InterDigital Inc (IDCC)

[rmarchma]

Projected 2004 royalties from newest licensee HTC

I project that royalty revenues from IDCC’s newest licensee High Tech Computers might be almost $4 million for 2004, at a conservative 1% estimated royalty rate. Most of my projection is based upon two tables (Table 2 and Table 5) from Merrill Lynch’s November 14, 2003 analyst report, provided recently by jimlur. (Sorry but I could not get these two tables to post into an ihub message).

Merrill is projecting total revenues for HTC of $640m US dollars (21,791m Taiwan dollars / 34 exchange ratio) for 2003 and $793m US dollars (26,960m Taiwan dollars / 34) for 2004. Of the $793m projected revenues for 2004, 48% of the revenue is projected to come from royalty-bearing Wireless PDAs and Smartphones. Therefore, $793m x 48% = $380m of royalty-bearing revenues x 1% estimated royalty rate = $3,800,000 estimated royalty to IDCC.

Another way to calculate the estimated royalty is to take $380,000,000 estimated HTC royalty-bearing revenues in 2004 / 980,000 estimated wireless PDA and smartphone units in 2004 = $388 average wholesale price per unit. Therefore, $388 per royalty–bearing unit x 1% estimated royalty rate = $3.88 estimated royalty per unit x 980,000 units = $3,800,000 estimated royalty. Of course the projected royalty would be higher, if one assumes a higher royalty rate than my conservative 1%. I really have no idea of the actual royalty rate for HTC.