hock1: Some of my thoughts on the value of IDCC's "deferred revenue".
While IDCC is following generally accepted accounting procedures in accounting for lump sum payments and prepayments, as deferred revenue, it could be argued that in evaluating IDCC’s value there are different factors involved.
The following are from some of the definitions of “deferred revenue”
“It is an amount that was received by a company in advance of earning it.”
“ a payment received for work that has not yet been performed.”
“collect deposits and other cash receipts prior to the completion of the sale.”
The common criteria appears to be the the payment amounts are related to some future action by the receiving company. As opposed to this, I would say that the royalty payments to IDCC for the license granted do not require any any future additional action to be taken by IDCC (see note). In other words they can just sit back and collect royalties. Although the deferred revenues are recorded as a liability on IDCC’s books, it is my understanding that probably for most licenses, they have no obligation to pay any of the payments back.
Note: This probably doesn’t apply to our technical assistance licenses, where the assistance is rendered over a period of time.
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