InterDigital Inc (IDCC)

[blueskywaves]

The general thrust of the media coverage of the option
expensing issue misses the point, IMO. The issue of
option expensing has never really been about the
accounting. That was decided a long time ago.
It has always been about policy. Policy falls within
the realm of politics. Politics is the art of the possible.

So read on, all ye from small and smaller states.
Look at the way that two leading technology
companies from the nation's most populous state
used this policy to win the recruitment wars and
improve their balance sheets.

 
 EBAY  
 Selected Financials 
 FY1998 to FY2002 
 . 
       Diluted    Net   Cash,MktSec  Net Proceeds   Tax Benefit 
         O/S     Sales   Restricted     Options        Options 
 . 
 1998    234M   $ 86M    $  78M        $ 69M              - 
 1999    273M    225M      777M         713M         $  11M 
 2000    280M    431M      901M          83M            38M 
 2001    281M    749M      1.1B         124M            87M 
 2002    293M    1.2B      1.8B         252M            77M 
 . 
 Total                   $ 1.8B        $1.2B         $ 213M 
 . 
 . 
 . 
 QCOM 
 Selected Financials 
 FY1995 to FY2002 
 . 
       Diluted    Net   Cash,MktSec  Net Proceeds   Tax Benefit 
         O/S     Sales   Restricted     Options        Options 
 . 
 1995   460M   $ 387M     $ 579M       $ 499M           NA 
 1996   523M     814M       154M          24M           NA 
 1997   575M     2.1B       809M          32M           NA 
 1998   592M     3.3B       303M          50M           NA 
 1999   650M     3.9B       1.7B         1.3B           NA 
 2000   800M     3.2B       2.5B         144M           NA 
 2001   756M     2.7B       2.6B         132M           NA 
 2002   809M     3.0B       3.2B         120M           NA 
 . 
 Total                    $ 3.2B       $ 2.3B 
 . 
  
 QCOM's use of balance sheet leverage is highly  
 relevant and instructive to IDCC because, as I 
 pointed out repeatedly, the IPR business is a  
 high margin but high friction business.   
 . 
 I don't think many people realize that IDCC  
 entered the final stages of the Nokia  
 negotiations in late 1998 and early 1999 with 
 only $52M in cash and an operating cost structure 
 of $55M!  Without the Nokia deal, IDCC would have 
 generated only $28M in revenue in 1999 and that 
  wouldn't have been enough to cover its operating  
 expenses!  Unarguably, IDCC could have gotten a 
 better Nokia deal if it had a better balance sheet 
 in 1998/1999. 
 .