InterDigital, Inc. (NASDAQ: IDCC) conducts research and development activities with a goal of building its patent portfolio, which it vigorously enforces. InterDigital’s patents aid in wireless communications via 2G, 3G, 4G and IEEE networks.
On July 19, the company announced it was in the process of evaluating “strategic alternatives” including a potential sale. This has drawn the interest of several law firms worried that the firm might sell itself too cheaply:
Since InterDigital, Inc. announced that it is exploring potential strategic alternatives NASDAQ: IDCC stocks grew from $41.56 on July 18 to as high as $81.99 per share during Thursday’s trading.
However, InterDigital has performed well for its stockholders in the past. Its annual Total Revenue rose from $234.23million for 2007 to $394.55million for 2010. Its Net Income increased over the same time frame from $20.00million to $153.62million.
Additionally, shares of InterDigital, Inc. (Public, NASDAQ:IDCC) grew at a substantial growth rate. NASDAQ: IDCC stocks increased from as low as $17.39 per share in February 2008 to $48.37 in February 2011.
On July 27, the company announced its Q2 results:
On the revenue side, we continued to see strong smartphone sales royalties from our key customers, offset by the expected decline in royalties from our Japanese customers, which is anticipated to be temporary, and a decline in our fixed fee royalties resulting from the expiration of our agreement with LG, with whom we continue to be in license renewal discussions. The expense side showed continued discipline in managing our costs even though our intellectual property enforcement costs increased in the quarter as a result of the recently filed ITC action. We ended the quarter with a very strong cash balance and continued optimism about the future prospects for the company.
The company also used its earnings announcement to give some commentary on their industry:
The industry is witnessing considerable interest in intellectual property. In addition to our very strong patent portfolio, InterDigital(R) also has a very strong capability in developing fundamental wireless technologies and managing patent assets with a well-regarded licensing program, the combination of which differentiates us from many other companies. Given the current industry environment, the Board believes that it is an appropriate time to undertake this strategic options evaluation process.
The company also discussed new patent litigation it was engaged in:
[W]e have commenced new patent litigation against Nokia, Huawei and ZTE,” said Merritt. “While we do not often need to bring lawsuits against parties to protect our intellectual property, we will do so when such action is necessary. In this case, we believed the time had come to bring litigation, but only after months of attempts to negotiate a license on fair, reasonable and non-discriminatory terms.
Only one Covestor model held IDCC as of 7/27, Stable Growth, which follows a strategy of “investing in US equities which are stable growth stocks that have become too cheap.”
Sources:
“Interdigital under investor investigation over possible buyout” Shareholders Foundation. http://pr-usa.net/index.php?option=com_content&task=view&id=829214&Itemid=32
“InterDigital Announces Second Quarter 2011 Financial Results” IDCC Press Release. https://www.marketwatch.com/story/interdigital-announces-second-quarter-2011-financial-results-2011-07-27?reflink=MW_news_stmp
