Replies to post #95503 on InterDigital Inc (IDCC)

[rmarchma]

Ranger re estimates of Nokia and Samsung royalties you asked:

..."Have you been keeping track of what NOK and SAM might owe, if IDCC received an award from 2002 thru May 31, 2005 for 2G?"

Probably the estimate for a best-case scenario would be what IDCC officially published in their March 17, 2003 press release as follows:

"Based on the Company's application of the MFL provision, currently available third party estimates of Nokia's and Samsung's sales of covered products in 2002, and the Company's assumptions regarding such items as Nokia's and Samsung's sales mix, selling prices, and market share, the Company projects that Nokia's royalty obligation for 2002 could be in the range of $100 million to $120 million and Samsung's royalty obligation for 2002 could be in the range of $22 million to $27 million. Further, based on the application of the MFL provision and assumptions noted above, recent market forecasts, and the prepayment of royalties (net of related discounts) consistent with the terms of the Ericsson and Sony Ericsson agreements, the Company projects that 2003 royalty revenue from Nokia could be in the range of $80 million to $90 million, 2003 royalty revenue from Samsung could be in the range of $20 million to $24 million, and the aggregate prepayment of royalties from Nokia and Samsung for 2003 and 2004 could be in the range of $180 million to $220 million. Once these initial prepayments are exhausted, Nokia and Samsung can either make additional prepayments (net of related discounts) for twenty-four month periods, or pay royalties at the base rate on sales through 2006."

If IDCC gets all that they initially believed due from Nokia/Samsung through 12/31/2004 = $302 million to $367 million. Then you would have to factor in additional royalties for 2005 through May 31. Samsung could turn out to be even more, because they have drastically changed their sales mix over to GSM/GPRS from CDMA2000 during the last two years.

I believe that the problem year could be 2002, due to allocations of the past settlement amounts back to 2002. Ericy and S/E recurring royalty rate began on January 1, 2003, and there should not be any allocations problems associated with 2003 and going forward.