InterDigital Announces First Quarter 2001 Results; Aggressive 3G positioning continues; Results in line with expectations; Cash balance remains strong
KING OF PRUSSIA, Pa.--(BUSINESS WIRE)--April 26, 2001-- InterDigital Communications Corporation (Nasdaq:IDCC), a leading wireless technology provider, today reported a loss of $0.04 per share for the first quarter ended March 31, 2001.
The first quarter 2001 included improved recurring royalty revenue from second generation (2G) patent licensees and higher specialized engineering services revenue compared to the same quarter a year ago. InterDigital's cash and short-term investments position at March 31, 2001 remained a very healthy $87.2 million while the Company increased its investment in engineering and strategic resources supporting the development of 3G digital wireless technologies.
The Company expects its cash position to grow by more than $17 million in the second quarter after an expected receipt of advance royalties (net of non-U.S. withholding taxes) from a previously announced 3G licensee.
Revenues in the first quarter of 2001 totaled $14.7 million, versus revenues for comparable activities of $10.6 million in the same quarter of 2000. In the first quarter of 2000, reported revenues of $15.2 million included $4.6 million of discontinued product sales. Recurring royalties in the first quarter of 2001 totaled approximately $8.0 million, up 9% from the $7.3 million reported in the same quarter of 2000. Specialized engineering services revenue associated with technology development work for Nokia in the first quarter 2001 was $6.7 million, up from $3.4 million in last year's first quarter.
For the first quarter of 2001, InterDigital reported a net loss of $2.2 million, or $0.04 per share, compared to net income of $2.9 million, or $0.05 per share (diluted) in the same quarter of 2000. The decrease in earnings versus 2000 was due primarily to higher operating expenses in 2001 related to accelerated investments in 3G W-CDMA technology development and lower than normal patent administration and licensing costs in last year's first quarter.
Commenting on first quarter activities, Howard Goldberg, President and Chief Executive Officer, stated, "The first quarter saw InterDigital form relationships with Infineon Technologies AG and Matsushita Communications Industrial Co., Ltd., that will act as key enablers for execution of our 3G strategic plan. Both of these agreements strengthen our position as a key player in the development of technology platforms and intellectual property for the huge market for 3G products and services that we expect to emerge throughout this decade.
"Our financial performance this quarter was in line with our expectations and our plan for the full year. The losses we experienced reflect our plan to increase our investment in technology development resources to meet our timetable for 3G technology and product development. Our current core revenue base (licensing and specialized engineering services) grew nearly 40% as compared to the same quarter last year. The combination of key industry relationships along with this healthy increase in core revenue confirms that our business plan is sound and that we are executing as planned. We also maintained a very strong cash balance, allowing us to further accelerate our investment in technical and support organizations.
Mr. Goldberg added, "Despite the current turbulence in the wireless industry, we remain committed to our strategy, which is designed to position us as a leading technology innovator for the 3G market. We have factored in the potential for changes in the timing of the industry's 3G rollout and have planned accordingly. In fact, the changes occurring now may present opportunities for fiscally sound companies such as ourselves to gain competitive advantage through further investment while others are retrenching their activities."
Rich Fagan, Chief Financial Officer, said, "We have had good levels of recurring royalties during the last several quarters driven by solid growth in unit sales of our existing licensees. Nevertheless, the current economic uncertainties affecting the sale of wireless systems may affect their growth rate for the remainder of 2001, as well as our ability to add new 2G licensees. In this environment, we may be challenged to achieve the recurring royalty targets we set for 2001. Specialized engineering services revenue will continue to be a contributor for the rest of the year, although revenue in the upcoming quarters may vary from the level attained in the first quarter due to planned fluctuations in staffing levels associated with different stages of the program. We expect our spending levels to increase somewhat over the course of the year as we continue to accelerate investment in 3G technology and product development and marketing. Thus, quarterly results for the remainder of the year, absent one-time revenue from past infringement or other licensing sources, will most likely reflect losses equal to or higher than those experienced in the first quarter." |
