Some Thoughts on Equity Investing with Eyes Wide Open:
For all the energy expended here on debating the effects of ISO's on dilution (efficient in creating more heat than light, in my opinion, because there are too many unknowns to make a wise, well informed decision on the matter with any degree of certainty), I have not seen a single person on this board stand up and say they will SELL their shares of IDCC if the decision on proxy #2 goes one way or the other. So this issue appears to be irrelevant or insufficient in significance to making the ultimate and fundamental decision about the wisdom of buying, selling or holding this stock. Other factors clearly have greater weight or significance, and this board has lost its focus on usefully examining and discussing them.
Can anyone point me to any growth stock, especially in the small cap area of investing, that does not face issues of actual and potential stock value dilution, excessive compensation, or other governance issues that exceedingly concern some investors in IDCC? Are these not issues affecting the entire equity market? And if these issues are not specific to IDCC, how useful are they in making an investment decision? Those who are so concerned and preoccupied with these issues should either devote their energies to the politics of reforming the governance rules regulating the entire equity market or consider alternative investments in the bond market or real estate or antiques or whatever. It is a fact of life and part of equity investing in the current market culture that shareholders face the RISK of share value "dilution" in any number of ways, "excessive" compensation, ineffective BOD's, "excessive" insider selling, etc., etc. This is the background "noise" in the equity market and many investors have abandoned this market for such reasons as well as the many other signs of corruption, dishonesty, thievery that we have witnessed on a grand scale.
So what is an equity investor to do? Given the current background of many governance related risk factors in the equity market, how do we wisely select among those stocks for investment? With respect to IDCC, the long term investors have believed in the growth potential of this company based upon an assessment of the value of its technology. That is where the fundamental analysis has to be made and continually re-evaluated. Those who thought IDCC had the goods in 2G patents viewed the ERICY litigation as the hook that would catch a whale of revenue. The Settlement revealed a small fish on that hook, which turns out to be the bait for catching a bigger source of revenue that has yet to be reeled in. And the as yet unrealized potential of 3G technology has us all with eyes wide open looking for that investment value payoff. So Joel is absolutely correct that we are invested because we expect the Value Pie to grow and to grow so much bigger that we all get a bigger piece of pie, even if it is a smaller percentage (thru dilution) of the entire pie. And that is why the dilution issue has so little resonance as a basis for the long term investment decision of SELLING or not.
Clearly, our basic focus needs to be the fundamental analysis of the technology proposition and management's vision and skill in realizing the potential of that technology. Are there any or many poster's left here who can help us continue with a useful and continual assessment of how this investment is doing from that perspective? My apologies for the rambling thoughts on getting focus back to basics.
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