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InterDigital, Inc. Message Board

  • investora2z investora2z Jun 7, 2013 6:37 AM Flag

    Rangebound movement likely

    The stock had recovered a bit after the correction from $47 to $44.30. However, there seems to be a 3% drop in the after hours quote perhaps due to a reaction to the news regarding the case against Nokia. The two questions asked by Nokia in the petition are Whether the “domestic industry” requirement of Section 337 is satisfied by ‘licensing alone’ despite the absence of proof of ‘articles protected by the patent’”; and “Whether underlying factual determinations in a patent claim construction ruling should be subject to deferential review by the Federal Circuit”. Court has fixed July 15 deadline for response to these petitions. Only legal experts can estimate the possible impact of the decision on the petition of writ of Certiorari filed by Nokia, but it seems that these questions can have a significant impact. There could be more correction and the stock can test recent supports again, but the supports are likely to hold when tested. The fundamentals have shown imporvement over the years, but the last quarter was not good. The revenues dipped and hence the company turned net negative. These fluctuations in revenue are mainly due to dependence on one or two licensing arrangements / arbitration awards for revenues. Diversification and getting more steady revenue streams into the cash flow may help steady the ship. Many companies have started to follow a diversification strategy by acquiring businesses or patents which will give them regular cash inflow. e.g. MGT Capital Investments (MGT), which was earlier dependent mainly on the $4.5 billion patent infringement lawsuit filed against casino gaming companies, is now getting into operational side of the sports wagering business through acquisitions. In any case, the IDCC stock has performed very well and the investors have been suitably rewarded. The guidance for the next quarter is good, and if it can beat the estimates, then the things will start to look better. Till that time, a rangebound movement is likely.

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