InterDigital Inc (IDCC)

[olddog967]

L2v: The way I understand IDCC's accounting policies regarding revenue recognition, even though payment may be spread out, as long as any settlement amount is for prior sales the total amount due would be reported as income. With the current SEC emphasis on accounting, I don't think they would be happy with an attempt to change the nature of income for prior sales to recurring revenue. I also think the analysts would be smart enough to recognize this in their models.

If no settlement is reached, and an award is announced by May 31, as you say Nokia will use every means possible to avoid paying. In this regard Nokia has up to three months after the award to request a distict court to vacate the award. However, as has been often stated, the grounds for vacating a binding arbitration award are very limited and difficult to prove, and the attempts not too successful.


Given the "accounting provisions" already established on Nokia's books it seems like the two firm's could work out a set of settlement terms that would allow BOTH sides to declare victory, i.e., spread the payments over a long enough period to let Nokia reverse some of the near term accounting provisions.

Doing that would allow InterDigital's 2G payments to be treated as "recurring revenues"(which the market understands how to value), instead of as a one time "lump sum" cash payment the market is never sure about. At the same time, Nokia's accounting of those extended payments against the established provisions on their books would allow some flexibility in managing the near term earnings impact.

Still no way to figure out WHAT is going to happen with Nokia, but it sure is nice to finally be certain that SOMETHING is going to happen by May 31st.