InterDigital Inc (IDCC)

[rmarchma]

Corp_Buyer re licensee info and first quarter

From the latest CC as follows:

Blaine Carroll, Adams, Harkness & Hill - Analyst [10]
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A couple of questions, if I can? First of all, I guess for Rich, here we are in the first week of March. I was wondering if you could give us some guidance on the top line and just how the quarter has been progressing so far.

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Rich Fagan, InterDigital Communications Corp. - CFO [11]
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As you know, Blaine, our reports from our licensees come in subsequent to the quarter ending, so we keep an eye on what's happening in the marketplace on our key licensees. I tried to point some of those factors out in my prepared remarks.

You know, we still feel that our recurring royalty base is a solid one. NEC apparently has resumed shipments of 3G devices for which they had some difficulties that they stopped shipping to some customers in the fourth quarter, so we're pleased about that.

From what we read, Sharp is coming out with new models and migrating to more 3G models in Japan as well.

Sony Ericsson had a nice fourth quarter and from what we view out there, we don't see that changing.

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Howard Goldberg, InterDigital Communications Corp. - President, CEO [14]
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Let me add that I think we should all look at the information we could gather as to the sell-through in Q4 and hopefully, the levels of sell-through were at a point where there needs to be a lot of sell-in in Q1 to replenish the inventories. But we will get a much better handle on that as we receive royalty reports after Q1.

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Blaine Carroll, Adams, Harkness & Hill - Analyst [15]
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Our (indiscernible) have shown, Howard, that, for the most part, there is very little inventory in the channel right now. We didn't have that build-up like we've had over the last few years.

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Howard Goldberg, InterDigital Communications Corp. - President, CEO [16]
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Right, that's why I'm throwing that out -- because that's my understanding.

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Blaine Carroll, Adams, Harkness & Hill - Analyst [17]
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Okay. When was the NEC issue resolved with Hutchison? Is that something that was in the last couple of weeks or was it earlier in the quarter?

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Rich Fagan, InterDigital Communications Corp. - CFO [18]
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I am not sure that they -- Blaine, to be honest with you, I've read various analysts indicating that it was resolved but I don't know specifically when it was resolved. I know they did – I read something just recently with regard to three, that they actually are going to start shipping -- they started shipping to three, as well as Hutch, just recently.”


Corp_Buyer I reiterate my opinion that Fagan probably does not talk directly with the licensees during the quarter. IDCC tries to keep updated on our important licensees by reading articles, analyst reports, and industry reports. But they really do not know what the licensees did until after they receive the quarterly sales reports.

I think that Howard was making the observation that handset Inventories are very low and are in desperate need of replenishment. Hopefully major replenishments will actually occur in March.

I am much more optimistic about the first quarter than you appear to be. We are pretty sure that NEC 3G handset shipments to Hutchison are going full-force right now. Sharp has gotten some major European orders, and appears to be in the process of making deliveries. FOMA has launched a new wave of 3G handsets during the first quarter, which also bodes well for NEC and Sharp. Sony/Ericy appears to be doing well in the first quarter also.