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Wednesday, May 14, 2003 11:11:04 AM
Operation-wise, the larger IDCC's cash balance,
the greater its ability to recruit talent and
improve its patent portfolio and hence, the
greater its ability to increase recurring
royalties.
Valuation-wise, the greater IDCC's cash balance,
the greater the enterprise value. Enterprise value
is defined as market capitalization plus long-term
debt less cash and investments. Many view this as
the going concern value of the company. I prefer
to use it to judge the margin of safety in the stock.
The people who got carried away by the misleading
data posted by Ronny and his cronies still don't
understand this.
Here's a table simulating the increase in IDCC's
cash and investment account from the option exercises.
INTERDIGITAL (IDCC)
SIMULATED CASH INFUSION FROM OPTION EXERCISES
.....
Price 5M 10M PLUS: TOTAL
Cash/Inv* Cash/Inv
.....
$20 $100M $200M $ 400M $ 500M-600M
$25 125M 250M 400M 525M-650M
$30 150M 300M 400M 550M-700M
$35 175M 350M 400M 575M-750M
$40 200M 400M 400M 600M-800M
...
...
* The simplifying assumptions used are that
all options will be exercised at the same time
AND all the prepaid royalties will come in at
the same time.
...
...
INTERDIGITAL (IDCC)
IMPACT OF SIMULATED CASH/INV LEVELS ON
IDCC'S ENTERPRISE VALUE(EV)
(Market cap PLUS long term debt LESS cash/inv)
.....
.....
Market + Long-term - Total = EV
Price Cap* Debt Cash/Inv
...
...
$20 $ 1.16B NM $ 500-600M $ 560M-660M
$25 1.45B NM 525-650M 800M-925M
$30 1.74B NM 550-700M 1.0B-1.2B
$35 2.03B NM 575-750M 1.3B-1.5B
$40 2.32B NM 600-800M 1.5B-1.7B
...
...
*Assumes O/S of 58M shares.
NM - not meaningful
Keeping the sales, earnings and cash flow growth
assumptions constant, would you pay more for an
emerging growth company with a larger cash and
nvestment account at the cost of minor dilution?
Of course you would.
Keep in mind that this analysis doesn't even
include the substantial tax benefits associated
with option exercises.
Recent IDCC News
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/22/2024 12:17:49 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/20/2024 08:06:55 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/20/2024 01:05:55 PM
- More than half of connected devices will be haptic enabled by 2028, revealing exciting opportunity for immersive video • GlobeNewswire Inc. • 08/20/2024 08:00:00 AM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/19/2024 08:19:03 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/19/2024 12:28:06 PM
- InterDigital Announces 2024 Investor Day • GlobeNewswire Inc. • 08/01/2024 12:45:00 PM
- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 08/01/2024 12:35:02 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/01/2024 12:32:54 PM
- Interdigital Announces Financial Results for Second Quarter 2024 • GlobeNewswire Inc. • 08/01/2024 12:30:21 PM
- InterDigital signs license agreement with Panasonic • GlobeNewswire Inc. • 08/01/2024 08:30:00 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/26/2024 12:52:36 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/26/2024 12:48:39 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/26/2024 12:47:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/26/2024 12:45:22 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/26/2024 12:40:30 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/26/2024 12:37:32 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/26/2024 12:31:56 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 07/26/2024 12:30:03 PM
- InterDigital Announces Date for Second Quarter 2024 Financial Results • GlobeNewswire Inc. • 07/18/2024 12:30:00 PM
- UK Court of Appeal rules in favor of InterDigital in dispute with Lenovo • GlobeNewswire Inc. • 07/12/2024 01:10:00 PM
- InterDigital Announces Convertibility of 3.50% Senior Convertible Notes Due 2027 • GlobeNewswire Inc. • 07/03/2024 08:00:00 AM
- InterDigital signs license agreement with Google • GlobeNewswire Inc. • 07/02/2024 08:00:00 AM
- Form 11-K - Annual report of employee stock purchase, savings and similar plans • Edgar (US Regulatory) • 06/20/2024 12:30:40 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/12/2024 08:10:56 PM
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