InterDigital Announces Second Quarter 2001 Results; Results in Line with Expectations
KING OF PRUSSIA, Pa.--(BUSINESS WIRE)--July 31, 2001--InterDigital Communications Corporation (Nasdaq:IDCC), a leading wireless technology provider, today reported a loss of $0.05 per share for the second quarter ended June 30, 2001.
The second quarter 2001 included a 26% increase in revenues for comparable activities versus the same quarter a year ago along with planned growth in spending related to 3G technology development initiatives.
For the second quarter of 2001, InterDigital reported a net loss of $2.5 million, compared to net income of $34,000, or breakeven earnings per share, 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.
In addition, InterDigital's cash and short-term investment position grew to $92.4 million at June 30, 2001, up $3.4 million from year-end 2000.
Revenues in the second quarter of 2001 totaled $15.0 million, versus revenues for comparable activities of $11.9 million ($13.0 million including discontinued product sales) in the same quarter of 2000.
The increase in revenues for comparable activities was driven by higher specialized engineering service revenue, which increased to $8.0 million from $4.7 million in last year's second quarter, associated with increased activity levels on technology development work for Nokia.
Recurring royalty revenue in the second quarter of 2001 totaled approximated $7.0 million, down slightly from the $7.2 million reported in the second quarter of 2000.
Commenting on second quarter activities, Howard Goldberg, President and Chief Executive Officer, stated, "Our overall financial performance this quarter was in line with our expectations and slightly better than analysts' estimates. Given the challenging market conditions in the wireless industry, we were pleased to report strong growth in revenue in the quarter. The losses we experienced resulted from planned increased investments in technology development to meet our positioning objectives for 3G Wideband CDMA technology platforms. Further, despite our investments, we grew our cash position to over $90 million due largely to a receipt of approximately $17 million (net of Japanese withholding taxes) of advance royalties related to a 3G licensing agreement signed with Matsushita. During the quarter, we continued to make good progress on our high data-rate W-CDMA technology development program with Nokia and moved forward aggressively on integrating our W-CDMA FDD development team with our newest development partner, Infineon Technologies AG.
"As the leader in the development of high data-rate W-CDMA technology platforms for the 3G market, we are watching developments that may define the market opportunity for our technology and intellectual property closely. In that regard, we are carefully assessing Siemens' recent announcement that it intends to place increased emphasis on developing a low chip rate TD-SCDMA(1) (Time Division-Synchronous Code Division Multiple Access) solution for the market in China and possibly Europe. Siemens has been one of the principal advocates of TDD as a mass market 3G technology solution and a key contributor in the 3GPP TDD standards working groups, along with InterDigital. Its emphasis on TD-SCDMA may serve as one means to help accelerate the deployment of TDD-based solutions in 3G products in China as well as foster broader and earlier deployment of TDD technology worldwide. However achieved, a more expansive TDD market may mean greater product and licensing opportunities, all of which can bode well for InterDigital in the long-term. Regardless of the form, or forms, of TDD technology that are deployed in the market, we are confident that our technology, know-how and intellectual property position us to benefit from the growth of the 3G market."
For the first six months of 2001, the Company reported a net loss of $4.6 million, or $0.09 per share compared to net income (excluding a SAB No. 101 related adjustment) of $3.0 million or $0.05 per share (diluted) in the first six months of 2000. Revenues in the first six months of 2001 were $29.6 million versus revenues for comparable activities of $22.6 million in the first six months of 2000.
In the first six months of 2000, reported revenues of $28.2 million included $5.6 million of discontinued product sales.
Rich Fagan, Chief Financial Officer, added, "In the current atmosphere of market uncertainty within the wireless industry, we, like many of our customers, have tempered our expectations for growth in near-term core revenues. The reduced rate of growth in second generation product sales by the major wireless equipment manufacturers had an impact on the level of 2G patent licensing royalties we reported in the first half of 2001. We expect it to have some impact on the second half 2001 royalties as well. The current environment also has affected discussions with new potential licensees, particularly those manufacturers who are experiencing financial difficulties. Despite the short-term challenges, we remain cautiously optimistic that we will be able to grow our 2G and 3G licensee base during the remainder of the year. We expect that second half 2001 specialized engineering services revenues will likely be lower than those reported in the first half as we work with Nokia to refine the pace and scope of work performed during the period in response to ever changing market dynamics.
"We plan to continue our investment in technology development on a steady basis during the second half of the year, managing our expenses and staffing levels so as to maintain our excellent financial health. We now believe that third and fourth quarter operating results, absent one-time revenue from past infringement or other licensing sources, will most likely reflect losses exceeding those reported in the second quarter, given our continued commitment to aggressive positioning for the 3G market."
InterDigital develops advanced wireless technologies and products that drive voice and data communications, offering solutions for mainstream wireless applications that deliver cost and time-to-market advantages for its customers.
By leveraging its technology and intellectual property into third generation standards and products, the Company is maximizing its long-term revenue and earnings opportunities. InterDigital has a strong portfolio of patented TDMA, GSM/GPRS and CDMA inventions, which it licenses worldwide. For more information, please visit InterDigital's web site: www.interdigital.com. |
