Replies to post #25593 on InterDigital Inc (IDCC)

[Learning2vest]

maddog, you bet! there are going to be a ton of revenues coming from W-CDMA in the years ahead. The really important thing about the favorable resolution of 2G vs Ericsson is that we don't have to wait for W-CDMA deployments to see the revenues start climbing up the handle on Howard's first "hockey stick" analogy.

It would be a big mistake to think of InterDigital as "only" a W-CDMA company. IDCC has a very large footprint in W-CDMA for sure, and without any doubts it's gonna become a big time cash cow in the years ahead, but there is going to be a ton of 2G revenue growth before then. IDCC's 2G value appreciation got knocked off the tracks with a badly managed Motorola lawsuit a long time ago and has been tied up in litigation for 10 years. On March 14, 2003 that 2G value train got back on track and there is a lot of catching up to do. Hundreds of millions this year according to the company. Buckle up and enjoy the ride!

[Learning2vest]

maddog, don't know if you have seen the March 17, 2003 release from IDCC which talks about some of the 2G revenues expected from just two currently licensed companies, Nokia and Samsung. These agreements could happen at any time, and the numbers are amazing. Copied an excerpt from that release below in case you wanted to start adding them up. I get 100's of millions every time I tally them. Ka Ching! And 3G W-CDMA will be in addition to these numbers when those licenses get completed one day.

Here is the part of the 3/17/03 PR I'm referring to:

The license agreements with Ericsson and Sony Ericsson establish the financial terms necessary to define the royalty obligations of Nokia Corporation (Nokia) and Samsung Electronics Co. Ltd. (Samsung) on 2G GSM/TDMA and 2.5G GSM/GPRS/TDMA products under their existing patent licensing agreements with ITC. Under the most favored licensee (MFL) provision applicable to their respective patent licenses, both companies are obligated to pay royalties on sales of covered products from January 1, 2002 by reference to the terms of the Ericsson and Sony Ericsson licenses. The MFL terms include provisions for a period of review, negotiation, and dispute resolution with regard to the determination of royalty obligations of Nokia and Samsung.

Based on the Company's application of the MFL provision, currently available third party estimates of Nokia's and Samsung's sales of covered products in 2002, and the Company's assumptions regarding such items as Nokia's and Samsung's sales mix, selling prices, and market share, the Company projects that Nokia's royalty obligation for 2002 could be in the range of $100 million to $120 million and Samsung's royalty obligation for 2002 could be in the range of $22 million to $27 million. Further, based on the application of the MFL provision and assumptions noted above, recent market forecasts, and the prepayment of royalties (net of related discounts) consistent with the terms of the Ericsson and Sony Ericsson agreements, the Company projects that 2003 royalty revenue from Nokia could be in the range of $80 million to $90 million, 2003 royalty revenue from Samsung could be in the range of $20 million to $24 million, and the aggregate prepayment of royalties from Nokia and Samsung for 2003 and 2004 could be in the range of $180 million to $220 million. Once these initial prepayments are exhausted, Nokia and Samsung can either make additional prepayments (net of related discounts) for twenty-four month periods, or pay royalties at the base rate on sales through 2006. The Company will not record revenue associated with the Nokia and Samsung license agreements until all elements required for revenue recognition are met.