This last take suits me fine and I suppose all in all, I'll go along with this guy.
Interdigital/Nokia 3G Talks a Positive Sign
posted on: March 25, 2008 | about stocks: IDCC / NOK Font Size: PrintEmail
At the beginning of this month I mentioned the steps Interdigital (IDCC) needed to take in order to convince Wall Street of its potential. Yesterday, the company appeared to have taken a giant step in that direction.
Interdigital reported that it was in settlement discussions with Nokia (NOK) for 3G, and that the parties have made substantial progress towards a resolution on all the patent between them. A bigger positive about this piece of news is that it was reported as an unscheduled material event or corporate change through a Form-8K. The news was further ratified by a Nokia spokesperson who declined to add more color to it.
Wall Street reacted very favorably to this information as the company's shares soared almost 15% to close at $22.31. In fact, the last trade for the day was at $22.80. This also ended a two-month rut for Interdigital shares that were trading in the high-teens.
The fact that a Form-8K was used signifies a positive end to this prolonged battle with Nokia. It also suggests that the King of Prussia-based company is quite confident, about a favorable licensing deal. Besides, with a stock buyback plan in progress, the company will also want to play safe. It will certainly not want investors complaining that the buyback is unfair (if a Nokia settlement is not made public).
On a related note, Interdigital also stated in the 8K that it will appeal against a court order seeking that it enter an arbitration with Nokia. It will also continue to participate in the ITC investigation against Samsung. It now appears that with Nokia likely in tow, Samsung and the others will soon follow suit, and Interdigital will be presented with a chance to prove its real worth to the Street.
Disclosure: Long IDCC at the time of writing.
Vijay Nagarajan
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