Congratulations on today's IDCC developments
I think IDCC put a very positive spin on the $45m Slimchip impairment charge, by emphasizing the decreased expenses/increased earnings going forward, and the market reacted quite favorably. A private message, with the recipient's name x'd out, that I sent Friday as follows:
Private Message | | *Private* Reply
Sent By: rmarchma To: xxxxx Date:3/27/2009 7:37:17 PM
Well I think Slimchip is casting a dark cloud over the share price, due to uncertainity. I really think that there will be an impairment loss, if shut-down, or a loss on sale, if sold. Once IDCC decides what to do, and the decision disclosed, I think the uncertainty cloud will lift, which should ultimately be helpful to the share price. IDCC should be able to spin it in a positive manner, if they are market-smart for once.
I did make a public post on this board with a similar conclusion last Wednesday as follows:
Posted by: rmarchma Date: Wednesday, March 25, 2009 1:29:55 PM
In reply to: my3sons87 who wrote msg# 254447 Post # of 254957
my3sons re worst-case scenario for Slimchip
Even under the worst-case scenario of complete abandonment by shut-down, this could still be spun as a positive development and decision for IDCC going forward. You've already mentioned a past benefit of Slimchip in helping to establish domestic industry requirement in the ITC actions against Samsung and Nokia.
Going forward, it appears that shutting down the Slimchip project could result in reducing expenses by $25m to 30m per year from current levels. It appears that the maximum write-down associated with the Slimchip business is also around $25m to 30m. Therefore shutting it down could provide a 100% return in the very first year through reduced expenses. (Taking a worst-case one-time nonrecurring hit for $25m to $30m, can save at least $25m to $30m of recurring expenses per year going forward.)
From Tom Carpenter's latest report:
...."Management announced on the 3Q08 and 4Q08 earnings calls that it is exploring options for itsSlimChip modem and data card business. Over the past year, leading semiconductor manufacturershave announced competing products, making it an uphill battle for InterDigital where scale isnecessary for profits. We are in favor of divestiture; the business has required $25 million to $30 million of yearly development expense, with only limited revenue contribution..... If InterDigital sells or shuts down its SlimChip business, the firm will likely have noncash and cash charges. We estimate the firm could take approximately $25 million in noncash charges for intangible assets and property, plant, and equipment. We estimate cash charges for severance at $4 million to $6 million.”
(BTW has anyone heard from our self-professed accounting expert Rakitno lately for his take on this Slimchip development?)
