ams13sag
This seems to me to be cautiously optomistic.
HILLIARD LYONS REPORT
Nokia Confirms 2G Royalty Obligations to IDCC; Reiterate Buy Rating
* We spoke to a Nokia representative yesterday who confirmed that Nokia has a 2G/ GSM/ TDMA licensing obligation with InterDigital for 2002 through 2006. This is important in our view, because prio to this, Nokia had been vague in describing its relationship with IDCC outside the 3G engineering work that IDCC performed for Nokia. While Nokia would not specifically comment on the financial terms of obligation, we believe that information found in a Nokia filing reinforce the recent figures that IDCC's management stated on their conference call that discussed the Ericsson patent licensing settlement.
* Nokia booked 92 million euros, or approx. $100 million for 2002 for IPR infringement. This is from a Form 20-F filing. As Nokia admits that it has a royalty obligation to IDCC and Nokia indicated to us that it, "....has taken prudent steps to provision for any liability, we believe that a large majority or perhaps even all of the 93 million euro provision in 2002 for IPR relates to Nokia's obligation to IDCC.
* Nokia's $100 million figure for 2002 matches the $100 million to $120 million obligation that InterDigital's CFO stated on the conference call announcing the Ericsson settlement. Importantly the fact that Nokia admits the obligastion (and provisions an amount) indicates to us the final royalty rate could be settled soon and that it will likely be settled amicably. Another positive is that once the NOK rate is finalized Samsung also becomes an IDCC licensee for GSM/ TDMA because late last year Samsung excercised a most favored licensee (MFL) clause whereby it will receive the same licensing terms as Nokia. Currently IDCC receives no licensing revenue from Nokia or Samsung.
* We reiterate our BUY rating and a $25-$31 price target range. Our price target is based on a 20x-25x P/E multiple applied to our 2003 EPS estimate of $1.23. As our EPS estimate only include Nokia and Samsung licensing revenues over 2H 03, our EPS estimate and price target could prove conservative.
The above is what the first page of the Tom Carpenter Hilliard Lyons Report says
AI
