Replies to post #390434 on InterDigital Inc (IDCC)

[Limejuice22]

Good work, the numbers are sound , the sector stinks right now, most are fatigued with more lawsuits and endless court wranglings about deferrals , depositions, delays, the court house steps is a a terrible place to do business one wise person told me----ITC could have halted all this if they'd been up to task---but they seem to miss most days--the technology is sound and the sector will return

[olddog967]

dndodd: A little accounting lesson for you.

When you say your numbers from the 2nd Qtr 2014 balance sheet "do not reflect the additional $200M coming in the 3rd QTR from Samsung", you are incorrect.

As noted in the following statement from the 10-Q, in regard to the Samsung license IDCC included $270 million due from Samsung as an Account Receivable (asset account). The offsetting entry would be in the Deferred Revenue liability accounts. Therefore the $200 million, plus an additional $70 million due from Samsung are reflected in the 2nd qtr 2014 balance sheet.

"Additionally, as of June 30, 2014, we included $270.0 million within our Accounts Receivable balance, $200.0 million of which we collected after the balance sheet date and the remaining $70.0 million of which remains due within twelve months of the balance sheet date. Consistent with our accounting policy, we have not recorded in accounts receivable any amounts due more than twelve months from the balance sheet date."

A more appropriate comparison would have been to just use the Shareholder Equity balances, which represent the shareholders ownership interest. These accounts show a significant increase in shareholder value for the two period you compared.

[FISH21049]

I don't follow your comparison of TOTAL LIABILITIES and SHAREHOLDER EQUITY to per share basis. Please help this retired Chief Financial Officer out.

You stated

Bottom line on a per share basis TOTAL LIABILITIES AND SHAREHOLDERS EQUITY has gone from $15.18/share in 1st QTR 2009 to $35.74/share in 2nd QTR 2014

If the company borrowed $50 billion, the 'per share basis would increase substantially, but the shareholder value would still remain the same since increasing an asset (cash) increases a liability (borrowed funds) and has no impact on what the company's per share 'value' is.

Looking at it another way, the $50 billion borrowing might be window dressing only to increase the balance sheet totals, yet the value of the company hasn't changed.

IF, HOWEVER, you compared the calculation of shareholder equity to number of shares, you would be more in line with determining what the value of the company has increased on its books.

You can then adjust for dividends, special dividends, etc. paid out to determine true 'shareholder value' had not the dividends been paid out and were left in retained earnings or undivided profits.

Lastly, you would compare shareholder value per books to stock market share price to determine what the 'market' is figuring a value of the company.

LINK TO CALCULATING SHAREHOLDER EQUITY:
http://www.wikihow.com/Calculate-Shareholders%27-Equity

Just trying to figure out what you are saying here.

JMHO