InterDigital Inc (IDCC)

[The Count]

Use of IDCC cash

I agree there are many cases when it is better to hold on to cash. However I don't think it is the case for IDCC at this point in time. IDCC will likely have over 500 million in cash in 2010 not counting any additional licenses. I don't believe the operating cash flow will be significantly negative for a few years at a minimum. Therefore I believe IDCC will have cash in far in excess of its needs and will have choices on how to use it.

I do believe that IDCC is going to appreciate quite nicely over the next couple of years. By buying back shares at these levels all the shareholders will benefit by the additional ownership as the market cap grows. I think putting the cash into IDCC stock will provide a very good return. Therefore I believe a buyback would be a good choice.

It is possible that IDCC may have a strategy to better use the cash. If so, then I hope they're able to successfully execute it. However I get very nervous about having a large pile of cash burning a hole in IDCC's pocket. If there is a great opportunity, take advantage of it. If not, don't force it. Sometimes the best investment decision is the buy you don't make.

As far as a split, it has no affect on market cap. Twice as many shares at half the price. Splits indicate a company that has done well, not necessarily one that is going to do well.