Rox re 4th quarter 2007 earnings projections
I think that IDCC will be very lucky to make 10 cents per share diluted in the fourth quarter, based upon company guidance to this point. My initial 4th quarter projected earnings comes to 8.5 cents per share diluted as follows:
Recurring Revenues $51.0m (guidance $50.5 to $51.5)
Non-recurring revenues $3.5m (guidance $3.5m)
Total Revenues $54.5m
Operating Expenses $50.5m ($47.2m second quarter + 7% increase)
Operating Income $4.0m
Interest Income $2.0m (equal to 3rd quarter)
Income before income tax $6.0m
Income tax expense $2.0m (per guidance of 33% effective tax rate)
Net Income $4.0m
Earnings per Share 8.5 cents (based on an estimated 47m diluted shares)
Added notes: I did not include any estimated incremental revenues for the recent RIMM updated 3G license. Since it was updated at the start of the fourth quarter of 2007, and IDCC normally lags one quarter in recording per unit royalties, I believe that the 3G part of the updated RIMM license will not impact IDCC until the first quarter of 2008. IDCC guided Operating Expenses to increase 5% to 10% above the second quarter, excluding the Federal arbitration award. I also provided for some decrease in the weighted average diluted shares due to the new buyback beginning in November. The third quarter weighted average diluted shares amounted to 48.7m shares.
From IDCC press releases involving 4th quarter 2007 guidance as follows:
“Expected revenues for fourth quarter 2007 include the following approximate amounts:
-- $50.5 million to $51.5 million of recurring patent licensing and technology solution revenue; and,
-- $3.5 million of non-recurring patent licensing revenue related to prior period sales for two licensees.
Scott McQuilkin, Chief Financial Officer commented, "We continue to focus on effective management of our costs, which contributed to the reduction in our third quarter operating expenses from second quarter levels. In line with our aggressive push to get our products to market, we currently expect that fourth quarter operating expenses, excluding patent arbitration and litigation costs, will grow within a 5 to 10 percent range above the second quarter level. We also currently expect that our patent arbitration and litigation costs in fourth quarter 2007 will increase over third quarter based on the expected level of activity. Lastly, we currently expect that our book tax rate for the fourth quarter of 2007 will approximate 33 percent."
