"How much of the Nokia/Samsung 2G recurring royalty and revenue income is built in to the $17.75 that IDCC is selling for today?"
NONE.
My analysis of a stock price ususally goes like this.
Shares outstanding
Sales per share
Gross Profit
Debt
Market Cap / Value
Possibility of revenue increasing
I like stocks that have a low number of outstanding shares.
Shares Outstanding 56.5M
This means that the stock can move very high very fast because these shares will be in demand.
QCOM is the only company you can analyse IDCC against that I know of.
They have Shares Outstanding 793.7M or 12x the amount of shares.
Sales per share. We need this number to rise
QCOM Sales (ttm) $4.83
idcc Sales (ttm) $1.82
Gross Profit - Can't get a better model than this.
Total Revenue $25,777,000
Cost Of Revenue N/A
Gross Profit $25,777,000
With no cost of goods sold every dime that IDCC makes goes to gross profit. Also costs have been pretty much consistant at approximately $20 mil a quarter including R&D. Bottom line every new dollar that comes in is profit.
Debt - Can't get much better than this either. No creditors to worry about. No bond holders in front of common stockholders. Plenty of cash on hand to fund any downturn in business. Long Term Debt $1,870,000.
Market Cap / Value - This is the number I use most often when I buy a stock. At a $1 billion cap do I think IDCC is worth more than $875 million. When I compute value I add debt and subtract cash. IDCC has no debt and $125 million in cash so the net is $875. What do I feel fair value of this company is. This is totally arbitrary. One can look at past values but not with IDCC. The 99/00 price spike can not be used because of the situation and market exhurberance. So one must projected revenue growth and value of IPR. IMO value of IPR, contracts, possibility of NOK/SAM favorable resolution and SIEMENS chip deal should bring this companies value to about $3 billion. Purely a guestimate with no numeric backing. But at $3 Billion the stock price would be $51 a share.
Lastly the possibility of rapid increase in revenue. Explosive revenue brings explosive price action. I count at least 8 events which will bring substantial revenue to IDCC in the next two years.
1. NOKIA resolution of 2G
2. SAMSUNG resolution of 2G.
3. ERICSON resolution of 3G.
4. NOKIA resolution of 3G.
5. SAMSUNG resolution of 3G.
6. SIEMENS resolution of 3G with chip deal.
7. MOTOROLA resolution of 3G.
8. PANASONIC resolution of 3G.
This does not include any low hanging fruit deals which may materialize like LG, Fujitsu, Palm, etc.
Bottom line this company is undervalued till about $50 in my estimations.
AI
