InterDigital (IDCC) Offers Q2 Operating Expense Guidance
InterDigital, Inc. IDCC recently offered operating expense guidance for second-quarter 2021. The outlook offers clarity regarding its business operations as it aims to navigate through post-pandemic revival and is likely to instill investors’ confidence in the stock.
Management currently expects second-quarter total operating expenses between $91 million and $96 million. The company anticipates a non-recurring, net charge of $28-$32 million, two-thirds of which is likely to be recorded in the second quarter with the remainder being recognized in the second half of 2021. InterDigital expects these actions to drive incremental savings of $15 million under the operating expense head, beginning fourth-quarter 2021.
Earlier this month, InterDigital also offered revenue guidance for the quarter. Management expects second-quarter revenues between $83 million and $88 million, reflecting the operating leverage of the company’s business model. The Zacks Consensus Estimate for revenues is currently pegged at $84.97 million.
Notably, InterDigital reported solid first-quarter 2021 results, wherein both bottom and top lines surpassed the respective Zacks Consensus Estimate. The company reported net income of $5.6 million or 18 cents per share compared with $0.1 million or breakeven results on per share basis in the prior-year quarter. The significant improvement was largely driven by higher operating income and lower interest. The bottom line beat the Zacks Consensus Estimate by 19 cents, delivering a surprise of 1,900%. The wireless R&D company’s revenues grew to $82.4 million from $76.2 million in the prior-year quarter. The growth shows that InterDigital is benefiting from a more diverse licensing program, along with the strength of its operating model. The top line surpassed the consensus estimate of $80 million.
InterDigital’s commitment to licensing its broad portfolio of technologies to wireless terminal equipment makers, which allows it to expand its core market capability, is laudable. It has leading companies, such as Huawei, Samsung, LG and Apple, under its licensing agreement. Consequently, the company expects to generate healthy revenues from patent licensing in the forthcoming quarters as well.
InterDigital’s global footprint, diversified product portfolio and the ability to penetrate different markets are impressive. Apart from the company’s strong portfolio of wireless technology solutions, the addition of technologies related to sensors, user interface and video to its offerings is likely to drive significant value, considering the massive size of the market it licenses. Furthermore, the company remains committed to pursuing acquisitions in order to drive its product portfolio and boost organic growth.
The company is focused on pursuing agreements with unlicensed customers in the handset and consumer electronics markets. InterDigital aims to become a leading designer and developer of technology solutions and innovation for the mobile industry, IoT and allied technology areas by leveraging its research and development capabilities, technological knowhow and rich industry experience. At the same time, it intends to enhance its licensing revenue base by adding licensees and expanding into adjacent technology areas that align with its intellectual property position.
The stock has gained 45.2% over the past year compared with the industry’s growth of 45.8%.
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InterDigital currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry are Aviat Networks, Inc. AVNW, Clearfield, Inc. CLFD and Nokia Corporation NOK, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Aviat delivered an earnings surprise of 57.3%, on average, in the trailing four quarters.
Clearfield delivered a trailing four-quarter earnings surprise of 79.8%, on average.
Nokia has a long-term earnings growth expectation of 1.5%. It delivered an earnings surprise of 215.2%, on average, in the trailing four quarters.
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