The Good, The Bad and The UGLY!
First, the good. NEC will provide better results this quarter. Delay in shipments affected revenue for this quarter only.
Sharp will start generating nice revenue via Vodaphone 3G rollout. This was mentioned on the CC.
New licence possibilites, infineon revenues, panasonic revenues all should start soon. Revenue base and license growth is firm.
3G is rolling out and IDCC's revenues will grow.
Second, The Bad.
No meaningful progres in 1 year. Last major signing was SONY/ERIC.
Key analysts (Marsala and Carpenter) seem very negative and are getting tired of Howard lawyer speak.
Merritt didn't get it done. He came off very cocky last call stating his rep in the sharp resigning as his track record. We could have done without his 2 new license claim.
They need new blood if nothing else to close deals.
Last, THE UGLY.
Share price plummets (down 8 1/4 points this week alone).
My take is that the miss equates to about 3 points and the Nokia arb delay is the other 5+ points.
Nasdaq in correction mode with no relief in sight.
With 24 mil this quarter we now have 98 mill per year. Valuation at 10x revenues is $980 million in market cap. Pretty much where we are right now.
I don't agree with timing of press releases. The news is the news and the market will value where it thinks it should be. We now have $0 dollars factored in from Nokia/Sam.
My biggest problem is the way this management team communicates with the investment community. The vauge answers that leave too much for interpretation. Sounds Clinton like. Depends upon what is IS.
The communication of the Nokia arb has been handled badly from day one. From Howards last year "fill in the blanks" attitude, to the rolling one year arb. When did the one year start? From July? NO. From November? NO. They were vauge and gave the impression that it would be done in 04.
Honesty works best. Hindesite is 20/20 but with this group they infer things and then leave themselves doors to back out. They never just own up to the fact that this is a very difficult and trying process. They have communicated that the arb was slightly possibe before it became a reality. Then they communicated that it would be a quick process and missed by at least 50%. The one year is really 18 months plus.
If these guys can ever learn how to deal with the street, we would have premiums permanently priced in. Look at SIRUS and XM Satelite. The potential is here for a hundred dollar stock. We should have been at $30 and got a haircut to $25. The reading I got today from Carpenter and Marsala was bad. It was like "Yeah, YADA, YADA, YADA, We heard this story before". Both of them are questioning IDCC's 3G contributions and the value of the IPR.
Bottomline, Howard sounded arrogant. He needs to go CEO school and learn how to communicate a proper message. Lots of empty promises and very little delivery. I didn't sell a share and I will wait another year. Everything I've read tells me that 3G is real and IDCC will get paid. I'm long and a lot poorer today than I was last week. Three years ago I was telling someone about IDCC and my description was great company but bad management. That statement still holds true today. Great company but management is very questionable in my opinion.
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