The company gave no incremental update on the Nokia litigation the decision for which could be rendered any time now. Management did acknowledge - similar to its recent earnings call - that should the Nokia case be unfavorable to InterDigital, other renewal processes could be impacted
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Barclays Capital: IDCC Conference Feedback
InterDigital (IDCC, 1-OW/Neutral, $42.20) Amir Rozwadowski
What's incremental: CEO William Merritt and CFO Scott McQuilkin provided an overview of the wireless IP landscape and touched upon several opportunities for InterDigital. Management highlighted that in light of the auction of Nortel's patent portfolio and Google's stalking horse bid, wireless IP is increasingly being seen as attractive assets critical in defending potential incursions of additional license costs or as a competitive advantage. Furthermore, the company is potentially looking to opportunistically acquire various IP assets that come onto the market given heightened interest in the intellectual property arena. According to management, InterDigital stands to benefit directly from the handset market's anticipated expansion from $200 billion in 2010 to $283 billion in 2014. The company has 50% share of the 3G market and hence, the size of the opportunity before the company is the other 50% of the 3G market as well as the nascent LTE market in which the company believes it is one of the top three patent holders. The company also anticipates traction in the M2M infrastructure market which is expected to increase from $45 billion in 2010 to $53 billion in 2014 as well as in wireless consumer devices which is expected to increase from $3 billion in 2010 to $11 billion in 2014.
The company gave no incremental update on the Nokia litigation the decision for which could be rendered any time now. Management did acknowledge - similar to its recent earnings call - that should the Nokia case be unfavorable to InterDigital, other renewal processes could be impacted.
What to do with the stock: We continue view the company as a play on wireless intellectual property, particularly given rising interest in the market. However, we recognize that the shares are likely to remain range bound near-term as key catalysts remain the Nokia litigation and the LG renewal.
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