InterDigital Inc (IDCC)

[jai]

The CFO is not impressing me at all. The decision to publically abandon the buy back is a bad one. While I do support the overall direction of building up these stock piles of cash the total abandonment of the buy back allows manipulation of the stock.

Token buys under the already approved $100 million whou;d have sent a message to these hedge funds that they can't push the stock price around that easily.

May 6, 2010 28.26 28.60 22.30 26.67 943,900 26.67

When I looked up yesterday and saw IDCC down $6 dollars a shares my first thoughts were holy sh$t.

The two things buy backs do are first return equity to the shareholder by giving them a greater percentage ownership in the company. If I owned 1 mil shares of IDCC and it had 50 mil outstanding, my equity percentage would be %2. If they bought back %50 of the shares and left 25 mil outstanding my equity would rise to %4 and all ROI would go up significantly.

But the second thing that buy backs do is protect the shareholder from these types of wild swings in trading. With an active plan in place the company would be buying shares at these dips and the short selllers would have a harder time driving down the the price.

So while the CDO is busy dividing the cash into buckets for further use, he needs to keep one bucket filled with water to throw on the short sellers when they swing the stock down so much.