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Re: ShallowMind post# 327682

Saturday, 07/30/2011 1:40:23 AM

Saturday, July 30, 2011 1:40:23 AM

Post# of 432663
Your raise some interesting points Duke

Right now I'm more hopeful than worried. Worst case is we don't get sold. In that case we have a company that is easily worth $40+ per share based on their current earnings and very strong balance sheet. They have a decision pending from the CAFC that could give us the leverage we need to license Nokia, which should help us sign LG and Ericsson. Failing that, we do have new ITC and Delaware actions. That would mean further delay, but it's not a disaster. We would still have earnings and plenty of cash. That would be very disappointing, but not the end of the world.

Yes, Joel and some others are enthusiastically optimistic. I enjoy reading his analysis but I don't think the potential buyers will be as generous in their assessment of IDCCs value. On the other hand, M Partners has estimated the sale value being worth $118-$167, using what I believe are realistic, conservative assumptions. So I am hopeful that IDCC will be bought and the price will be in triple digits. I'm not expecting it to be in weeks. Assuming that IDCC's portfolio is as strong as advertised, management will want to give everyone plenty of time to do their analysis.

Your concerns about the lack of value due to the licensing history is misplaced IMO. I believe that IDCC has been too passive, taking legal action as a last resort, and when they have it's been an incredibly slow process. I think they've allowed Nokia and others to string them along, engage in financial discussions that never end. Even if our patents are pure gold, if we can't show them the upside to signing today rather than tomorrow, they won't sign. Until QCOM got their patent validated in court, they had similar troubles. So IDCC does need to get a decisive win or the threat of a decisive win to drive licensing. So I don't see the mediocre licensing as evidence that IDCC doesn't have the goods. No licensing would do that, but IDCC has enough current and past licenses to validate that IDCC's IP has significant value in my lay opinion.

As far as why others didn't buy us, it was because potential purchasers had enough IP to cross license. There is not much additional value to adding more. It would free them from having to pay IDCC, but they can just refuse to sign to achieve the same goal. Plus some of their competitors are paying, giving the infringer a competitive advantage. Similarly, our patents would not allow QCOM to materially increase their licensing rates, so they had no interest. Other than QCOM and manufacturers, who else would want to buy? That's why no one made a run at us.

Nortel may be our watershed event, so that we will need a calculator with a lot of zeros and our price chart is going to look like a hockey stick. It's not a sure thing, but there is a real possibility that our long journey is going to come to a successful end. I got a hunch you too are hopeful that this will come to a happy conclusion otherwise you'd be taking advantage of the current high price and selling. Yes, there is risk here, but there is also upside potential. I can understand the fear that comes from being on the cusp of the big breakthrough so many times only to have things fall through. I am a 49er fan since the 60s. I came to expect them to blow it whenever they got close. After "The Catch", I was on my knees, praying they didn't miss the extra point. I was still sure that Dallas was going to get a field goal. But things had changed, there was a new reality, and I enjoyed the best times of my sportsfan life. I'm hoping to have "The Sale" become the seminal event in my financial life.
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