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I am just thinking Has2be2004...
If the board decides to sell for $100 / share or around $ 5 billion, then they are effectively giving up on their own strategic plan or objective to license 100% of the wireless market.
If we look just at the mobile phone market:
Smart phones currently 400 million @ avg price $300 wholesale price = $120 billion market. At just 1% license rate, that is $1.2 billion revenue for 100% or $600 million for 50% of the market licensed at 1% rate.
Feature phones around 1 billion phones sold annually @ avg price of what (?) $50 gives $50 billion market. 1% licensing rate and 100% market is $500 million revenue
Total of $1.7 billion revenue for 1% rate and 100% market. That works down to $765 million NPAT or $14 / share earnings. P/E of 15 gives $210 share price.
At 0.5% rates and 50% of the market for mobile phones, they should be worth at least $50 / share plus the cash.
That is only mobile phones and exclude all other wireless devices.
Now IF they were to be a Qualcomm and got their 3% rates and 100 % of the market licensed, they would be able to command over a $600 share price.
So we can see how low the market is currently rating management ...
I know, against my better judgement, that I should not even try to argue with you, as it's obvious you see things only through your own tainted lenses.
Most people are eventually going to own smart phones. Any macro events will just slow down or postpone it for some. This does not change the long term value of IDCC. You are only interested in the short term benefit to your options ...
ABXX : You are cluttering up this thread with Macro economic issues. There is many of us that follow these global events closely, and have been aware of them for longer than you, but chose to keep postings on this board related to specific IDCC matters.
DR,
Again, I also suggest to you that you read all my previous posts. I can assure you that I have read most that there is to read on IDCC the past 3 months. That includes every one of your posts on this board as well. Which of course lead me to start questioning the value of your contributions. You have your own view, and anyone that dares to disagree with that, is just stupid, all JIYO right ?
If you have been holding this company's stock from 1999, I think it's safe to say that you don't have a clue about it's fundamental value either ?
DR,
If you have taken the time to actually read my posts up to now, you would have noted, that I don't trade options. Secondly, I have only one interest, to try and find what the fundamental value of this company is. A buyout is a bonus for me. This is not an exact science and is always based on incomplete information, hence me trying to find out as much missing info or views as possible.
So far, you have not been particularly helpful ...and try to ridicule many that do not have as long history on this board as you.
My apologies for us more recent investors that have not suffered as long as you in this stock.
It is difficult to determine your main interest, especially since you stated that your opinions are formed by you working for a company in the industry that IDCC serves. This would in effect put you in conflict of interest. You might have an economic interest in IDCC as well, as a common stock holder, who knows, but it might pale to your other interests. That's why I ask. You make it difficult to determine from outside what your true opinions and agenda are.
DR, As you rightly point out, context is everything. It is important to know which side of the fence you stand, to properly judge your "opinions".
Is it in your interest to have IDCC management sign licenses with as low as possible rates?
Is it in your interest to have IDCC offer more "value" to you/your company than merely very valuable patents?
DR, True to form it seems, you have again taken a very simple question and broadened its scope and complexity by not answering it straight, but by injecting vague and unspecified terms like "adjacent markets", "new technologies" and "new business model".
You are quick to ask others for detailed explanations of their reasoning and beliefs, yet you offer none of your own?
I am interested in your opinion because you seem to have defended management's licensing results and business strategy up to now.
Now it looks like you believe the strength of the patents are not enough to offer value or get manufacturers to sign up?
I asked whether YOU believed that... not what most other might believe...
Olddog: Ok, thanks, just thought there was some other strategic plan that the board evaluate management by other than what is painfully apparent to all us other shareholders...
Can't do that. Not paid member. Are you somewhere else I can contact you ?
Nice ! I am from SA as well, not far from you ... Which fund if I may ask?
Not questioning you. I'll take it on face value that those calculations are correct. However, that is a shocking, and I mean SHOCKING Apple deal ! Please tell me what this flawed "strategy" is that you are talking about? Can a leopard change its spots ?
It's hard for me to see how anybody can sugarcoat this. Apple makes nearly all the smartphone profits in the industry and has billions in turnover in just their smartphones and they pay IDCC $2 mil a quarter? WTF ? When does this deal expire?
So are you long personally, or on behalf of your hedge fund ?
Valuebull, you're from Cape Town ?
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Nice to see and read about someone's views that is a bit more long term than the next options expiry !
Do you think I moved the market? So sorry for that ! :)
Limejuice:
It's actually a patent from Motorola that won the day. A lowly GPRS standards essential patent. And here people already think 3G is past and its all about 4G/LTE going forward. You only need 1 patent to cause a lot of damage. IDCC has 19000 . Apple needs more essential patents in this war imo. Their design patents is proving to be less effective than many thought before.
I actually think this delay in the sale process is working in favour of IDCC. With the avalanche of suits and court decisions coming through now, a much clearer picture emerges of the strength of standards essential patents.
Florian Muller's discussion of the today's ruling against Apple highlights this:
http://fosspatents.blogspot.com/2011/12/motorola-mobility-wins-german-patent.html
Particular interesting and important in IDCC vs Nokia and others:
Why do you ask me all these questions?
What is your purpose?
Do you perhaps know the answers?
Why don't you tell?
What is the relevance?
...
Shall I go on ?
DR:
All I know, and judging from the Qualcomm announcement, provided and posted by you, in this regard as industry practice:
Olddog: Maybe if you actually took the time to read my posts properly, and not fall off your stool when someone dares to question one of your posts, would you not rely on "appearances", but see that I have not cited the Jefferies report as basis for my reasoning.
But let's leave that aside. Rather tell me, why you don't think IDCC can charge close to 3% rates for 4G/LTE, given their 16% essential share, and being a true NPE, without the need to cross license or reciprocity. Keeping in mind that Qualcomm can demand a 3.25 % rate and Microsoft between 4-5 % ?
Thanks DR for this info.
I can not comment on the position of management re proposed rates for 4G/LTE in 2009. All I know is that times have changed, therefore the strategic review announced. These patents for 4G/LTE have become A LOT more valuable since 2009 as the need for more bandwidth has exploded in wireless devices. Qualcomm knows this, and so does everybody else.
The article I am referring to is this one:
http://ipfinance.blogspot.com/2011/06/patent-licensing-fees-modest-in-total.html
Always look where the interests are to better understand "public" statements regarding proposed rates and capping. In who's interest is it?
Thanks HenryW and postyle for the link to the Jefferies report.
Some comments:
The report is quite old, July 2011, and much more info has come to the fore in the last few months regarding rates that is being charged currently by Microsoft, Nokia, Qualcomm, and others.
Jefferies based their $3-10 billion valuation on rates for 4G being only slightly higher than for 3G.
Where is the source link for this report by Jefferies ?
Hi all, don't know if any of you have read this article, or if any is still interested in the dynamics and players involved here, but this guy, Keith Mallinson, sure looks like he knows his stuff, and this article was very informative. It sure puts everything in perspective.
http://ipfinance.blogspot.com/2011/06/patent-licensing-fees-modest-in-total.html
After reading it, I have changed my mind. I think even a 3% royalty rate for a 100% NPE like IDCC with its share of essential 3G and 4G patents is too low. $118 / share is too cheap ! IDCC is the next Qualcomm in the making. As an independent, they have of course everyone against them.
Read it and weap ...
Some interesting quotes from this Bloomberg article on Ericsson: