Good post!
1) 2G/2.5G rate w/Ericson is sufficient to establish rate w/Nokia and Samsung, do not require another licensee.
People griping about the lack of a 3G rate do not seem to understand that 2G/2.5G still account for more than 90% of all handset revenues. Since the transition from 2G to 3G will take much longer than most people expect, 2G is actually the revenue story for IDCC over the next 2-3 years in terms of handset royalties! Nokia, for example, has a replacement cycle of 25%, i.e., 1 out of every 4 handsets it sells is a replacement sale. This number is expected to increase with the transition from monochrome displays to color displays in 2G and 3G.
One way to keep track of this transition is to watch the 3G infrastructure business since infrastructure spending precedes handset spending . Right now most of the 3G deployments have been pushed to 2004/2005. Wireless voice and data ARPUs (average revenue per unit) trends may even push that back by a year or two. For example, if wireless data ARPU cannibalizes wireless voice ARPU then that signficantly affects the payback of any 3G deployment since most carriers got carried away and assumed that wireless data ARPU would be incremental to wireless voice ARPU.
4) No news regarding Japan Patents. Sharp negotiation is ongoing and does not involve GSM and 3G agreement, hence JPO has no impact. Good relationship w/Sharp.
Sharp negotiations involve PHS and PDC ONLY! PHS and PDC are the TDMA variants that are sold only in Japan. Japan has the fastest ramp from 2G to 3G in the world so PHS/PDC related royalties are expected to decline rapidly during the next 18 months especially now that Docomo, the largest wireless carrier, appears to be recovering from its early missteps.
It's worth repeating that IDCC recently entered into a new licensing agreement Sharp covering GSM and 3G, and that Sharp used up $2.7M of the $11.1M advance royalty payment under this agreement. That contract is not, I repeat, NOT affected by the expiry of the original PHS/PDC contract.
It's amusing to watch the same people who were flat-out wrong about insider selling before the settlment now fixate on insider selling after the settlement run-up during a shooting war. While proven right this tax season after being so wrong so many times before, I think they will only end up losing more money down the road. Why?
The fact of the matter is insider selling has long been proven to be a very UNRELIABLE source of information about a stock's direction, before and after the change of SEC rules on insider selling in the mid-90s. The exception is the activity of insiders who have demonstrated a clear pattern -- pattern, not isolated instances or two -- of being ahead of any major price moves, but that is the proven exception, not the rule, and, in those cases, buy signals tend to be more reliable than sell signals in those exceptional cases. Not surprisingly, IDCC doesn't have any such insiders because of the legal uncertaintities that have weighed on this company for the last decade or so.
The important thing to remember is that IDCC is still under-owned by institutions and over-owned by individual investors. Expect the change of hands from individuals to institutions to continue.
AI
