Replies to post #99624 on InterDigital Inc (IDCC)

[mschere]

Korean Handset Makers Focus More on GSM Phones

Korean mobile phone makers are putting more emphasis on models that meet the European-style Global System for Mobile Communication (GSM) standard, which accounts for more than 70 percent of the world¡¯s cell phone market.

Samsung Electronics shot up into the top three in the global GSM market last year. Strategy Analytics, a U.S.-based market researcher, said Samsung Electronics¡¯ market share in the world¡¯s GSM market rose from 4.4 percent in 2001 to 12 percent in 2004. That means Samsung overtook Siemens of Germany and joined Nokia and Motorola at the top of the market. Sales also skyrocketed, from 33.8 million phones in 2003 to 58 million in 2004. GSM-compatible phones made up 67 percent of total sales last year, compared to 60.7 percent in 2003.

LG Electronics also increased production of GSM handsets, from 610,000 out of a total 27.4 million phones in 2003 to 18.4 million out of 44.4 million in 2004. GSM-style phones took up 41.4 percent of all LG¡¯s handsets manufactured last year, up from 22.2 percent the year before. The company, which launched over 20 GSM handsets last year, plans to release more than 30 this year.

Meanwhile, Pantech and its affiliate Curitel Communications are to open their European headquarters in Frankfurt, Germany, in May. The company said the long-term prospects for the GSM market were very positive, and it had high expectations of the European unit.

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[olddog967]

L2v: The way I understand IDCC's accounting policies regarding revenue recognition, even though payment may be spread out, as long as any settlement amount is for prior sales the total amount due would be reported as income. With the current SEC emphasis on accounting, I don't think they would be happy with an attempt to change the nature of income for prior sales to recurring revenue. I also think the analysts would be smart enough to recognize this in their models.

If no settlement is reached, and an award is announced by May 31, as you say Nokia will use every means possible to avoid paying. In this regard Nokia has up to three months after the award to request a distict court to vacate the award. However, as has been often stated, the grounds for vacating a binding arbitration award are very limited and difficult to prove, and the attempts not too successful.


Given the "accounting provisions" already established on Nokia's books it seems like the two firm's could work out a set of settlement terms that would allow BOTH sides to declare victory, i.e., spread the payments over a long enough period to let Nokia reverse some of the near term accounting provisions.

Doing that would allow InterDigital's 2G payments to be treated as "recurring revenues"(which the market understands how to value), instead of as a one time "lump sum" cash payment the market is never sure about. At the same time, Nokia's accounting of those extended payments against the established provisions on their books would allow some flexibility in managing the near term earnings impact.

Still no way to figure out WHAT is going to happen with Nokia, but it sure is nice to finally be certain that SOMETHING is going to happen by May 31st.