Replies to post #22677 on InterDigital Inc (IDCC)

[loophole73]

BSkywaves

Information contained in your posts presents some interesting areas for discussion. Under the existing IDCC policy, the employees receive 2000 shares per patent whether it enhances Node B or removes pubic hair from an ASIC. Thus if IDCC receives 1000 patents of which only 70 can be expected to return royalty dollars, then we must delve further to ascertain the real costs going forward to establish the royalty rate necessary to make a profit.

It appears that we have the following costs associated with the 1000 patents :

1. Engineering annual salary expense is 33.75 mil.
2, Patent prosecution estimated is 50 mil.
3. 2 mil options or 4% dilution rounded.

Assuming a 3 year program for the patent, the cost of those 70 live patents is 150,000,000 plus whatever expensing is applied with respect to the option dilution.

Now, we shareholders should keep these numbers in mind in grading our company's performance as it makes various deals along the way. Now we know that the goal should be 80% margin for patent royalty revenue. In order to get a closer handle on the costs, we must ascertain the costs associated with licensing and accounting which is where we will run into the real dilutive effect and I am just not qualified to work in that arena.

However, it does not take a giant leap of faith to conclude that the Ericy settlement, the B-CDMA licensing and the Nok agreement are less than good deals for IDCC. I am not criticizing the deals because they are Mot based and this management group inherited that problem. All I am attempting to point out is that the need for a ticker tape parade based on performance is just not present at this time. The options package currently in place is certainly more than fair based upon results already in hand and expected soon.

This management group had their chance on several occasions to get closer to the shareholders and opted to thumb their nose rather than open communication lines. This management group also had the opportunity to press the value of its IPR to higher limits in the Ericy case in which had a trial setting in place and a set of operative facts that were potentially very dangerous for Ericy. They chose to go the low road for whatever reason and the shareholders just have to accept it.

Perhaps the shoe is now on the other foot and if their proposal for additional options can be defeated, then they will just have to accept it. This is not a popularity contest. It is a business decision for the shareholders. The performance is just not there at this time to justify the further dilutive effect on the company. They just have not hit that homerun yet.

As you have pointed out in your previous posts, W-CDMA and 3g are not going as scheduled and anticipated. This presents management with a real chance to become the recipients of the ticker tape parade and the bonuses waiting at the end. They have a golden opportunity before them, but they must close the deal on their terms and not on the terms of the other guys. If they can accomplish this goal, then I am more than sure that even the toughest anti-option proponents will join with the middle of the road gang and reward these guys. They are just too early for the party right now.

MO
loop

[plumear]

blueskywaves, To get back to your last post to me, I find it both interesting and a little amusing that you consider accusing someone of working for IDCC, an attack. Of course I didn't even accuse you, but rather QUESTIONED, if you had ANY connection; a question you still did not catagorically deny.

You characterised my post as a "a rambling emotional argument with no useful data". I disagree. I wasn't rambling but rather was posing questions that you avoided answering. You accused me of wanting to argue about IDCC's excessive compensation. I don't want to ARGUE about anything. I had some questions that illustrated my concerns but you don't seem to want to engage in a civil DISCUSSION in order to convince me my concerns have no merit.

You brought up QCOM, ARMHY and RMBS as justification that IDCC's management is not over compensated with options. I don't consider that to be a valid argument since I feel they ALL recieve more options than are justified. My reasons why are again inherent in the questions I posed to you in my earlier post. QCOM has an additional reason for not being a valid comparison in that Irwin Jacobs did found the company unlike the managers of IDCC. There can be no question as to the degree that company has benefitted from his leadership since the company wouldn't even exist without him.

Incidently, yeah, you did bring up those other companies and how much per share they generate. If I'm not wrong, those companies have split their stock several times. If IDCC were to split, which I would think they would if the price rises, wouldn't that change your figures? Does that alter your argument?