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Technology Stocks : Interdigital Communication(IDCC)
IDCC 371.89+1.9%3:59 PM EST
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To: Jim Lurgio who wrote (4582)11/8/2000 11:49:56 PM
From: Bux  Read Replies (1) of 5195
 
If one looks just at recurring royalty income and omits licensing and other revenue streams it is apparent that it's growing. According to management, the recurring royalties are from TDMA licenses. How much of a premium do you think an investor should put on a royalty stream that will soon be displaced by CDMA? How long will this stream grow?

Also, according to guidance given by management during the 3rd Quarter earnings release, recurring royalties and specialized engineering services are expected to come in flat for the 4th quarter. That means the 19 million for the first 9 months of 2000 could be estimated to be roughly 26 million for the entire year 2000. Even if it were pure profit with no overhead it would only amount to less than $.50 share. The trouble is, there is plenty of overhead and these revenues are (IMO) being wasted to unwisely go head to head with WCDMA ASIC manufacturers who are much better funded. It's a risky move that will, in all likelihood, be a huge waste of cash.

In any case, do you think TDMA royalties will grow for more than a couple more years and do you think any TDMA growth we do see will be as robust as that which has already happened?

I wouldn't base an investment in IDC on TDMA royalties and it remains to be seen if IDC will be able to collect significant CDMA royalties. If they do, it won't be for a couple of years so I wouldn't hold my breath.

Bux
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