InterDigital Inc (IDCC)

[The Count]

The settlement doesn't make sense to me

We settle $34MM for 10 years and billions of dollars of infringed sales, and a 2G license at what 0.5%?? with NO 3G license included. How can they end up paying for all years through 2002 a fraction of what NOK is paying just for 2002?
It's done now, but I would've preferred taking our chances at trial. Even if we only had a 25% chance of winning, the potential win at trial was a worthwhile risk at these numbers.

Fortunately, the market had priced in next to nothing from this, so the stock price moved towards the true value. If there was a trade off for 3G rates or other quid pro quo, why was it not included in the settlement? We sure did not scare anyone from infringing first and paying later - ERICY got quite a discount for their efforts.

The good news is that IDCC is still undervalued even with what I consider a poor settlement. IDCC should be able to easily achieve $2.00 per share of recurring royalties and a growth rate that should mirror 3G, plus an incredibly strong balance sheet. This should translate into a share price of at least $40 by the end of the year, and if we can get a decent 3G rate or successfully put our cash flow to work, we could work up to the triple digits many are hoping for.

I am happy with my investment in IDCC, I guess I just had more faith in our legal position, or more risk tolerance, than our management did.