Bluesky
Since this is the first evidence that IDCC will have recurring royalty from 2g licensees, I would assume that the Street and the sell side analysts will assume that this is pretty much the standard going into 2005-06 and any new licensees for 2g and 3g will fall directly to the BOTTOMLINE because the expenses have already been incurred. What is so confusing about the business model? If phone sales remain steady or grow 15%, the IDCC share is rather easy to determine. IDCC is going to have to be very adept at the guidance game from here forward. This has not been their strong suit because the importance was not as great as it will be with the increasing revenue. IDCC is going to be forced to become an information mill if they desire to maximize the multiples available on the Street.
If IDCC buys another company, this could certainly change the BOTTOMLINE unless the company is already income producing. It will then be incumbent upon IDCC and its analysts to convince the rest of the Street to use a different set of multiples when evaluating whether to get in or not.
The reason for the price right now is the chance to get in on the ground floor. This is the pre-show me rally. If Nok does not come through soon, then the price will fall. We know the short term risks, but we also know the medium and long term potential.
MO
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