Replies to post #26318 on InterDigital Inc (IDCC)

[blueskywaves]

Hey Joel! Welcome back!

Gee anyone take a look at the stock float of BIG companies?


In the same way that different levels of dilution are
acceptable at different stages of a company's growth,
there are also different ways of making money at
different stages of a company's development from
start-up (PS/cash flow) to growth (PS/cash flow/PE)
to maturity (PE/dividends).

During IDCC's turnaround stage (1999-2003), for example,
most of the people here just loaded up on the stock
and options anytime this stock got to the $5-$10 range
imply because the risks and rewards were outstanding
especially if you were paying attention to the
monetization of the patent portfolio.

Anyway, for some perspective here's a comparison of
the royalties generated by IBM, QCOM and IDCC from
1992 to 2002. IBM is, obviously, the most successful
licensor in history. QCOM is probably going to catch
up with IBM in the next five years.

Before the 2003 settlement IDCC already stood out in
terms of IP efficiency as measured by cumulative
royalties per share! We also know that more royalties
are potentially going to come in the next 4 years than
the previous 22 years.

Note that it took IBM 5 years to reach the $400M
milestone after exceeding the $100M milestone. It took
QCOM 4 years to exceed the $400M milestone after
exceeding the $100M milestone.

 
 10-Year ROYALTIES 
 IBM vs QCOM vs IDCC 
 1992 to 2002 
 . 
 . 
                IBM              QCOM           IDCC 
 . 
 . 
 1988        ~$  30M 
 1989           170M 
 1999           180M 
 1991           220M 
 . 
 . 
 1992        ~$ 250M           $  10M          $  3M 
 1993           400M              16M             0M 
 1994           500M              29M            29M 
 1995           600M              45M            68M 
 1996           850M             100M            29M 
 1997           1.0B             152M             6M 
 1998           1.1B             218M            92M 
 1999           1.3B             454M            66M 
 2000           1.5B             705M*           51M* 
 2001           1.4B             777M            53M 
 2002           1.3B             851M            88M 
 . 
 Total       ~$10.2B           $ 3.4B         $ 485M 
 . 
 Diluted 
 O/S(2002)     1.73B             809M            56M 
 . 
 Cumulative 
 Royalties 
 Per Share    
 1992-2002 $5.90/share    $4.20/share    $ 8.66/share 
 . 
 No. of 
 Patents      
 (FY2002)    ~24,000 (Global)   900 (US)       240 (US) 
 . 
 . 
 Note:  QCOM and IDCC numbers were extracted from 10Ks.  
 IBM only started to break out its royalties numbers  
 this year so its historical numbers were culled from 
 different sources including CHI Research and SSB. 
 . 
 *SAB 101 transition 
 . 
 . 
 Note again:  Royalties usually have gross margins of 90%.