ASM - KOP-1
Since the ASM meeting was webcast, I will not make my usual detailed report. I will paraphrase and summarize briefly as some of the most important points have already been posted on the board. (Thanks to my wife for typing my dictation)
Bill Merritt Presentation
The Business of Invention - a new asset class of industry includes the following steps:
vision - mid 90s - IDCC knew it was about data not just voice
invention - 200 outstanding engineers
protection - warchest to protect against infringers
evangelize - market to standards bodies and and companies
license - put forward the best patents that can be licensed
He then showed a ten year chart for profitability and earnings per share.
There was strong demand for the $230,000,000 note - as soon as we talked to anyone, they were immediately snapped up.
Companies have special people dedicated to this asset class responsibility. Consequently, this helps IDCC because we become better understood. There are 4 categories for technical IP & license that come with different risks:
IP pools - ?
NPE - buy or acquire patents- not much invention
Corporate R & D - innovation and invention to drive their specific products
Pioneers - IDCC - major inventors not hemmed in by a limited vision - but produce patents that drive the whole spectrum of systems.
BM then showed a chart of stock prices for IPR companies over the last year - ones that we are familiar with.
The trend was up but very volatile and bouncing around at higher levels.
With 50% of the 3G market license, we are looking to target 1.2 billion units of opportunity in 3G/4G in(not by) 2015.
IDCC is among the top 3 in LTE where we are well respected and very very strong and expect the rates to be higher. LTE will provide more opportunity in the tablet devices area etc. IDCC is positioned to benefit from the next generation of networks:
billions of subscribers - trillions of connections - seamlessly connected and integrated
Our average rate of royalty is approximately 1%. Again, a .1% increase in royalty rate nets $1.2 billion.
It is one of the reasons that we are looking for good acquisitions. We don't have to do this because we can grow organically but it is icing on the cake. We have 80% of 2G and 50% of 2G licensed in 2010.
Our goal is to execute new and renewed licensing agreements at higher royalty rates.
(more to come)
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