Interdigital - Nokia talks signify changing fortunes

Monday, March 24, 2008

Just this month, I mentioned the steps Interdigital (IDCC) needs to take to convince the Wall Street of its potential. The company seems to have taken a giant step in that direction today.

Interdigital reported that it was in settlement discussions with Nokia for 3G and that the parties have made substantial progress' towards a resolution on all the patent disputes between them. A bigger positive about this piece of news is that it was reported as an unscheduled material event or corporate change through a Form-8K. The news was further ratified by a Nokia spokesperson who declined to add more color to it.

The Wall Street reacted very favorably to this information as the company's shares soared almost 15% to close at $22.31. The last trade for the day was in fact at $22.80. This also ended a two-month rut for Interdigital shares that were trading in the high-teens.

That a Form-8K was used signifies a positive end to this prolonged battle with Nokia. It also suggests that the King of Prussia-based company is quite confident, perhaps about a favorable licensing deal. Besides, with a stock buyback plan in progress, the company will also want to play safe. It will certainly not want investors complaining that the buyback is unfair (if a Nokia settlement is not made public).

On a related note, Interdigital also stated in the 8K that it will appeal against a court order seeking that it enter an arbitration with Nokia. It will also continue to participate in the ITC investigation against Samsung. It now appears that Nokia likely in tow, Samsung and the others will soon follow suit and Interdigital will be presented a chance to prove its real worth to the Street.

[Long IDCC at the time of writing]

Posted by Vijay Nagarajan at 8:07 PM  

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