in my investing. I bought IDCC in August of last year because I loved the free cash flow, the huge amount of cash on the balance sheet, and what I perceived to be a very undervalued company in the growing field of wireless communications. No longer is this the case. IDCC is a pure patent play now with its cash flow of very little importance.
I sit here tonight sitting on a tidy profit with most of my gains locked in through put option purchases this morning (at least through September). This has been an excellent investment. However, I know nothing about patents or what this thing is really worth. What scares me are the animal spirits in this market regarding IP. The Nortel bid seems to have shaken the entire industry. It seems logical to me IDCC as a going concern with what seems to be a stronger patent portfolio than Nortel should fetch at least $6B being there is over $500M on the balance sheet in cash and short term investments. That being said the herd is only thinking in one direction and normally that never ends well.
Gonna hold tight until September. We should know something by then.
DGMorgan, shouldn't we know something by the end of this month or early August? Usually these deals (but not necesarily patent deals) are done pretty quickly once the fact of the talks leak out.
We will have to see whether Merritt can deal with Google any more effectively than with Nokia. Probably so. Google is motivated -- Nokia is just about destroying their business with pig-headedness. Did you see Nokia's quarterly results?
Think about what you just said because you pretty much nailed it. 6B is very close to reality. There is an article going around which says 9 to 11B but I think "that" is a little too optimistic. This would be a far far long shot and could only happen if an ego fueled bidding war started between at least 2 if not 3 large entities.
So what does 6B equal with 45M shares outstanding? Well I am glad you asked. 6B/45m = 133 dollars per share minus the few 10's of millions that management will undoubtedly figure out a way to pay themselves. I am thinking 120 to 125.
There is absolutely no danger holding at this level. No worry about losing profits. Sleep well.
Well there is one thing which concerns me. And that is this Carl Icahn character talking about Motorola selling its IP. Even though I believe it is inferior to IDCC's IP, Google could use it as a ruse to talk IDCC down, by saying that they might consider buying MOT if IDCC doesn't come in with as good price.