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Those are very reasonable thoughts in my opinion. Will be interesting to see how things turn out.
Yes - somebody sold a little yesterday after the release. We both arrive at the same conclusion (stock down a lot today) but Ill stick with my interpretation of the story as to why. The top line growth number was known weeks ago when the company put out their press release about revenue growth for the quarter. The new information that the 10-Q included was what were the earnings.
This is a frustrating and stock for anyone who follows it. It could be worth so much more but management doesn't run it in a way to lead it to that. It has been 5 years of great top line growth and virtually no earnings growth. During that time they are making a decent profit but if you value this as a company with no earnings growth it should be valued at 8-12 times earnings. I think that is too low - you have to give some value to the possibility that the rev growth will fall to the bottom line but the longer that doesn't happen the harder it is to bank on that as a reason to invest.
I don't make it a habit to speculate on short term price movements but I expect it will sell off tomorrow. Announcement came late in the day and this isn't a stock that people watch like a hawk and trade on the second new information comes. I have a similar view to you about the company - as I said in a prior post I sold at around .39 several weeks ago. I *might* be a buyer if it goes back down to mid 20's.
Jeff
I sold out of my position about a week ago. I think the stock is fully valued at .40 cents a share. The only scenarios I see for further upside are the company gets bought out or management starts performing better than they have in the past. As I mentioned in my previous post, Revenues have grown tremendously over the past 5 years but profits have not:
2010 2011 2012 2013 2014 TTM
Revenue 3.78 4.92 6.39 7.76 8.7 9.96
Gross Profit 2.51 3.26 4.14 4.95 5.31 6.1
SG&A 1.7 1.97 2.66 3.54 3.85 4.12
EBITDA 0.78 1.3 1.42 1.26 1.25 1.57
Oper. Income 0.72 1.2 1.29 1.06 1.01 1.31
Net Income 0.89 0.7 0.82 0.73 0.7 0.9
Every year there is the hope that the revenue increases really will fall to the bottom line and every year they get sucked up by increased SG&A. Management clearly isn't running this to maximize shareholder value. At $.25 I still saw upside even given that but at $.40 it is less clear.
Also I don't trust management to execute on new product development. So far they are a one hit wonder where demand for a product they invented arose from subsequent developments that they couldn't have predicted ahead of time. I believe this is the original patent which IP is contained in the Freedom60 - it was filed in 1984: http://www.patentgenius.com/patent/4447232.html. Also as noted in the comments of the last seekingalpha article on this company they didnt even create the working product - Creative Engineering did: http://www.creativeengineering.com/medical-healthcare/infusion-pump/.
The firm has been ripe for a buyout for years given the increasingly bloated SG&A and it hasn't happened so I am not going to wait around for that. Also, managements renewed interested in product development says to me they aren't looking to sell the business and get out. I am also not excited about the nepotism (CEO naming his son to the board).
So upside only comes if management either starts acting differently and reducing SG&A or they manage to pull of a success with a new major product. I don't believe in the company enough to do either to convince me to buy shares at $.40 so I won't hold them there either.
Of course it is possible that the company slowly progresses going forward - if SG&A growth just slows down relative to revenue growth other time more money will trickle down to the bottom line. But revenue growth isn't guaranteed either.
Best of luck all
Sales were more or less the same as last quarter but net income dropped 220K. Income before taxes dropped ~265K. Approximately one-third of that was due to increased cost of goods sold, one half due to increased SG&A and the rest - about one-sixth to increased R&D. Disappointing - Yes. Surprising? Not terribly. I really hope the SG&A comes back down to under a million going forward. And hopefully the gross margin recovers as well.
I think this is a good company that has a chance to be worth more on a standalone basis. SG&A has always been way too high though. As others have said this company would make a lot of sense as a buyout candidate. Roll them up into a bigger company where they can just take up a fraction of corporate SG&A activities and you are looking at ALOT more money to the bottom line making the company worth a lot more than $10 million to an acquirer.
The stock is reasonably valued today meaning I think there is a decent return to be made from these levels. But a GREAT return will only come if SG&A stops increasing so much with revenue (I think that is still possible - hopefully current SG&A is a highwater mark like Q3 of 2013 was) or the company gets bought.
This was a great quarter.
I broke out Some Q4 Numbers:
Revenue: 2.63 Million
Net Income: 378K
SG&A: 961K
Cash Flow from Operations: 395K
Sales had been hanging around 2 million a quarter for the past 2 years but we see a big jump in this Q. It looks like the new sales team is getting stuff done.
Net Income hit its highest level in a few years. Net Income jumps around a lot with this co. For example it was 351K in 2013Q2 then 56K in 2013Q3 and 229K in 2013Q4. But net income has been growing consistently in the past few quarters - so this might be more sustainable and continue to grow.
SG&A expenses have always seemed really high and they have grown with sales over the past few years which is why net income hasn't increased that much even though sales have. However SG&A sales have now been right around 1 million a quarter for the past 6 quarters. Even though sales this Q were up 21% sequentially from Q3 SG&A was slightly lower. If that trend continues it bodes very well. And since it seems the new sales team and bonuses etc are all in place that very well might happen.
FYI this is a great place to view holdings of IDCC by various "gurus": http://www.gurufocus.com/gurutrades/IDCC#hold. You can see the history of their holdings as well.
Medicare Reimbursement Rates for Freedom60 Pump over time.
I compiled reimbursement rates for the e0779 code which is what matches the Freedom 60 pump. The ceiling and the floor represent the highest and the lowest reimbursement amounts across all of the (continental) states in the US. The 2014 rates are 1% higher than in 2013 across the board (a 1% increase in every state). I have just given the summary with the floor and ceiling below. Another poster indicated in the past that the reimbursement rates were cut which is false as you can see.
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Fee Schedule
Source: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/DMEPOSFeeSched/DMEPOS-Fee-Schedule.html
HCPCS Mod JURIS CATG Ceiling Floor
2014 E0779 RR D CR $18.29 $15.55
2013 E0779 RR D CR $18.11 $15.39
2012 E0779 RR D CR $17.97 $15.27
2011 E0779 RR D CR $17.55 $14.92
2010 E0779 RR D CR $17.57 $14.93
2009 E0779 RR D CR $17.57 $14.93
This certainly was disappointing. I have been in IDCC for about 4 years always keeping a core position and then trading around it. I, like others am anxious to see the actual decision from the judge to understand his reasoning. I suspect that it will not be very convincing and that ultimately IDCC will prevail. However, I did sell half of my position after hours. IDCC is one of my largest holdings - if it does go significantly lower than it was trading after hours on Friday I will want to buy more. If I didn't sell half of my position and it drifted a lot lower (say to the low 30's) I would be too emotional about the loss and want to add more at the lower price to make up for the loss. But I think I would have too much in IDCC at that point if I did that. Now I can look forward to a significantly lower price if it happens and feel good about adding more there. Or if it does stabilize and recover/get good news I still have a decent sized position.
Just what works for me.
Obviously hindsight is 20/20 and put protection ahead of time especially at the prices offered made a lot of sense but I didn't do that.
Regarding the 10K - you probably already know this but looking it up the annual filings for the last few years have been made between 5/27 and 6/1. So good bet we get it in a little under 2 weeks from now.
Thanks Jennybenny - I followed the link and tried to pinpoint what you were talking about but couldn't.... I saw information about changes in 2011 to selected geographic areas but that is it. Hopefully I will have some more time to look through it soon.
Hey Truthfinder - any chance you have a link to that radio interview?
Thanks!
Hi Jenny - where can I find that information about Medicare caps?
Thanks,
Jeff
Thanks olddog - I was unsure if IDCCs case was of the type discussed in the comment I linked to and it very clearly was not - thanks to you and others for pointing that out. Also thanks for sharing the comment about timelines of cases that were similar to IDCCs.
Average time period for decision from CAFC
Not sure if this has been posted yet so forgive me if it has:
Re: Average time period for a decision from the CAFC
« Reply #1 on: 08-12-09 at 01:59 pm »
________________________________________
Is anyone aware of statistics showing the avarage time it takes the CAFC to issue a decision post oral argument?
"My keen research assistant Patrick Barnacle pulled up records on 56 ex parte patent appeals that have been decided by the Court of Appeals for the Federal Circuit since March 2005. All of these cases arise from rejections sustained by the USPTO's internal Board of Patent Appeals and Interferences (BPAI). We are working to create a more complete database. In the meantime, I wanted to report some preliminary results on timing." .........
"Once oral arguments (if any) are complete, the Federal Circuit is rather quick at issuing an opinion. The median decision was issued 47 days after the oral arguments. (Again, a skewed average of 86 days is driven by the handful of en banc decisions) 30% of the decisions came within one week of oral arguments - most of those took one to two days."
Source: Patently-O: Patent Law Blog
June 2, 2009
Direct link: http://www.intelproplaw.com/ip_forum/index.php?PHPSESSID=4aecrf007f625fhggck3bbjsk4&topic=12462.msg57919#msg57919
I am not sure if IDCC's case is an "ex parte patent appeal" but if these stats relate to the general class of case that IDCC is involved in a decision could certainly come quickly.
Thanks for a link back to that post - it is very important and good information to have. On the tivo case in particular, I am not concerned about the fact that Mayer didn't write the opinion.
I have been listening to the recording of the arguments, going through the briefs, and looking at the patents a good bit today and am becoming even more comfortable with Interdigital's position. Just my take (one with no expertise or experience in these matters).
Does anyone know if there is an easy way to get a transcription of the oral arguments?
Thanks very much for the info. The cases I could see on that one site were a very small sample for all three judges but since Mayer said nothing during the hearing, the decisions I could see had me somewhat worried. I am very reassured now. For those interested I found a link discussing the tivo decision: http://ipwatchdog.com/2010/03/04/tivo-stock-surges-over-50-on-patent-decision-in-echostar-case/id=9496/.
Interesting resource - intellirights.com
When searching for information on the judges I came across this website. It has a searching function where you can put in a judges name and view where they came down in certain cases. It only looks like it covers cases since 2009 unfortunately but I did find it interesting to glance over some of the cases each of the 3 judges was involved in and what side they were on. Here is a link directly to a search for cases bryson was involved in:
http://www.intellirights.com/cms2/index.php?searchword=bryson&ordering=newest&searchphrase=any&limit=0&Itemid=76&option=com_search
Looking over what is available here it seems to me like newman and bryson tend to side with the patent holder whereas mayer tends to go against them. This is a link where mayer sided with the majority opinion that a patent was not valid and newman "vigorously dissented".
http://www.intellirights.com/cms2/index.php?option=com_content&view=article&id=66:bayer-vs-barr-cafc-aug-5-2009&catid=37:case&Itemid=67.
Here is another case where Mayer and Newman disagreed and in fact seemed to be on the far opposite ends of the spectrum: http://www.patentabilityblog.com/2009/05/07/solicitor-general-opposes-review-of-bilski-patentable-subject-matter-test/
However, here is a case where Mayer and Bryson agreed that seemed to be for patent holders:
http://www.intellirights.com/cms2/index.php?option=com_content&view=article&id=69:upitt-vs-hedrick-jul-23-2009&catid=37:case&Itemid=67
While trying to find out more about mayer I learned he used to be chief judge but in 2010 took senior status: http://inventivestep.net/2010/06/01/former-chief-judge-h-robert-mayer-to-take-senior-status/. Senior status, a form of semi-retirement is explained here: http://en.wikipedia.org/wiki/Senior_status.
NukeJohn - I think I remember you saying in a recent post that Mayer seemed to generally be for the patent holder in your experience and you mentioned something about a case with Rambus. I would very much appreciate if you could talk more about that/point to some of the opinions as right now I am uncomforable with Mayer (although thankfully feel good about newman and bryson). I was extrememly impressed with Newman after listening to the video GBR posted a link to - seems thougtful, honorable and very intelligent; what a judge should be.
I was thinking it might be good to scan that too and post it but wasn't sure how much value it would have. I will scan and post it though. I'd prefer to let others see it than to only have my comments on what I remembered from a couple of weeks ago. I will see what else I can find that looks interesting. I just wish that the CAFC was open at times other than 9-5 to make it easier to do that.
While I was scanning Nokia and the ITCs brief at the courthouse I glanced over the IDCCs response to nokia's motion which was at least 5 maybe 10 pages long. They seemed to strongly oppose a delay. They stated that 6 weeks before when the postponement to December was decided on, Nokia was indisputably already aware of the conflict for their attorney but did not object to the new date at that time. Instead that waited until soon before the dec hearing date to do so. Interdigital argued against the postponement citing that a delay could only be granted for a compelling new reason or something to that effect and this scheduling conflict was not something new.
Thanks to everyone else who shared their thoughts - especially infinite_q. I was also at the hearing (was nice to meet you in person Monterey2000). I don't have much to add to what was already said but I can concur that I saw the same. I definitely noticed how much younger the lawyers on the Nokia side were vs. on the Interdigital side.
On body language Ill add that Bryson and Newman in addition to being engaged in asking questions were always focused on the speaker as they were presenting their case. Mayer was not even looking at the speaker some of the time.
I was interested to notice how little time was spent on the "continuously increasing power level" issue by the ITC and Nokia. It seems like that is a very simple point of argument and I thought Dunner gave some good arguments. Perhaps Nokia/ITC felt that handled that well in their briefs but that is another place they can lose aside from the spreading code issue.
I am going to the hearing; protocol question...
I work only about a mile from CAFC so will be at the hearing. I got good advice to focus on body language as there is a recording released the same day. I will pay particular attention to the body language of the judges who aren't speaking at any given time and will share what I observe. It will be great if infinite_q or others with more experience are able to attend. For those who have been - how exactly does it work. I was planning on arriving sometime before 1:45 and my guess is I go to the main entrance, and indicate that I am heading to courtroom 201 panel J. Also I gather that since my phone has a camera I am better off leaving that at the office.
Hi NukeJohn - your instructions were very helpful. I didn't run into any real issues. I ended up getting a lightweight flatbed scanner that is very portable and it worked well for the briefs even though they were bound. I went to a few stores that online said they carried the Vupoint Wand you mentioned but none of them actually had it. It took me a little longer to scan than I thought (I expected an hour total) which is why I don't have both briefs scanned yet - mainly just a function of figuring out the most efficient system for scanning. Now that I have the hang of it I think the 75+ page Nokia brief will take me about a half hour.
Hi jjff - I was able to copy the ITC Brief today and will get the Nokia Brief tomorrow. Currently the ITC Brief is a 120MB pdf - I am trying to figure out how to compress it so I can send it to be posted to wirelessledger.
Thanks for the instructions for the CAFC visit - they are very helpful. I will purchase the scanner as it seems like it is the best all around option because it will allow me to get copies relatively quickly and in a form that it easy to disseminate. Researching other scanners I saw some that automatically feed the document and therefore might be faster. But the wand is more versatile. Would I be able to separate the documents into single pages to feed into a scanner or not?
Thanks
NukeJohn: Questions on obtaining briefs from CAFC
Hi NukeJohn - I am going to head down to the CAFC on Monday (the next day the court is open) to get copies of Nokia and ITC's briefs. Longinvestor_98 suggested the idea and I thought it was a very good one. I've never been to the courts before but know that you have and that you have gotten briefs. I'd liked to be prepared so I can get the briefs as quickly and painlessly as possible. So, I would appreciate it if you could let me know what information I will need to have and who I will need to speak with/which room I will need to go to and any tips that you have. Once I get copies I will coordinate with JimLur and others to get them to wirelessledger.
Thanks
You're welcome. I didn't realize you were going to fly out to do it yourself. I'll contact you and JimLur when I get a copy. It turns out the court IS closed today so I won't be able to get a copy until Monday at the earliest but I should be able to get it then.
Hi LongInvestor - very good idea. I have wanted to read the Nokia and ITC briefs myself but never put two and two together that they were readily available for me to access. I would be happy to copy them and send them to wireless ledger specially because I have benefited from similar efforts by others on this board. I don't doubt that you would honor your commitment to cover the cost but I am ok with covering that myself. Strangely I see that the court was closed yesterday but not today so I will head down there today to make the copies. Anyone know exactly what information I need to bring about the case or where specifically I need to go to get the briefs? If not I'll figure it out...
That is a good question. I think that would fall under the rule:
"Attire for counsel and spectators should be restrained and appropriate to the dignity of a Court of Appeals of the United States."
In my opinion a "Nokia sucks" t-shirt definitely qualifies as restrained (I can think of a lot worse to say given the history) but it probably wouldn't meet that second part of being appropriate to the dignity of the court. I like the idea though so maybe I'll chance it : ).
I already checked the CAFC website. They have a section on courtroom decorum in which they indicate that recording devices and cameras among other things are not allowed: http://www.cafc.uscourts.gov/argument/court-decorum.html . But as others have indicated a recording of the hearing is posted soon after.
Thanks for the suggestions everyone. It does make a lot of sense to me to focus on body language and not worry about taking notes so that is what I will do. I also will listen to the recorded hearing after that as NukeJohn suggested and then will share on ihub what I was able to observe in the courtroom. Of course it would be great if none of that was necessary because of a settlement. While I hope those who think things at Nokia are changing are right I would have to see it to believe it. So to me a settlement would be a nice surprise.
As others have said it really seems as though IDCC the stock has moved beyond just the Nokia factor in the short term. I remember a few months ago I expected IDCC to trade in a range near the upper 20s and then break one way or the other based on the decision because well that just seemed to be its pattern. But it looks like a lot of other people have woken up to the fact that IDCC is undervalued with or without Nokia. Or as others have pointed out it may (also) be that after looking at the blue brief filed by IDCC some major investors felt it very likely IDCC would win.
Will be attending CAFC hearing - suggestions? thoughts?
Hi all,
I've posted a few times on this board and have followed it fairly closely since I discovered IDCC about a year ago. I very much appreciate the quality of many of the posts; the board has helped me understand this company much better. I live in DC and work only about a mile from the CAFC so I am going to attend the hearing. I am not a lawyer or an expert of any kind in patents but I am going to see what I can see and also out of interest and curiosity. I've read IDCC's blue brief and so look forward to hearing the oral arguments to see where they go. Does anyone have any suggestions about what to look for? Is anyone else planning on going? I'd like to share my impressions on the board afterward although am somewhat leery of the influence my opinion may have since as I said I don't have any background/experience in this.
Thanks,
Jeff
Buyback... Many have commented on the good news included in this announcement but I haven't seen the mention in the PR about maintaining the buyback getting much attention. I was happy to see that in there - maybe an indication that they will start buying back shares after not doing so for a little while.
Also in thinking about the robust opportunities to deploy cash, aside from the Nortel patents, it seems like this may also be getting at more investments in small companies with complementary technologies in areas where they see the market going. The way the statement is phrased in the release: "The Board believes opportunities remain robust to enhance shareholder value through continued focused investments in market-leading wireless technology" seems to suggest that more. Perhaps this is something the Technical Advisory Council would play a large role in.
Looking forward to tomorrow and beyond.
InterDigital presents at the World Telecommunications Congress tomorrow. There presentation is under Future Mobile:
S01: Future Mobile
Room: Hall 1
Chair: Luigi Licciardi (Telecom Italia, Italy)
11:00 On the way to NGMN - experiences out of trials and tests
Christian Laque (T-Mobile Austria GmbH, Austria)
11:20 Mobile Network evolution: innovative solutions to face the ITC future challenges
Sandro Dionisi (Telecom Italia, Italy)
11:40 Mobile network evolution towards rich communication services
Hiroshi Nakamura (NTT DOCOMO, Inc., Japan)
12:00 Bandwidth Challenges and Providing Reliable, Dependable Connections For Everyone, Everything, Everywhere
Mike Wrape, Naresh Soni (InterDigital, USA)
In general I consider motley fool to be a place of hype and their articles to contain very little information. However the way a couple of sentences in this latest article are phrased makes me wonder. The article states:
There might even be more growth than that in InterDigital's future, now that Clearwire (Nasdaq: CLWR) has thrown in the towel on the WiMAX wireless standard. Once WiMAX's strongest supporter, Clearwire has now begun testing InterDigital's next-generation LTE technology, which could run four to six times faster than competitors' networks. AT&T and Verizon (NYSE: VZ) were already backing this 4G wireless broadband solution, so Clearwire will have a lot of catching up to do here.
I am not very familiar with the technical aspects of wireless technology like some others on the board are. But is this saying something about Clearwire using Interdigital's technology in particular or does it just mean that Clearwire is switching over to LTE in general?
Thanks,
Jeff
IDCC noted "the renewal of a patent license agreement in second quarter 2010" do we know who that is?
Very happy about the quarter being so great and looking forward to the conference call tomorrow.