Red Angus, you are in the majority,
which is why I complained yesterday.
Maybe I’m in the minority here, but I don’t see a problem with people griping when the stock takes a 20% hit in one day on virtually “no news”.
What’s the point? It’s like griping when it rains on the weekend. You might be unhappy, but no one can fix it nor prevent it in the future. As you observed, there was NO NEWS.
Most of us cheered wildly when we won the NOK suit and when LG was signed, and we gave credit to management for accomplishing same. But (as someone who has been in business many years can attest) management is sometimes fallible, too.
I completely agree that management actions should be looked at critically, but what happened here has nothing to do with management’s performance. It’s like a college football team that has a bye week and someone on ESPN says the team is overrated. The next poll comes out and they drop 8 places in the rankings. Does that mean that the coach and team should be criticized?
I for one think that the grant of stock options to insiders is a bad practice (now evidently being abandoned as a practice by most companies, including IDCC). As Business Week and the great majority of economists now point out, the purpose of issuing stock options in the past was supposedly to “align the interests” of management and shareholders. However, when options are exercised and the stock sold immediately by insiders, just the opposite happens. This is diametrically opposed to “alignment” of executive and stockholder interests. Stock options are NOT intended as ordinary pay supplement for insiders. Incentive bonuses work just fine for that, as most companies are now coming to realize.
Amen. It was an exorbitant gravy train that is finally being derailed. Stock based incentives are similar gold mines for those that get them.
I think it’s a totally bad business practice for insiders to sell shares during an announced buyback. Such practice dilutes the purpose of the buyback; it tricks shareholders into believing that the company’s outstanding shares will be reduced, when in fact they won’t be, to the extent of the option exercise/sales; it raises all sorts of questions that are debilitative to stock price; the timing can never be right for exercise/sale, etc.
What is the purpose of the buyback? I thought it was to acquire stock so that all the shareholders would increase their equity in the company. I don’t see how who they buy the shares from affects that.
IDCC management has done well on several counts, and we’ve given credit when due. I think it has screwed up on insider sales, though. Bigtime. I’m long on the stock, and just bought some more, but let’s face it: Even though IDCC insider sales were not the major reason for the recent price decline, they have definitely hurt the stock to some undetermined percent and they’ve definitely caused tremendous stockholder turmoil.
I agree that they’ve been given way too much stock way too cheap, but once they have it, it is theirs to sell. Preplanned sales would be a better way to go, but as long as they are not violating the letter or spirit of the insider trading laws they are doing nothing wrong. Do you really think the stock price in two months would be any different if these sales had not taken place? The affect is short term.
I don’t think there’s any problem with discussing the subject.
Discussion is fine. You’re post was well thought out and presented well, as usual. While I disagree with some of your points, it is a useful discussion. It’s the “I wuz robbed” and I’m going to blame management, shorts, Amit, someone other than me for my investment loss posts that I find a waste of space. The folks that can’t or won’t look at the facts and analyze, they just see the price drop and have to blame someone.
