InterDigital Inc (IDCC)

[blueskywaves]

That's the normal 3% annual share creep assumption that sell-side analysts like to use, Mschere. Some even break it down to a quarterly share creep rate. No biggie.

The size of the share creep assumption matters most to mature companies with well established but slowly growing revenue streams because of the impact on EPS.

It matters less to to early stage growth companies like IDCC because nobody will pay more than 1x sales for a company with all the EPS in the world but no consistent sales growth. Again, as we agreed before, IDCC is poised to join the very elite clubs of companies --- 10/10, 20/20 --- with rapid sales growth and rapid earnings growth in the next 2-4 years so I would like them to keep on reinvesting those earnings to keep sales growing through the key financial milestones -- $100M, $250M, $500M, $750M and $1B.

Several studies have shown that the $1B milestone is the hardest milestone to reach for more than 80% of technology companies. I have followed more than 20 companies during the last 10 years that have tried to pass this milestone, but have failed because their target markets simply weren't big enough or weren't growing fast enough.

That's why I like to see IDCC keep on recruiting world-class managerial and technical talent because that's the key to making a successful transition to a product-oriented business model which, in IDCC's case, will be built on IDCC's firm royalty base.