From IV
M Partners : $167 price target - IDCC - New Perspective: InterDigital As A Weapon
IDCC - New Perspective: InterDigital As A Weapon
2011-07-25 13:44:51.356 GMT
With its proven licensing capabilities, we believe that the current IDCC portfolio could represent a 0.8% per annum swing in margin for an acquirer.
Based on industry projections of 3G devices and tablets sold until 2015 and 4G/LTE devices sold until 2013, we have estimated the NPV of 3G and 4G/LTE licenses discounted by 18% after-tax per annum to be worth approximately $9.0B, or $193.50 per fully-diluted share. This assumes that an acquirer can extract royalties from, or cross-license with, all manufacturers. We believe that our 18% discount rate mitigates some of the potential licensing risk. We have also assumed an annual decline in licensing cash flow of 10% beginning in our terminal year. Based on a potential acquirer licensing 85% of the market, we derive a per share value of approximately $167.00. (M Partners - 416.603.7381)
| 
