First you have to put a value on the current business outside of the LTE portfolio. Interdigital has realy not benefited at all economically due to the LTE patents so we can really just look at the current business ex LTE patents. The current business includes ~$500M in cash net of debt, 3G patent portfolio producing cash but only 50% signed in a growing market, video suppression solution in testing with a Tier 1 operator, world class wireless engineering team, standards body expertise and connections, patent monetization experience, etc. Based on this information I will give the current business the following valuation:
3G patents - $1B (based on IP value increase)
Video Compression - $500M (hard to guess but could be very conservative)
Cash - $500M
Other - Engineering Team, standards connections etc - $500M
Total Value Current Business: $2.5B or ~$55 per share
LTE Patent Portfolio Value:
Nortel LTE portfolio (Apple paid $2B for a portfolio that has not been improved or updated in 3 years)
Interdigital has a portfolio of LTE patents that could be 4X greater or more in quantity based on teh recently published ETSI database searches, I will assume that the quality is similar.
If you only give Interdigital's LTE portfolio 2X Nortels to be conservative, that gives you roughly $4B or ~$90 per share.
Add these up are I get a rough estimate of $145 per share today in case of a buyout. Since there is uncertainty in all this I would discount it about 40% to roughly ~$87 per share. I am guessing that we will trend toward that number in the coming months and will get there even quicker with a favorable CAFC ruling.
Dclarke
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