Wireless Industry Analyst

vijay...idc has more than just a 3g patent portfolio...their work on 802-21,lte and wimax tells me they will be part of the wireless IPR landscape for a very long time...imo their patent portfolio only gets stronger as the network evolves towards packetized data...evidence of this strength is the ongoing work idc is doing for SK Telecom and their ipr that has been included in the 802-21 standard and the evolving LTE standard [verizon has stated they will evovling their network to LTE....i do think you are on the right track w/ a qcom/idc merger...although i think your price range is a little low...imo idc would not even entertain an offer that is south of 50

Thanks for your comments. I do agree that IDCC has OFDMA IP as well. But, given the more dispersed nature of the OFDMA IPR landscape, I think that like Qualcomm, IDCC will also have reduced licensing revenue. I do think that with 3G looking to mushroom in 2009 and 2010, the IP-based revenue will peak during these years and perhaps continue into 2011 and 2012.

Also, I have been part of the RAN1 forum of 3GPP until last year. The IPR has been carefully chiseled to make sure that no one company has an upper hand. IDCC is no exception considering that all companies are aware of its position as an IP powerhouse and its reputation of going after them as products come out.

Valuation..I can look more carefully into my estimates a little later. I will perhaps write a post-note on my interdigital series shortly.

vijay...i do agree that the lte ipr landscape is much flatter going forward...but interdigitals current licensing fees at just over 2.00 per unit...are more likely to be sustainable going forward than qualcomms across the board 3/4/5%[you choose] demands...which now equate to well over $20 for a full featured smartphone...intedigitals long term projections are for $1 per phone...at 700myn units [min]thats 700myn revenue vs 250-300myn in costs..400myn pre tax 250myn after tax vs 40myn shares thats 6 bucks...surely worth 60 per share...and we havent once spoke about the chip side of the business...thanks for your time...anthony

Anthony,

I very much appreciate your insights. I am aware of the handset shipments and how Interdigital stands to gain with the cellular boom. I was planning to do a valuation analysis much on the scale of what I did for Qualcomm on Sramana Mitra's site but haven't gotten around to doing so. My worry on IDCC's licensing model is the flat fee model. The 'cap' that they may have to agree will curtail the kind of numbers you mentioned. Besides, the inherent risks associated with the licensing business alone makes the company's fortunes that much more volatile. Unlike QCOM which is well established in the chip business as well, IDCC has a harder battle to fight for the patents alone. The company has lesser leverage and more of a bad reputation in this matter. This goes back to my point of IDCC needing some good design wins for its chipsets for a firmer foot as a stand-alone company.

This being said, the main purpose of my IDCC-QCOM article is to bring a larger awareness about the potential of IDCC and the power that a combined entity can bring to the US wireless industry. Also, my 'value' is certainly conservative and is based on how much QCOM will be willing to give in return for the power. With the current share price of IDCC, north of $50 may be too high for QCOM to contemplate as a premium. I suppose it is a different matter if some huge recurring licensing deals and bigger chipset wins come through for IDCC, right?

Vijay

as far as idc's reputation in the industry....it is certainly no worse than qcom's heavy handed ways...when the big boys dont want to pay you...there is not much more you can do than to scratch and fight...i think you'll be surprised at the depth of their patent portfolio...i think the current number is about 3000 w/ 2000 in the pipeline...you are right in that the modem business should help things along..they have targeted a specific niche for their first product...im looking for idc's modem to appear in apples laptops by the end of this year or early next year....apple as your first customer is not too bad...they also recieve royalty from infineon for every umts/modem sold..thanks for your thoughts....anthony

Given that Apple's wireless vision is centered around WiFi, I would look to companies that have ASICs with WiFi bundled with GSM/UMTS.