InterDigital Inc (IDCC)

[blueskywaves]

You're being simplistic. That's why you're trying to outshout everybody. Your rant about options is mooted by the fact that FASB is already in the process of implementing the option expensing rule change early next year. The issue is how IDCC can take advantage of interim period before the rule change goes into effect. Remember that even with the weighty litigation risks hanging over the stock, IDCC was still able to prop up its cash flow with option exercises during the lean years and IDCC's solvency and liquidity were keys to its bargaining positions.

The fact is that each exercise of 1M shares at an average of, say, $22 per share generates $22M in CASH and a tax benefit. The higher the actual exercise price, the greater the cash inflow for IDCC. The downside is dilution.

However, dilution is not yet an issue for IDCC since it is still in its high-growth stage and is valued more by its P/S ratio or price to sales ratio than its EPS or earnings per share. In fact, I repeat the argument that IDCC's stock float of 55M shares is still too tight for many mid-cap institutions, forcing many funds to take smaller positions that they would otherwise take if IDCC had something like, say, 100M shares.

Keep your feet on the ground now. Nobody is saying that IDCC should issue 45M shares to management and employees. It should come as no surprise, however, that one of the first decisions made after the 3/14 settlement was to promote its M&A guy, who has 20 plus years of venture capital experience. I figure that the ERICY settlement gave IDCC a merger and acquisition war chest of at least $1B in cash and stock-as-currency in a technology industry that is plagued by overcapacity in many areas. In other words, it's a buyers' market in many areas inside the wireless industry or outside the wireless industry.