THE LAST 12 DAYS ... and tomorrow.
PAST AND REVIEW
IMHO............
These past 12 trading days have been very difficult. All Shareholders have been greatly disturbed ... as much by the severity of the reaction to the stock weakness as to the arbitration itself. I needed to step back a bit and review these few days as they have been equally disturbing to me. These are my thoughts.
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THE NOKIA/MARSALA ANNOUNCEMENT.........
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The day after the arbitration announcement as we were staging a recovery.
I posted .............
"We will need longs to stay as resolved as they were today and as shorts have been in the recent past. This will certainly encourage our institutional investors to support the stock"
We MAY loose a 'long 'here or there....who will likely buy back ....
7/23/2003
Just prior to Marsalas announcement, but after the Nokia announcement we traded as high as 19.24 . Our low after the Nokia announcement was 17. That was an expectable decline. Many longs had previously indicated that if such an event took place they would be buying ... just as the buying was coming in the Marsala announcement came..double whammy.
Marsala dropped his bombshell in anger feeling blind sided by Howard's CC reassurances that "all we have to do is fill in the blanks" .
Marsalas timing could not have been worse....we were in the process of recovering from the Nokia announcement when he came out with his announcement ... this just added fuel to the fire.... thus exacerbating the weakness. [ IN A WEAKING SHORT TERM MARKET]
The Marsala announcement [with a low ball number 12] attached to it....took us from an inter day high of 17.57 at around 1.30. PM and in a matter of minutes it took us to an inter day low of 15.46…. He really kicked us hard when we were trying to recover.
We held our own till the Marsala call and then support dropped out and another wave of selling took off ... that was one week ago. Since then we have traded as high as 17.20 and as low as 14.46.
I was completely caught off guard with Marsalas call. No excuse... I HAD NOT ANTICIPATED an analyst reaction that quickly. At that moment I was focused on evaluating the strength of IDCC'S position based on their past and current public comments.
Marsalas action in some ways was as bad if not worse than the arbitration announcement itself. His announcement really rattled investor confidence at that moment. Several of our strongest longs lightened up and decided to wait for a new bottom. Remember we attracted a number of new investors with the recent coverage. I would imagine many of our new investors being on the short end of the learning curve as to this industry and this investment also lightened up. The absence of strong support after the Marsala call no doubt brought out the short vultures and additional downside pressure resulted.
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SO...WHERE ARE WE TODAY.........
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As you can see by today's volume the reaction selling seems to be abating. We are currently below the ericy settlement stock price. IMHO..Traders will continue to work the stock....the shorts have had a good 12 days.....as did the longs have a good few months till the arbitration/Marsala call. Is the bottom 14.50 ....whatever it is it is we are much closer to it then we are to our recent highs. The market will take it's course day by day... but in the end...IMHO IDCC will once again flourish...
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THE GOOD THE BAD THE UGLY .........
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THE BAD
. There is no doubt that many loyal longs sold shares following the recent Marsala/Nokia announcements.
THE GOOD
I believe many are still around holding smaller positions waiting to see how things play out.....looking for entry points to secure a larger postion....We no doubt have a number of new players who are just tuning in...so we may have to help them along as they do not have the same history.
THE UGLY
Uncertainty looms over the stock at a weak moment in the market [short term ]...
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WILL WE PREVAIL....
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I do still believe IDCC will prevail.... for the reason I posted on 7/23/2003
--- NEWS RELEASE (BUSINESS WIRE)
Nokia's arbitration request relates to ITC's claim that the patent license agreements ITC signed with Ericsson and Sony Ericsson in March 2003 defined the financial terms under which Nokia would be required to pay royalties on its worldwide sale of 2G and 2.5G products commencing January 1, 2002.
Excerpt from my post 7/22
IS THERE A QUESTION AS TO WHETHER THE ERICY OUTCOME ...
"defined the financial terms under which Nokia would be required to pay royalties on its worldwide sale of 2G and 2.5G products commencing January 1, 2002."
MY THOUGHT....
If so.....management's representation to the public has been inaccurate...in which case they have a problem. I find this unlikely due to the significance of the event to the company. " WATERSHED EVENT"
IDCC'S RESPONSE...
"We believe that we have fully satisfied our contractual obligations and remain confident in our position, including our prior projections as to the amount of royalties owed and to be paid. William J. Merritt, president of the InterDigital subsidiary.
Including our prior projections as to the amount of royalties owed and to be paid...
HIS JOB AND FUTURE DEPENDS ON IT.
IDCC WOULD BE SIGNIFICANTLY JEOPARDIZING THEIR FUTURE IN MANY WAYS IF THESE PUBLIC STATEMENTS WERE UNTRUE.
My comment:
TO MUCH AT RISK......THEY ARE DRAWING THE LINE IN THE SAND
IN AN EFFORT TO AVOID USING SETTLEMENTS AND ARBITRATION
AS FUTURE NEGOTIATING PLATFORMS
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AS TO INVESTORS CONTRACTS AND ETHICS....
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"Many investors were caught off guard .......they were basing their expectations of the NOKIA resolution on an 'fair play' ethics model that unfortunately does not always play out in the business world. This seems particularly true in the wireless sector..."
"For those with business backgrounds dealing in contracts it is well known that ... when a party is unhappy with a contract they have signed they may opt to try to renegotiate the contract at the time the contract is due to be enforced. Think of having a commercial lease [with a cost of living clause] if the cost of living shoots up higher than you anticipated ... but your revenues and profits have not accelerated as quickly.....you might go to the landlord and try to renegotiate. At the end of the day the landlord has the upper hand...you may opt to withhold your increase until such time as you either are evicted or your landlord may restructure your lease lightening up the frontside obligation while increasing the backside of the lease so that the overall monetary terms remain the same.
If the landlord does not feel the tenant has a true burden he will commence litigation with damages and ... he will most likely win."
Excerpt from my post 7/22 MY THOUGHT
NOKIA is posturing with the hope of making a little better deal. Nok is obviously unhappy with the effects the ericy settlement has on their royalty agreement with IDCC. They did not anticipate the outcome. They chose to be tied to that event as they were not willing to agree to the royalty numbers idcc was suggesting at the time.....they felt they could always throw in the' arbitration card 'to try and negotiate a better deal down the road if the ericy card didn't work out.
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CONCLUSION....
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As unfortunate as it is.....it is often in the darkest moments that the greatest opportunities arise. We each have to decide whether we believe IDCC has executed a contract with NOKIA that will prevail. I am not privy to the NOKIA/IDCC Licensing agreement. I am only privy to management's understanding of its contents and their representations in recent and past months. ERICY being a' watershed' event .....that defined the financial terms under which Nokia would be required to pay royalties on its worldwide sale of 2G and 2.5G products commencing January 1, 2002.
I have little doubt it was not just joyous exuberance that led management to clearly identify the triggering event and the financial outcome. They do not have a track record of being forthcoming unless they are certain.Nokias remarks in their claim regarding insider activity Imo indicates a true weakness in the value of their claim. Their is no substance just innuendo and a request to go fishing. It is a set back....IN TIME.
Will we look back and wonder how we missed this moment?...
Belief is a funny thing....it is often formulated as a result of our personal past experiences.Fortunatley or unfortunately things change and our past experiences may not always serve us well as a GOOD guide post for our beliefs and decisions.
I do not have a crystal ball....only my beliefs....IDCC strong pronouncements and Nokias desire to fish before going to the dinner table leave me feeling comfortable with my long position. I am annoyed that this Goliath company would utilize such deplorable tactics after receiving the benefits of our labor. Ethics unfortunately are desired, but not always applied when the stakes are high.
As always your comments and thoughts are appreciated. Alley
God bless the righteous. God bless all of you for who have had the strength ,patience, and now the faith that the JUST shall prevail. While this is a business venture ....and my intellect and judgement are my God given tools ...there are times I just have to put my faith to work... fortunatley it has always served me well.
