InterDigital Inc (IDCC)

[dndodd]

InterDigital (IDCC) Already Paid the Penalty for Last Quarter's EPS Shortfall
By James E. Brumley
Apr 26, 2013 8:26:33 AM PDT | 94 View(s) | No Comment(s) - Post a
StockHQ:
IDCC $44.41 $0.00 0.00%
JAMES E. BRUMLEY


When a stock rallies on good news, that's a fairly expected result. When a stock rallies on bad news, however, it means one of two things (if not both).... either traders realize the stock's oversold, and/or the market has a bullish agenda. If it's the latter, then look at above. Enter InterDigital, Inc. (NASDAQ:IDCC). Shares are soaring today on the heels of rather bead news - IDCC missed last quarter's earnings estimates by a dime, losing $0.30 per share rather than the expected $0.20.

So what, pray tell, has prodded IDCC shares higher since dropping that news yesterday morning? In simplest terms (and read this as wryly as possible), welcome to trading.

InterDigital is the owner and developer of technologies that make wireless equipment work. The company licenses its patented products and processes, looking to drive revenue from the cell phone and tablet makers that need such a technology to power their goods.

Almost needless to say, the booming mobile-wireless business has put many of these IP companies like IDCC on the radar, and for good reason. InterDigital, for instance, more than doubled 2011's revenue of $301 million in 2012 by pumping up last year's top line to $663 million. Bluntly though, the numbers and valuation are only relevant to this and these companies about half the time. The other half of the time, speculators drive the stock's price, and much of the time they've overpriced or underpriced the stock in an effort to get out ahead of how they think the (rest of the) market is going to trade that stock. The end result is a stock that's all over the map, forcing investors to play a game of psychological chess.

Fast-forward to the recent action from InterDigital shares. Right or wrong, IDCC was driven lower in March and April in front of earnings. In many ways, that pullback suggests somehow that the market knew disappointing numbers were on the way. But, since the masses pre-emptively pushed the stock lower before earnings were announced, there was little selling interest left by the time the news became official.

That's not the only technical force in play here, however. As you can see, all it took was a brush of the important 200-day moving average line (green) last week to spark new buying interest in InterDigital, Inc. shares. One more confirming retest of the 200-day average line yesterday sealed the deal, and also affirmed the majority of traders have a bullish "buy on the dip" agenda... and that's a force you just don't want to mess with.

Bottom line? Let's take the hint at face value.

If you want to get the next update on IDCC (which might be the reversal of the bullish call), then sign up for the free SCN daily newsletter today.

http://www.smallcapnetwork.com/InterDigital-IDCC-Already-Paid-the-Penalty-for-Last-Quarters-EPS-Shortfall/s/via/10/article/view/p/mid/1/id/242/