Please help this poor sick investor understand
I apparently am suffering from a new (to me) malady, CPA syndrome. I've always known CPAs are dull and boring - everyone who knows me will attest to that. I didn't realize that we are, as a group, woefully ignorant of business and should refrain from raising concerns about our investment. Unfortunately I am so far in the grip of this disease that I can't stop myself. Logical questions have to be addressed. I have to look at facts and draw conclusions from them. What I see is IDCC UNlicensing a 3G license, getting rid of the trigger that was the only way we were able to get the scofflaw company Nokia to pay 2G royalties. We also gave away all royalties on 3G to date, which could be as much as $100 million. That’s almost $2 on each of my shares. What did we get? They paid what they owed us per the arbitration agreement and what we were in the process of collecting through the courts. So what is Danny Detail’s (Brad's) response to those substantive issues?
For me it is all about changing WS's perception. On WS perception IS reality more often than not. WM has been a true change agent regarding perception since the day he took over. In spite of all of the clearly correct board attorney opinions here it is difficult to change WS's deeply ingrained perception of NOK as a winner and IDCC as a loser. Not sure even this will do it, but IMO it is a very significant step in that direction .. perhaps of watershed magnitude for the stock price, analyst coverage, and institutional acceptance/ownership even though those on this board who follow the company 24/7 may feel that it falls well short of a watershed event for the future 3G business of the company. I submit to you that if NOK had not filed for arbitration after ERICY settled, then that would have been a watershed event for WS. No reason it can't be one a couple years removed, particularly if SAM falls in line.
It is also funny how a rapidly rising stock price can bring business success all on its own, which results in further price improvement which leads to more business success, etc. Happens more often than you may realize.
First, perception. In the end, Wall Street perceives financial results. You can put on all the dog and pony shows you want, but long term it comes down to the bottom line. If you don’t have visibility on ongoing revenue streams the stock price will not reach the levels it can. While a buffoon can prevent a company from getting value from Wall Street, no management can create LONG TERM value unless it gives its myopic accountants some results that they can use to produce strong financial statements. I think Mr. Merritt is a huge improvement, his presentations are very good, the LG license is a great accomplishment. If he gets 3G licensed then I will agree that this was a good move. But right now I don't see it helping.
Second, how can a rising stock price bring a business success. Please enlighten me, because I cannot see how a rising stock price can help a company unless it is selling stock or borrowing with stock as collateral. Help teach this ignorant CPA so I can understand. If that were the case is seems that there are hundreds of bubble stocks that would still be around.
Brad, way back when you prepared what I thought was a brilliant document outlining steps IDCC could take to improve the company. I was impressed with your work and wish the company would have implemented at least some of them. However I find your thoughts on investing in IDCC to be rather pointless. The reason is that you start with a couple of basic premises that eliminate any rational analysis. If I understand you, you believe that Wall Street and institutional investors are far superior to any other group, including Jim’s IDCC board, when it comes to investing. So what ever they think is right and everyone else is naively fooling themselves. This band of obsessed investors with areas of expertise from legal, technical and even accounting focused on one investment have no chance to understand IDCC better than the pros who cover thousands of stocks. The second assumption is that since management has more knowledge of the company operations, we as ignorant shareholders cannot question anything they do because they know things we don’t, so whatever they do should be supported. You are like a religous fundamentalist. You start with the conclusion (whatever management does and institutions support is right) and decry as heresy anyone who questions them. You were a big supporter of HG and RT, until the BOD dumped them. Then you said they were not right for the job. You don’t think or analyze based on information, just what the all-knowing board says. You were stridently in favor of the additional options on the proxy because management supported them, ignoring the obvious fact that they were the primary beneficiaries. However when the even more omnipotent institutions voted them down, this too became the right thing. Whatever happens is good and positive in your view. I think blind acceptance leads to abuse and corruption.
Those of us with CPA syndrome aren’t loyal to a stock. Loyalty to any stock is a truly incomprehensible concept to me. I invest in a stock to make money. If it goes up, I made a good investment. If it goes down, I made a bad investment. The split second I don’t think IDCC risk/reward ratio justifies a higher price than it’s trading at, I’m selling. The stock is an inanimate object. The company regards investors as a necessary nuisance – they don’t give a damn whether or not I make money on the stock, nor should they. It just that there is no relationship that I can see that would merit any sort of loyalty. CPAs question authority and have a professional skepticism. Every day I decide if I want to invest in IDCC. To do that I need to analyze the current information. I read and ask questions on the board to get opinions from others. Those that state their premises and explain their thought process help me shape my opinion. Those that begin with the premise that anything that happens is good (or bad) and then points to anything that supports their side and ignores anything contradictory is useless.
While I may suffer from CPA syndrome, I don’t suffer from Ivory Tower Syndrome, where one speaks with great passion and confidence in their opinion, yet does not put their money where their mouth is. Kind of like a gambler bragging about all the picks he’s made, winning some incredible percentage of bets, then you ask him for his bookie’s number and he says he just bets on paper, no real money. To me, to have Wall Street Cred for your opinions you need to invest in what you promote. I, like Chris, have gone against any advice we would ever give our clients and put close to 100% of our investment into one investment, IDCC. We can’t afford to “trust” and “be loyal”. We have our futures tied up in this stock. You, on the other hand, believe so strongly in IDCC that you have what, 1% of you portfolio in it? If IDCCs technology became obsolete tomorrow your lifestyle would not change one bit now or in the future. I, however, would be looking at delaying retirement 10 years or more. You can afford to trust, to give away excessive amounts of stock options and the like, because it is just an intellectual game for you. Like putting a $5 bet on the Super Bowl. Gives you a rooting interest and you can say you’ve got money on the line, but it really doesn’t matter. For this CPA it does matter, so I will continue to raise questions about the company and its management on this board. That’s what the board is for. The only reason I would stop is if Jim asked me to. I am loyal to Mr. Lurgio because he has given so much to me and all the investors that use this forum. He spends time and effort to enable us to have a place to exchange ideas about our investment. He does this for us. That earns my loyalty.
So those that want to belong to the see no evil, hear no evil, speak no evil rose colored glass wearing loyal longs, please feel free to ignore me. I am going to continue to question. I’m going to say the emperor has no clothes if that’s what I see. If you can show me where I’m wrong, thank you. If you just want to pontificate, ridicule or complain about my loyalties that’s your right, but it is pointless. I’m sorry Brad, but you touched a nerve. I tried to refrain from responding but I needed to get this off my chest.
Frank
