency ranked the potential damage to New Orleans as among the three likeliest, most castastrophic disasters facing this country.
The other two? A massive earthquake in San Francisco, and, almost prophetically, a terrorist attack on New York City.
The New Orleans hurricane scenario may be the deadliest of all.
In the face of an approaching storm, scientists say, the city's less-than-adequate evacuation routes would strand 250,000 people or more, and probably kill one of 10 left behind as the city drowned under 20 feet of water. Thousands of refugees could land in Houston.
Economically, the toll would be shattering.
Southern Louisiana produces one-third of the country's seafood, one-fifth of its oil and one-quarter of its natural gas. The city's tourism, lifeblood of the French Quarter, would cease to exist. The Big Easy might never recover.
And, given New Orleans' precarious perch, some academics wonder if it should be rebuilt at all.
It's been 36 years since Hurricane Betsy buried New Orleans 8 feet deep. Since then a deteriorating ecosystem and increased development have left the city in an ever more precarious position. Yet the problem went unaddressed for decades by a laissez-faire government, experts said.
"To some extent, I think we've been lulled to sleep," said Marc Levitan, director of Louisiana State University's hurricane center.
Hurricane season ended Friday, and for the second straight year no hurricanes hit the United States. But the season nonetheless continued a long-term trend of more active seasons, forecasters said. Tropical Storm Allison became this country's most destructive tropical storm ever.
Yet despite the damage Allison wrought upon Houston, dropping more than 3 feet of water in some areas, a few days later much of the city returned to normal as bloated bayous drained into the Gulf of Mexico.
The same storm dumped a mere 5 inches on New Orleans, nearly overwhelming the city's pump system. If an Allison-type storm were to strike New Orleans, or a Category 3 storm or greater with at least 111 mph winds, the results would be cataclysmic, New Orleans planners said.
"Any significant water that comes into this city is a dangerous threat," Walter Maestri, Jefferson Parish emergency management director, told Scientific American for an October article.
"Even though I have to plan for it, I don't even want to think about the loss of life a huge hurricane would cause."
New Orleans is essentially a bowl ringed by levees that protect the city from the Mississippi River to its south and Lake Pontchartrain to the north. The bottom of the bowl is 14 feet below sea level, and efforts to keep it dry are only digging a deeper hole.
During routine rainfalls the city's dozens of pumps push water uphill into the lake. This, in turn, draws water from the ground, further drying the ground and sinking it deeper, a problem known as subsidence.
This problem also faces Houston as water wells have sucked the ground dry. Houston's solution is a plan to convert to surface drinking water. For New Orleans, eliminating pumping during a rainfall is not an option, so the city continues to sink.
A big storm, scientists said, would likely block four of five evacuation routes long before it hit. Those left behind would have no power or transportation, and little food or medicine, and no prospects for a return to normal any time soon.
"The bowl would be full," Levitan said. "There's simply no place for the water to drain."
Estimates for pumping the city dry after a huge storm vary from six to 16 weeks. Hundreds of thousands would be homeless, their residences destroyed.
The only solution, scientists, politicians and other Louisiana officials agree, is to take large-scale steps to minimize the risks, such as rebuilding the protective delta.
Every two miles of marsh between New Orleans and the Gulf reduces a storm surge -- which in some cases is 20 feet or higher -- by half a foot.
In 1990, the Breaux Act, named for its author, Sen. John Breaux, D-La., created a task force of several federal agencies to address the severe wetlands loss in coastal Louisiana. The act has brought about $40 million a year for wetland restoration projects, but it hasn't been enough.
"It's kind of been like trying to give aspirin to a cancer patient," said Len Bahr, director of Louisiana Gov. Mike Foster's coastal activities office.
The state loses about 25 square miles of land a year, the equivalent of about one football field every 15 minutes. The fishing industry, without marshes, swamps and fertile wetlands, could lose a projected $37 billion by the year 2050.
University of New Orleans researchers studied the impact of Breaux Act projects on the vanishing wetlands and estimated that only 2 percent of the loss has been averted. Clearly, Bahr said, there is a need for something much bigger. There is some evidence this finally may be happening.
A consortium of local, state and federal agencies is studying a $2 billion to $3 billion plan to divert sediment from the Mississippi River back into the delta. Because the river is leveed all the way to the Gulf, where sediment is dumped into deep water, nothing is left to replenish the receding delta.
Other possible projects include restoration of barrier reefs and perhaps a large gate to prevent Lake Pontchartrain from overflowing and drowning the city.
All are multibillion-dollar projects. A plan to restore the Florida Everglades attracted $4 billion in federal funding, but the state had to match it dollar for dollar. In Louisiana, so far, there's only been a willingness to match 15 or 25 cents.
"Our state still looks for a 100 percent federal bailout, but that's just not going to happen," said University of New Orleans geologist Shea Penland, a delta expert.
"We have an image and credibility problem. We have to convince our country that they need to take us seriously, that they can trust us to do a science-based restoration program."
Good point M3S. If you could be a fly on the wall at KOP, where do you think they believe Nokia will be in 2-3 years?
IMO: Nokia is a large corporate bully that I believe will ultimately pay the price for this kind of action. I know that some of you believe other companies will do business with behemoths such as this without regard to their past unethical behavior. Count me as one that says this company won’t be a leader in the future years, and part of the reasoning is that real leaders don’t stay on top this way; they earn it through innovation, efficiency, good marketing, etc., but not via half-truths, partial truths, or stealing. The Asians will leave the Finns in their dust in the next few years, if for no other reason than companies will want to do business with legitimate groups they can trust. Who would honestly want to call on Nokia and/or work with them, wondering if the amount they agreed to would really be paid? No, the drop won’t be short term but I could easily see a precipitous drop as their “clout” and #1 rating erodes. Their “friends” will disappear quickly and words won’t bring back partners, suppliers, and supporters. Bad reputations are hard to repair.
Thursday should be telling as to what IDCC says. With no offense to the resident legal experts, my “Men in Black” theory about lawyers was reaffirmed in that the law is simply whatever you want to make it any time prevails now. As a non-lawyer, this isn’t a shining moment for American jurisprudence.
Whether or not Elliot Spitzer would take a case like this leads one to ask a simple question—we’re certainly not a large entity and Nokia is an international powerhouse. Thus, would he look into this? If he does, you can short Nokia the next day, and I doubt Nokia would grasp the magnitude of this individual’s reach. Here’s hoping that Elliott proves his mettle for the “little guy” one more time and goes after the “snakes” of the world. Who knows, there might even be a legitimate journalist out there who isn’t a paid-for shill who takes this story and runs with it.
Loop, I respect your knowledge and opinions and would like to ask a handful of questions (if you have the time):
Loop: If you ever have the opportunity to buy final binding arbitration awards at a discount, jump all over them. IDCC will have no trouble once confirmation occurs. Ask investment bankers what they think of a confirmed final binding arbitration award and you will discover the true value of that packet of papers delivered by the ICC.
1)I’m neither a lawyer nor banker, therefore wonder why institutions wouldn’t see this. Do you believe they don’t understand it, or is this them deciding there’s plenty of time to buy later and make money when there is virtually no uncertainty?
2)Men in Black: Politics aside, after having read this book one can only conclude that the law continually evolves, at times through “creative” reasoning. Knowing this, isn’t the uncertainty justified knowing that interpretations and the law are more a point in time rather than legitimate guidelines?
3)I take it that you believe the ICC has done everything they were hired to do? Malko’s views aside, does this come across as validating ICC’s reputation as a world-class body?
4)Maybe this is an Infinite Q question, but I simply don’t understand why any firm would want to work with Nokia, having watched this saga. Who would trust these people in any relationship with any agreement for any amount at any time? Perhaps arrogance hasn’t cost them yet, but I’ve seen little upside for them to act in this manner, while the downside has to be known and understood by many.
Your time and input is appreciated. TIA.
Perhaps Danny can look back at his WS experience and let us know whether 2’ is reasonable for a CC. The timing of 8:00am pre-market doesn’t surprise me as much (explanations) as the length of time. Even allowing 20” for questions, why would this take so long?
My speculation only: IDCC has prepared for this moment for an extended period of time. Could there be some additional licensees waiting to be announced? The imagination is limitless...Loop, are you reading any tea leaves?
One question I have is let's say the CC lasts 2 hours. Knowing what's happened, plus new announcements and an imbalance of buyers and sellers, when do you think trading would actually start?
TIA.
“Isn't it a little unusual that the CC was called for 8a.m. rather than 10 a.m. or 2 p.m.? Is it possible that some additional information of interest will be released at or prior to the CC which has been scheduled to be held at a time before the market opens?”
DD: Thank you--I very much appreciate your insight into the AMT. This one particular paragraph caught my eye, since that’s exactly what I had intended to do. Rather than throw away deductions, I’ll need to consult a tax adviser if events progress as I hope.
“The AMT changes tax planning strategies significantly for those who fall into the trap. If you are going to fall into the AMT trap anyway, it may not matter if your gains are short term or long term. Also the standard rule of thumb to accelerate deductions and defer income for regular tax planning strategies could backfire significantly and cause you to throw away deductions if paid in the wrong tax year.”
OT: Here's a very good article related to identity theft via cyber thievery, and the prevalence of a world-wide black market. This falls in the "what you don't know can hurt you" category.
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June 21, 2005
Black Market in Stolen Credit Card Data Thrives on Internet
By TOM ZELLER Jr.
"Want drive fast cars?" asks an advertisement, in broken English, atop the Web site iaaca.com. "Want live in premium hotels? Want own beautiful girls? It's possible with dumps from Zo0mer." A "dump," in the blunt vernacular of a relentlessly flourishing online black market, is a credit card number. And what Zo0mer is peddling is stolen account information - name, billing address, phone - for Gold Visa cards and MasterCards at $100 apiece.
It is not clear whether any data stolen from CardSystems Solutions, the payment processor reported on Friday to have exposed 40 million credit card accounts to possible theft, has entered this black market. But law enforcement officials and security experts say it is a safe bet that the data will eventually be peddled at sites like iaaca.com - its very name a swaggering shorthand for International Association for the Advancement of Criminal Activity.
For despite years of security improvements and tougher, more coordinated law enforcement efforts, the information that criminals siphon - credit card and bank account numbers, and whole buckets of raw consumer information - is boldly hawked on the Internet. The data's value arises from its ready conversion into online purchases, counterfeit card manufacture, or more elaborate identity-theft schemes.
The online trade in credit card and bank account numbers, as well as other raw consumer information, is highly structured. There are buyers and sellers, intermediaries and even service industries. The players come from all over the world, but most of the Web sites where they meet are run from computer servers in the former Soviet Union, making them difficult to police.
Traders quickly earn titles, ratings and reputations for the quality of the goods they deliver - quality that also determines prices. And a wealth of institutional knowledge and shared wisdom is doled out to newcomers seeking entry into the market, like how to move payments and the best time of month to crack an account.
The Federal Trade Commission estimates that roughly 10 million Americans have their personal information pilfered and misused in some way or another every year, costing consumers $5 billion and businesses $48 billion annually.
"There's so much to this," said Jim Melnick, a former Russian affairs analyst for the Defense Intelligence Agency who is now the director of threat development at iDefense, a company in Reston, Va., that tracks cybercrime. "The story that needs to be told is the larger, long-term threat to the American financial industry. It's a cancer. It's not going to kill you now, but slowly, over time."
No one is willing to estimate how many cards and account numbers actually make it to the Internet auction block, but law enforcement agents consistently describe the market as huge. Every day, at sites like iaaca.com and carderportal.org, pseudonymous vendors do business in an arcane slurry of acronyms.
"Cobs," or changes of billings, are a hot commodity. Typically, a peddler of cobs is offering fresh bank or credit card accounts, along with the ability to change the billing address through a pilfered PIN. In other cases, a vendor selling cobs is offering to change billing addresses himself, as a service. Sometimes the address is changed to a safe "drop," which might be an empty apartment in a local building, or some other scouted locale where goods can be delivered. (Information on reliable drops is also bought and sold.)
Lengthy tutorials posted at online "carding" forums indicate that the cob art form is highly developed. A patient criminal will wait until the day a victim receives a billing statement. "That way you have a full 30 days" before the victim is likely to look over his account again, explained one frank tutorial collected by the F.B.I.
A user going by the name "mindtrip" had cobs for sale recently: "I'm selling cobs from at this time only banks Discover and American Express t'ill further notice," he wrote in brusque English. "The cobs come with full info including MMN" (mother's maiden name). Discover Card cobs with any balance were on special: $50. American Express, a more exclusive and potentially more lucrative account, commanded $85.
Alongside advertisements for cobs are pitches from malicious-code writers, who sell their services to the con artists, known as phishers, who contract with spammers to send out millions of increasingly sophisticated phony e-mails designed to lure victims into revealing their account information.
A successful phishing operation might bring in thousands of fresh account numbers, along with other identifying details: names, addresses, phone numbers, passwords, PIN's, and mothers' maiden names. The richer the detail (and the higher the account balance), the better the asking price.
A user by the nickname Sirota is peddling account information so detailed, and so formatted, that it clearly came from a credit report. He is asking $200 per dump on accounts with available balances above $10,000, with a minimum order of five if the buyer wants accounts associated with a particular bank. "Also, I can provide dumps with online access," he wrote. "The price of such dumps is 5% of available credit."
Every day brings more. "These things have a short shelf life," said Dan Larkin, the unit chief at the F.B.I.'s Internet Crime Complaint Center in West Virginia. "The criminal value of a compromised credit card is very short term, so there's a constant need to keep backfilling their resources."
A Full-Service Black Market
Those buying fresh batches of account numbers may try to make purchases online, having goods delivered to a drop and then fencing them through online auctions.
More sophisticated thieves will seek out a vendor of encoding devices, and others who sell "plastic," or blank credit cards, and "algos," algorithms that are needed to properly encode the magnetic strip and produce a usable card. And "cash out" services can be arranged with those offering to take the encoded plastic to a cash machine and make daily withdrawals until the account is depleted. (The cash-out risk commands a premium - often 50 percent or more of the total balance.)
Traders - whether they deal in plastic, algos, cobs or other booty - build reputations first by earning the right to advertise, and then, in a black-market version of eBay buyer feedback, augment their status by receiving published kudos from other members. No one is permitted to post product or service offers at most of these Web sites without first having their wares vetted by site administrators, or by those who have been selected as trusted "reviewers."
At iaaca.com, for example, those wishing to sell cobs or cob services "will be required to provide ten (10) change of addresses, to be distributed to two reviewers," who "will test this service by either phone or Internet." New vendors of credit card numbers "will be required to furnish 20 VALID dumps (5 Classics, 5 business, 5 platinums, 5 corporate; 50 percent Visa, 50 percent MasterCard)," according to the site administrators. "The testers will determine the quality, in a percentage of valid numbers."
Once the wares are vetted, a vendor might then pay a fee to peddle them on a site's message boards. Banner ads can also be purchased.
Contacts among deal makers almost always move off the boards and onto ICQ, the instant-messaging program of choice among cyberthieves because of its easy anonymity (no names, no registration, no e-mail required). Payments often change hands in relative anonymity (and with little regulation) by e-gold, an electronic currency that purports to be backed by gold bullion and issued by e-gold Ltd., a company incorporated on the island of Nevis in the Caribbean. (Secret Service agents have expressed skepticism over the gold backing.)
Transactions might also be made in WMZ's, electronic monetary units equivalent to American dollars and issued by WebMoney Transfer, a company based in Moscow.
Plenty of noncriminal entities use such services to move money, Secret Service analysts said - although they added that the agency had conversations with some of the e-currency issuers to discuss ways to address the problem.
Thefts at Data Aggregators
Mark Rasch, the former head of cyberinvestigations for the Justice Department and now the senior vice president of Solutionary, a computer security company, said the numbers taken in the CardSystems breach - at least 200,000 are said to have been in stolen files - are almost certain to end up in one of these trading posts.
CardSystems represented a vital hub through which millions of account numbers passed. ChoicePoint, a data aggregator, was another gold mine; it announced in February that thousands of records had been downloaded from its databases by thieves posing as legitimate business clients (no hacking required).
"The pattern in the last six months is going after aggregators," Mr. Rasch said. "It used to be you'd get a few numbers from a few merchants and aggregate them yourself - a few numbers from a lot of people. But at some point they said, 'Wait a minute, there are other people who aggregate this stuff.' "
And, Mr. Rasch pointed out, it is nearly impossible to stop. For all the information that law enforcement and security experts can glean from sites like iaaca.com, "there are whole marketplaces of bulletin board systems and chats that are invisible," he said.
Still, law enforcement has made inroads. In October, the Justice Department and the Secret Service announced the internationally coordinated arrest of 28 individuals in eight states and several countries, including Sweden, Britain, Poland, Belarus and Bulgaria.
Among those arrested were Andrew Mantovani of Scottsdale, Ariz., David Appleyard of Linwood, N.J., and Anatoly Tyukanov of Moscow. The Justice Department says they are the ringleaders of Shadowcrew.com, the largest English-language Web bazaar trading in everything from stolen credit card, debit card and bank account numbers to counterfeit drivers' licenses, passports and Social Security cards.
The investigation, called Operation Firewall, broke up a 4,000-member underground that, according to the Justice Department, bought and sold nearly two million credit card account numbers in two years and caused over $4 million in losses to merchants, banks and individuals.
But eight months later, the traders have adapted and resumed business. They are a bit more skittish now, said John Watters, the chief executive of iDefense, which generates cybercrime intelligence for government and financial industry clients. Operation Firewall did take out some of the "low-hanging fruit," Mr. Watters said. But that has only caused the pricing models to become more refined, and the characters in this black-market economy to become more sophisticated.
A New Market for New Identities
Mr. Watters said there was also a small but growing market for the type of raw consumer information that has been pilfered from ChoicePoint, LexisNexis and other general data aggregators.
"We've observed people paying for identities," Mr. Watters said, describing Web forms where criminals could tick off the fields they had to sell or wanted to buy: address, date of birth, Social Security number, driver's license number, mother's maiden name. And as the traders slip deeper underground - or onto servers in regions with lax laws, overburdened or uninterested law enforcement and no real working relationship with American authorities - the odds of pulling off another Operation Firewall get worse.
"The next battle will be substantially harder," Mr. Watters said. "It's getting harder for us to do our job."
Asked at a symposium on cybercrime late last month if law enforcement was losing the battle against cybercriminals, Brian Nagel, assistant director for investigations at the Secret Service, said no, according to published reports.
But another panel member, Jody Westby, the managing director of security and privacy practice at PricewaterhouseCoopers, disagreed, insisting that based on Federal Trade Commission statistics on identity and credit card theft, only about 5 percent of cybercriminals are ever caught.
In an interview, Ms. Westby offered an assessment no less bleak. "We're not making an impact," she said. "The criminals are too hard to track and trace, too hard to prosecute, and the information they steal is too easy to use."
At one Russian-language site over the weekend, a user called Lexus celebrated the CardSystems breach, saying that "judgment day has come for the bourgeoisie." Another, Zer0, suggested on the site that the hacked numbers might represent new opportunities in the underground.
"It is a good occasion for us," Zer0 said. "Happy hunting."
Copyright 2005 The New York Times Company
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DD: If you have the time, could you give a summarized version of the AMT, or point to an understandable link related to it? I’ve heard and read a number of comments related to this topic, but need to be more informed.
TIA
Tuesday/Wednesday should make next week very interesting, especially listening to WM’s conference call, watching how quickly the shorts cover and if/# of buy recommendations that are given in the weeks thereafter.
Gman & Jim Charts, or any other T/A’s: Do you have any predictions on how quickly the shorts will cover and the impact it will have in the near term future? i.e. +25? From a technical point of view, wouldn’t most shorts cover at an 8-10% loss?
Congratulations to all of you longs—you and your families deserve some just rewards.
Dave: Hopefully, you are correct on assessment regarding Ericsson.
One question: What do you believe Nokia achieved by not signing a 3G license at this time?