Replies to post #27146 on InterDigital Inc (IDCC)

[ed_ferrari]

Jimlur, if you take today's example, Colson would have had to have roughly $250,000 in cash available to exercise the options and hold the stock for a year. I doubt he has that kind of cash sitting around...

[postyle]

Jimlur,

Corp_Buyer

"If they were really smart, they would exercise options and HOLD the stock for a year to benefit from a lower capital gains tax rate. NO, INSTEAD they exercise and SELL immediately."

I agree with that comment.

Sorry, but I totally disagree with that comment. Anyone who has been in the ISO game the last several years realizes that the landscape has changed. For those that do not know, exercising the options triggers a taxable event.

How many former technology millionaires that followed the standard "exercise and hold for a year to get preferential AMT treatment" are now bankrupt? In some sad cases the former execs not only had worthless assets, but they even OWED tax on the difference between the grant price and the market value when they exercised.

I don't believe for a second IDCC's value is going to plummet. And I doubt Colson does either. But that doesn't mean he should not be prudent with his holdings.

I see the debate has once again shifted from excess compensation to insiders sales -- and the emotional ones are now having a hard time distinguishing between the two issues. On top of it IDCC insiders, who already have a significant portion of their total net worth tied up in IDCC, are being questioned for not purchasing shares. The arguments against excess compensation, which I believe originally had some credibility, have now crossed over into nonsense land.

You can't simultaneously argue that insiders are overpaid in IDCC holdings -- and then turn around and chastise them for not using out of pocket funds to buy more shares. It doesn't work both ways. If they have too much IDCC equity from the compensation plan, why would they buy more stock? And if one believes insiders should be buying more, then one must not think they hold enough already. You see the point, Jim?

The debate isn't much of a debate anymore. It's just a shouting match with a couple insults inserted here and there for good measure.

Most everyone on this board agrees IDCC has potential to grow significantly from newly signed 2G deals and the promise of 3G revenues. That should be the board's focus, and I'm going to do my part to comment on core IDCC issues. Hopefully others will also focus on that. Loophole has done a fine job taking the lead in that regard, and for that he should be commended.

Cheers.

postyle

[Learning2vest]

JimLur, re your question in the ref post;

"Why do we see value and management doesn't?"

Good chance that we are looking at IDCC primarily as an investment that will provide future income for us when it becomes more valuable(that's what I'm hoping anyway). We are "investors" when it comes to InterDigital, and nothing else.

The folks employed at InterDigital may see those same IDCC shares as just part of their salary, i.e., "paychecks" that need a little SEC paperwork to be cashed. In fact, they may have qualified financial advisors telling them that since they have their salary income dependent on InterDigital, and so much of that is dependent on the future stock price because of the options based structure, holding any IDCC investments makes them much too dependent on one investment. So, they may be hearing advice telling them that they should be selling some, or all, of their available IDCC stock regardless of what they expect, and putting that money into a more diversified set of investments.

What I would like to know is WHERE are THEY investing the money they get after selling IDCC shares? Now, there are some answers I would find very interesting to read about. I mean we have looked around for investments and we see IDCC as being pretty good, right? So,.... wouldn't it be fun if we COULD see what kind of investors those InterDigital executives really are? Long term T Bills maybe. CD's earning 2%? Nah, they would not be THAT chicken little conservative, or would they?

Maybe they are spreading the money over anything other than telecom stocks in order to diversify, or into real estate deals that provide some tax shelter in addition to long term capital gains? Lot's of possibilities when somebody has so much money coming at them in both salary and exercisable stock options. We should all have those problems!

[loophole73]

Jim

You have to have something that cannot be replaced before it is valuable to you. So long as they have unlimited supply, they will never view value as the shareholder who saves to purchase his shares. The alignment that is one of the stated goals needs a little balancing. After the drought this company has experienced, any recurring royaly will stimulate the share price. Settle for the low end or high end and the stock will rise. Reach in the drawer and blow the dust off several thousand 4 and 5 dollar options and "Bingo" is your name. If the supply is limited, then you have more incentive to get the high end royalty and not exercise and sell until your target share price is reached. This is the alignment when the option holder has to set goals and target prices just as the investor. Mind you, I am not criticizing because I have been an enabler in the past. I just wish that I could be more like them or they could be more like me because the alignment is missing.

MO
loop

[sophist]

Jimlur: Do we really have to go thru this tired, old song and dance routine about "insider selling" again. Do people here really have a bad case of amnesia? I can't think of a single NEW idea about this topic, like "incentive options", that hasn't been covered in the previous round of insider selling.

Unless it can be shown to have some direct impact on the fundamental value and risk/benefit calculation underlying the ultimate success of IDCC, why should a long term shareholder care if insider's collectively sell some small percentage of their collectively held shares? If you want to trade the stock, you might take note of it as a possible clue to calculate your trading points of entry or exit. What other significance do you think it has? Perhaps to play mindreading and paranoid mindgames about motives, plots and intrigues that are pure speculation and fantasy. I guess that is the fond fodder of the usual investment message board, and I guess this one isn't that much different from any other.

Forgive my rant here, but I do not relish another irrelevant round of management bashing and shareholder activism and secret scheming if we see another round of some insider selling. We have surely had enough of that with the discussion of options, don't you think? The ultimate choice for investors always remains the same: buy, sell or hold.