Replies to post #23406 on InterDigital Inc (IDCC)

[blueskywaves]

I agree with you about IDCC's ability to generate both sales growth and EPS growth -- remember the 10/10 and 20/20 elite club I described, but I don't agree with you that there is no distinction between a sales-based multiple and an earnings-based multiple.

A sales-based multiple allows comparison of IDCC with other companies the an early stage of their growth since all have sales and you have a consistent basis for judging if you're paying too much or too little for each sales dollar.

An earnings-based multiple simply doesn't allow that kind of comparison because most companies are unprofitable at their early stage of their growth.

IDCC is unique in the sense that..It can raise its gross income stream ten fold and add not one dollar to cost of merchandise, labor, general overhead etc..90 cents on each increased dollar revenue should fall to the BOTTOM LINE..

IDCC is unique but not quite in that way. For example, a company has to keep on updating its patent portfolio to keep up with rapid technology cycles and to introduce new innovations. The average patent costs $4M to prosecute and maintain over its 20-year lifetime. The more patents are issued, the higher the maintenance fees which form part of overhead. In 2002, IDDC generated 43% of all its patent applications (typically 1-2 years) indicating that it will probably generate more patent applications in 2003 than in 2002 and so on. That means a higher patent overhead in 2003 than in 2002 and so on.