Slocat re disclosures and earnings estimates you commented:
...."Knowing that the price of the stock would take a big hit in failing to meet its quarterly estimate why would managemnt not disclose the information?"
IDCC only gives guidance as to revenues, but not expenses and earnings. IDCC had not included the disputed deferred revenues in its revenue guidance. Therefore, the analysts missed earnings due to underestimating expenses, not misestimating revenues. However, the actual quarterly revenues and earnings would have been more, if the disputed deferred revenues had been included in earned revenues. IDCC did disclose that information with the earnings press release and CC. (BTW those Q4 expenses that were missed by the analysts were primarily nonrecurring sub-license expenses of $4.6m associated with 4th quarter final deliveries of technology solutions, and $2m associated with an adjustment to the long-term incentive compensation plan).
I wish that IDCC had given a heads-up to the analysts regarding those nonrecurring 4th quarter expenses before the fact. It would have certainly helped them estimate Q4 earnings better. I think IDCC might have learned a lesson from that, and did give a little forewarning in the CC that operating expenses in the 1st quarter of the year run about $4m higher than other quarters during the year. I certainly hope the analysts pick-up on that and include it in their estimates for the 1st quarter earnings. From the CC as follows:
"Going forward, we will continue to aggressively manage our expenses. In the first quarter 2011, we expect that our expenses will not include these non-recurring items mentioned in the release. However, we do expect to see some normal seasonal increases related to personnel and trade show expenses. Of course, expenses associated with intellectual property enforcement will vary in accordance with the level of activity.
Operator
Our next question comes from Ron Shuttleworth of M Partners.
Ron Shuttleworth – M Partners
Good morning, folks. I apologize about my voice, but I’m dealing with a little bit of a cold, so if I’m not clear, please help me and ask for clarity. So I just wanted to confirm that the $6.7 million fee – sort of the sublicense fee, is that in your R&D line item?
Scott A. McQuilkin
There’s two components to that, about 4.6 is a sublicense fee that would be included in the development line.
Ron Shuttleworth – M Partners
Okay.
Scott A. McQuilkin
There is another approximately $2 million or so that relates to an adjustment to the accrual for a long-term incentive plan and that’s split by each of the lines, probably SG&A maybe a million, patent licensing, I would say most of that is probably in development.
Ron Shuttleworth – M Partners
Okay. So if you back out the $4.6 million of R&D from 21.5, you should be in the $17 million range. Is that correct in terms of sort of normalized R&D?
Scott A. McQuilkin
Yes. There is a few other adjustments. I think if you look at that number, it’s probably been running in $16 million to $17 million range, I think. Something in that range is a reasonable kind of normalized level of expenditures for Q4.
Ron Shuttleworth – M Partners
And should we expect that to continue for the next couple of quarters in that range?
Scott A. McQuilkin
I’d say generally yes in terms of the level of resources that we have planned. The only qualifier I’d put on there is at the first quarter of every year we normally have an uptick in our expense levels. That’s due to personnel costs and trade show costs. So vacation accrual, fringe benefit accrual and such go up normally every quarter and we have to merit increases as well. That’s probably a $4 million increase in aggregate and I guess about $2 million or so of that applies to development.
Ron Shuttleworth – M Partners
For Q1?
Scott A. McQuilkin
Yes sir."
AI
