InterDigital Inc (IDCC)

[vg_future]

This should bode well for IDCC.

http://www.minyanville.com/buzz/buzzalert/goog-down-on-patent-issue/11/05/2012/id/165104?camp=syndication&medium=portals&from=yahoo


The Google (GOOG) is likely down on this story as the spin seems to be very negative. Folks, there is a huge silver lining here. While Google wants a pretty strong royalty rate, and they might not get it, there are two interesting facts to note. The company holds essential patents that are not in dispute. What is in dispute is the payment of the royalty rate. The other fact is that they are not currently getting paid for those patents. So even if the royalty rate is lower, it will go from getting ZERO from AAPL and MSFT to getting paid on every (or nearly every) mobility device sold.

Again, GOOG is much better at buying assets than almost every other company and I suspect they looked at this untapped "revenue stream" very closely. My conservative assumptions have this royalty stream at $1.3-1.5B per annum. Further, margins on this would be in the 95-98% range. Again, most think the Motorola purchase wasn't "smart", just as most thought the YouTube and Android purchases were poor decisions with the biggest criticisms being that Google was overpaying. The $1.6B paid for YouTube may go down as one of the best buys in the last 50 years and I think the Motorola buy could end up being nearly as good. However, I'll note that this requires a multi-quarter forward view and I'll issue a reminder that I was very positive on Android (and hugely positive on YouTube, though that was pre-Buzz days) in early going, guiding for that platform to see 50% share when they had about 3% share. I was wrong... they just printed a 75% share quarter.

The biggest thing people miss with the Moto buy is the value of patents, the value of Moto selling future Nexus (or near Nexus) devices and the "build vs. buy" analysis on the acquisition of the product design and manufacturing capabilities of Moto. This looks even better after backing out the huge net cash balance that Moto had at the time of the deal.

Read more: http://www.minyanville.com/buzz/buzzalert/goog-down-on-patent-issue/11/05/2012/id/165104#ixzz2BNNvCBy9



JMHO,
vg_future