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To: gdichaz who wrote (915)	12/8/1999 10:31:00 PM
From: Teflon	Respond to of 1817

IDC, very interesting indeed. Check this out: InterDigital Communications Corp. (AMEX:IDC) Written by Dr. Bill Dalglish, CFP from information gathered via the TelecomTechStocks.com informal source network. Why Is the Stock so Cheap? InterDigital shares have the potential for being that "ten bagger" that Peter Lynch describes. So, why haven't potential investors heard of this investment opportunity and bought InterDigital Stock before the beginning of its rapid ascent on Nov. 18, 1999? 1. "Investor Psychology" No matter how thorough the research an investor does nor how compelling the outlook for a particular stock, fear of making a mistake and regretting it later tends to keep even experienced investors from purchasing shares until the share price starts moving up. The more it moves up, the greater the feeling is that "others feel the same positives that I feel," confirming the investor's earlier instinct and providing the courage to buy the stock. While InterDigital languished in the $4 - $5 range without breaking through to new highs, self-doubt prevailed, even though a potential investor may have felt strongly positive about the stock's potential. But when the movement upward begins (as it did for InterDigital on Nov. 18), Katie bar the door. Investors who liked the Company's fundamentals before but either did not buy any shares or bought only a few because no one else was buying, tended to climb aboard with confidence. That's what happened on Nov. 18th (up 10% on 7 times normal volume) and Friday Nov. 19th (up 40% on 17 times normal volume). Assuming the volume remains significantly above average and the price continues to appreciate ( with periodic consolidations), the shares seem destined to keep growing in value. That's just the way we humans are. Not many Warren Buffets around who buy out of favor stocks and hold on for as long as it takes for them to reach their potential. 2. Former share prices of less than $10 has kept some major brokerages from recommending this stock. When the stock stays above $10, we likely will see recommendations of InterDigital from major brokerages. 3. The loss of a patent infringement case against Motorola years ago soured brokers. Since then, the Supreme Court has changed the rules (Markman decision) for such litigation. Under the new rules, InterDigital probably would have won easily. See: "Learning from the 1995 Motorola Case 4. Until former president William Doyle resigned in October, InterDigital management lacked either the interest in or the charisma to "sell" the company to Wall Street, even though management could obviously sell its technology to the scientists at a giant like Nokia. (Scientists are a different breed than brokers.) A search for a "fire in the belly" CEO is underway with expectations that the post will be filled shortly after year end 1999. 5. Its not easy for an investor without technical training to understand the engineering breakthroughs IDC has accomplished. But the media is beginning the education process with front page stories in daily newspapers mentioning "new third generation standards", "wideband CDMA" and other important wireless terms. (See: "Telecom Technology for Non-Techies" for a beginner's level introduction to telecommunications technology.) For investors seeking to enter the rapidly expanding wideband wireless technology area, InterDigital is one of very few "ground floor" investment opportunities still remaining. Like some other small caps – its value is just now starting to be recognized by the investment community. At a price of $4-$6 per share, IDC's current trailing price to earning ratio (PE) is a modest 6 or so, while larger, more widely followed companies are now sporting PE's of 40 - 80 or even 300 or 400. Added bonus: (1) IDC reported huge earnings for the 1998-2Q99 period, (2) a mountain of cash is in the bank, and (3) IDC has major tax credits to offset future taxable earnings. On Aug. 5, 1999 the only brokerage analyst who reports on InterDigital (Morgan-Keegan's Kasargard) raised his earnings estimate for 1999 by 84%, from $0.25 to $0.46 per share. (See: "Earnings", "Third Generation Standards for Wireless," "Risk-Reward Ratio", "Liquidity", "Earnings Risks", "Learning from the 1995 Motorola Case) Teflon

To: gdichaz who wrote (915)	12/8/1999 10:45:00 PM
From: Teflon	Read Replies (1) \| Respond to of 1817

IDC (part II): ...Alliance or Acquisition? Not surprisingly, many IDC shareholders believe that InterDigital is a ripe acquisition target in an environment in which the major telecom firms, enjoying dramatic increases in their share values, have plenty of capital to buy attractive resources. Apparently, the InterDigital Board also considers the Corporation a ripe target for acquisition. In 2Q99, they hired the investment banker Morgan Keegan to help sort out their options. InterDigital probably has a 6 – 12 month lead over the competition in developing next generation wireless architecture. That lead was perhaps 12 to 18 months at the end of 1998, I believe. InterDigital realizes they are in a unique position. They have what some of the giant telecom technology firms greatly need -- the know-how for putting together a wireless next-generation telecommunications system. Some shareholders suggest that InterDigital retain its profitable and cash rich licensing and royalty arm (already designated as a wholly owned corporate subsidiary) and allow its engineering arm to be acquired. They argue that this would enhance shareholder value and ensure that InterDigital's $38.7 million in tax loss carry forward credits not be forfeited if the entire corporation were acquired. Of course, the discussion of InterDigital possibly being acquired is hypothetical at this point. But we know that InterDigital is in an enviable position relative to earnings as well as cash on hand and that IDC recently hired an investment banking firm to provide advice on matters related to acquisitions, purchases and mergers. Another major alliance (ala to the Nokia $70 million deal in 1Q99) instead of, or leading into, an acquisition is another possibility. (An interesting precedent for the alliance as a prelude to a buyout is Cisco System's (NASDAQ:CSCO) alliance with the U S division of Bosch in 2Q98, followed by a buyout of the Bosch division by Cisco and Motorola (NYSE:MOT) in 2Q99. Just as the alliance between InterDigital and Nokia has made sense as a way to help Nokia with the engineering experience it needs in wideband CDMA, so also a major alliance between InterDigital and Cisco, Texas Instruments, Qualcomm (NASDAQ:QCOM), Motorola (NYSE:MOT) for some other firm could be quite profitable for both parties. InterDigital shareholders are on the whole quite aware that timing is everything. The telecom tech giants are currently running behind, but they are committing vast resources -- far more than InterDigital could ever hope to muster -- to catch up. When they catch up, InterDigital future as a freestanding, viable corporation may be uncertain. That's why InterDigital has hired an investment banker to look for firms interested in buying the company. It is strongly in InterDigital's interests to consummate one of the following deals before the end of 1999: a) another major alliance, b) an alliance leading to an acquisition, and c) an outright acquisition A growing number of InterDigital shareholders strongly believe that InterDigital is in the final stages of either a major new alliance, or an acquisition deal with some large telecom technology firm. Shareholders see confirmation of their belief that management and board members are currently involved in negotiations toward an additional major alliance or a buyout by the following: 1.The company's highly touted search for a new CE0 (the post has been vacant for some time) may or may not have been moved from the front burner to the back burner, suggesting that the appointment of a new CEO would be inappropriate if acquisition was imminent. 2.The stockholders, including the Heartland Fund (currently holding 8 million shares -- 18 percent of the corporation) want a buyout, sooner rather than later. 3.A significant increase in trading volume, including the relatively large number of $5 and even $7.50 calls for October, December and March 2000 contracts, suggest strongly that a major announcement is near at hand. Nonetheless, rather than buying the company on the basis of rumor -- however plausible it may be -- a prudent investor will carry out "due diligence". That is investigate the pros and cons of the investment, including the inherent risks and rewards. (See: "Acquisition Target?" "Competition Risk" and "Partnership Risks") Teflon