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Technology Stocks : Interdigital Communication(IDCC)
IDCC 369.41-3.0%Nov 7 9:30 AM EST
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To: Ron who wrote (4729)1/17/2002 3:59:48 AM
From: Gus   of 5195
 
IDCC won't have all that QCOM hot air behind its sails this time so they have to rely more on the numbers.

IDCC (Outstanding Shares - 53M)
Recurring Royalty Income (RRI)

RRI/Share               Annual         Quarterly

$0.75 per share       $  39.6M       $   9.90M (current)

$1.00 per share          53.0M          13.25M
$1.50 per share          79.5M          19.99M
$2.00 per share         106.0M          26.50M

The well-understood risks of litigation aside, the rewards
are clearly in the realm of the possible for IDCC.

For example, to get from the current $0.75 per share to $2.00 per share, IDCC only has to secure RRI from other vendors totaling $66.4M.

Nokia alone is already selling more than 140M handsets a year so if you simplify all the tiered infrastructure and handset royalties to a single handset rate, IDCC would only have to boost its income from Nokia from the current $20M-$25M a year rate (booked as engineering services) to $66.4M a year (booked as recurring royalty income). Put another way, Nokia is already paying IDCC $0.14-$0.17 per handset.

$66.4M a year on 140M handsets is equal to $0.48 per handset for 2G and 3G IPRs. That's a royalty rate of 0.47% or less than 1/2 of 1%, assuming a handset factory price of $90 each. That means that IDCC only has to bring the Nokia rate from the current $0.14-$0.17 per handset to $0.47 per handset. Other royalty rates being bandied about by other wireless IPR holders range from 1% to 5%. The 3G Patent Platform itself contemplates keeping a cap on aggregate royalty rate at 5% for most IPR holders so these numbers are conservative enough with the uncertainty of any litigation to consider.
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