Replies to post #247883 on InterDigital Inc (IDCC)

[The Count]

Use of IDCC cash

I agree there are many cases when it is better to hold on to cash. However I don't think it is the case for IDCC at this point in time. IDCC will likely have over 500 million in cash in 2010 not counting any additional licenses. I don't believe the operating cash flow will be significantly negative for a few years at a minimum. Therefore I believe IDCC will have cash in far in excess of its needs and will have choices on how to use it.

I do believe that IDCC is going to appreciate quite nicely over the next couple of years. By buying back shares at these levels all the shareholders will benefit by the additional ownership as the market cap grows. I think putting the cash into IDCC stock will provide a very good return. Therefore I believe a buyback would be a good choice.

It is possible that IDCC may have a strategy to better use the cash. If so, then I hope they're able to successfully execute it. However I get very nervous about having a large pile of cash burning a hole in IDCC's pocket. If there is a great opportunity, take advantage of it. If not, don't force it. Sometimes the best investment decision is the buy you don't make.

As far as a split, it has no affect on market cap. Twice as many shares at half the price. Splits indicate a company that has done well, not necessarily one that is going to do well.

[mickeybritt]

Red Angus

Why do you think the stock is trading where it is presently? Had IDCC not retired 450 million worth of stock? Lets add another 25 million shares outstanding and put the money in the bank and do you think we trade at this price or lower or higher? My vote is it trades a hell of a lot lower. So you sit on cash and see your stock sit at a lower price. IDCC has almost a predictable cash input which will be growing big time especially if they add more new licensees, and they are hiring someone to even add to getting new licenses, as so many companies are still unlicensed. So IDCC would not be putting itself in a bad financial position by using the cash to increase shareholder value. However if they are in a position to aquire a company that would increase shareholder value even more then that is the avenue to take. I do feel that even if IDCC spent money retiring stock and a great deal came up that IDCC would be able to get the money or aquire with stock even if it required issuing additional shares. It isn't like they wouldn't have the ability to aquire good deals just it might require a loan, no big deal if it is a big time profitable situation as you write the loan money off as expenses.

Right now if IDCC sold the Jan 10 $35.00 puts they could take in $8.00 and if they sold the Jan 10 $30.00 calls they could take in another $8.00 for a total of $16.00 they could buy some stock with that money but making sure they have the cash to cover if the stock got put to them. This is a hell of a lot better return on the company money than sitting on the cash. In fact they would be plain stupid not to implement a program like this, as cash gets no return and they have a fiduciary responsibility to enhance shareholder value and make as much as they can with the money they have, and this makes them money.


Just my opinion

Mickey