Welcome visitors! Following are several positive reasons for why IDC shares may do very well in the months ahead. I don't work for IDC, but have followed it as a shareholder for several years. My background includes financial planning, so that's the perspective I'm commenting from here.
Upward price and volume action on Wednesday 1/27 generated lots of interest in IDC. Perhaps that's why you visited here. There's a lot more IDC board action over at Raging Bull (www.ragingbull.com) in case you are interested.
If you've never heard of IDC before now, you may be fortunate. You don't have to carry around negative feelings about the company and its former management. You won't be angry that the stock market has roared while this stock has whimpered. You are free to look at IDC's current potential from a more objective vantage point.
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Visitors' questions are always welcome here. No question is "stupid.' We've all been new to wireless technology at one time. Jim Lur(gio) is our chief resident guru here. His posts are always knowledgeable and usually very positive (even he gets frustrated sometimes). Check out his posts for sure. Welcome aboard!
++++++ A Positive Perspective on IDC's Potential ++++++
These positive reflections are organized in three areas:
A. The telecom manufacturing industry potential;
B. IDC in particular;
C. Our current management.
I don't claim to be an expert in any of these areas - these are simply the current conclusions of a fairly lengthy thought process.
A. The telecom manufacturing industry potential:
1. I believe that wireless telecommunications has an incredibly prosperous future. I personally am not aware of any industry that has a greater demonstrable potential.
2. Wideband WLL, where IDC has chosen (I think wisely) to focus its resources, has potential in the following key markets, each with millions upon millions of potential customers:
a. North America: urban areas where our technology could provide major players like MCI-WorldCom with the means for effectively challenging the advantage that wire-based existing telecoms have enjoyed up to now. (A successful field trial in Iowa by Pioneer, MCI-WorldCom's branch there, will be crucial.)
b. North America: rural areas where wireless may be more cost efficient than stringing additional wirelines necessary to support the huge demand for new dedicated lines for data transmissions. (I understand that the wait for a new telephone line from BellSouth in the area of Tennessee where I live has now grown to one or two months, with demand reportedly rising quickly month by month as Internet usage sky rockets.)
c. Other "developed" nations - in both urban and world areas - as in North America above.
d. "Less developed" markets (of which the most populous country in the world, China, is a prime example). To compete effectively in worldwide commerce these countries cannot wait years to build a wired infrastructure. Wireless telecommunications will be the technology of choice for both voice and data transmission here, I believe.
B. InterDigital Communications Company, in particular:
1. I believe that our company has the most significant IPR in the most effective and widely used digital telecom system to date (TDMA-GSM).
2. I think our company, which has proven itself through his development of TDMA, also has significant IPR in another technological breakthrough - W-CDMA especially for wireless local loop systems.
3. The strong commitment of three of the world's five or six largest telecommunication companies (Seimens, Samsung-Daiwoo, Alcatel) to IDC's wideband CDMA technology confirms my appreciation of its potential. (I acknowledge that these companies do not consider IDC to be a major partner but they are still significant because they have contributed 15 or 20 million dollars each as well as thousands of hours of engineering and marketing time.)
4. The German Appeals Court decision last spring upholding our IPR in TDMA throughout Europe is of major importance to our immediate and longer-term revenue stream.
5. Momentum has been building as Japanese firms have been accepting our IPR in TDMA, as well.
C. Current Management of IDC
Frankly, I do not feel that I am in a position to objectively evaluate the effectiveness of our current management team. Of course, I wish our share price were higher in 1998, but I am using downturns as a buying opportunity, employing a dollar cost averaging strategy that gives me a basis of less than the current share price. (I realize that some who post here are not at all that fortunate in their basis and that it must be very frustrating to long-term shareholders whose basis is eight dollars to twelve dollars per share, seeing trading at its present lower-level.)
I don't feel I will be able to fairly judge our company's management until 2Q 1999. It is probably only then that the following factors will have emerged:
1. Enough time to settle with European firms who lost the German patent case as well as other European companies affected by the patent decision in our favor.
2. The beginning of a stream of revenue from licensing royalties already negotiated over the past two or three years.
3. Reported results from the WLL B-CDMA field trials in Iowa to, China, and I assume elsewhere.
4. Alcatel will have received the Texas Instruments chips and will be doing its own field trials.
5. If they proceed on schedule, there will be a decision from the United Nations ITU on a new standard for WLL, which we hope will include some of our own IPR and therefore indicate a future stream of income.
6. The United Nations ITU may also have made progress in establishing a 3G standard for mobile wireless. It is possible that IDC will have some IPR in that standard and therefore a future stream of income.
7. If ITU follows throughout its threat to use TDMA instead of CDMA as the basis for a 3G mobile system (if Qualcomm and Erickson do not settle their differences), IDC may have more IPR in that standard than anyone else. (This is a long shot, and on the whole not a very good option, I sense.)
Depending upon how these seven factors shakeout between now and 2Q 1999, I will be able to make a reasonable judgment about management's success at that time. Until then, while I feel frustration about our share price, I am reserving judgment about management and refuse to get involved in piling complaint upon complaint.
When I was in financial planning a few years ago, a key factor in decision-making was "risk management." I am willing to commit 10 to 15 percent of my portfolio to IDC today because I like the way the risk to reward potential looks. I see the downward risk in share price as a low of $3.50 at the worst. (I base this, in part, on the company having almost two dollars a share in cash alone, plus other tangible assets. That means our intellectual property rights us are valued in the current share price at only two or three dollars per share -- almost unbelievably low for what I believe we have in licensing and royalty potential.
I'm not an investment adviser, but personally I see the upward price potential being $12 - $20 in 2Q 1999 and $30-$40 in the year 2000.
I like these odds!!! Even if it takes until 2Q 1999 to finally demonstrate IDC's value!
Again, welcome visitors to this IDC Silicon Investor board! Come again soon. And do check out Raging Bull and Yahoo (but if you visit either of those, please don't be turned off by the negatives you will see there from frustrated long term shareholders. They have a good point to make and think that is the best place to reach management. I think writing directly to members of the Board of Directors is a better way to communicate - but that's another story).
Bill
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