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InterDigital, Inc. (NASDAQ:IDCC)

Q3 2008 Earnings Call

October 31, 2008 9:00 am ET

Executives

Janet Point - Executive Vice President, Communications and Investor Relations

Scott McQuilkin - Chief Financial Officer

William Merritt - President and Chief Executive Officer

Analysts

Tom Carpenter - Hilliard Lyons

Bennett Notman - Davenport

[Andy Shafik - Novac Security].

Kevin Sharbatoni - Boenning & Scattergood

Bill Nasgovitz - Heartland Advisors

Operator

Good day everyone. Welcome to today's InterDigital Financial Call. As a reminder, today's call is being recorded. At this time, I would like to turn the call over to Janet Point. Please go ahead.

Janet Point – Executive Vice President, Communications and Investor Relations

All right. Thank you, Dana. Good morning everyone and welcome to InterDigital’s Third Quarter 2008 Financial Conference Call. With me this morning are Bill Merritt, our President and CEO, and Scott McQuilkin, our Chief Financial Officer. Consistent with last quarter’s call, we will offer some highlights about the quarter and the company and then open up the call for questions.

But before we begin our remarks, I need to remind you that in this call we will be making forward-looking statements regarding our current beliefs, plans, and expectations, which are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results and events to differ materially from both results and events contemplated such as the forward-looking statements. These risks and uncertainties include those set forth in our earnings release published yesterday and those detailed from time to time in our other filings with the SEC.

These forward-looking statements are made only as of the date today hereof and except as required by law, we undertake no obligation to update or revise any of them whether as a result of new information, future events, or otherwise.

So with that, I will turn the call over to Scott.

Scott McQuilkin - Chief Financial Officer

Thank you, Janet and good morning to everyone. I am pleased to report strong profitability this quarter with net income of 9.2 million or $0.20 per diluted share. This earnings performance is driven by a combination of combination of solid revenue generation, strong expense control, and significantly lower litigation and arbitration costs.

Total revenue was $55.1 million in the third quarter 2008 compared to 56.5 million in the third quarter 2007. This revenue reflects solid growth for a number of our licensees, good results from our royalty auditing program and a significant increase in technology solutions revenue. However, these results offset were decline in royalties for some of the Japanese licensees. Some of this decline can be explained by normal ups and downs that are due to a variety of factors including new product introductions, competitive activity, market seasonality and changes in retail inventories. In fact, royalties for several of our Japanese licensees increased year-over-year. Part of the decline can also be attributed to a relatively strong third quarter in 2007 posted by a few of our licensees.

Nonetheless, we think that our Japanese licensees will continue to face the challenging market and economic environment. While the current economic environment is not a pretty picture, we believe that our royalty stream is somewhat insulated from market swings. Our per unit royalties accounted for 57% of our recurring patent license royalties in third quarter 2008, with the remainder being fixed fee and amortized royalties. While our per unit royalty revenue provides ample opportunity for growth in revenue from our existing licensees as the 3G market volume expands over time. The fixed and amortizing component of our royalty revenue provides stability in our revenues, which is particularly helpful in the current economic environment.

Revenue from our royalty auditing program of our licensees contributed 1.3 million of the revenue in third quarter of 2008. This is an important and relatively consistent source of revenue that we work hard to generate. In fact, we have generated audit-related revenue totaling $19 million over the last two years.

The technology solutions revenue remained strong at 2.2 million in the third quarter of 2008, up significantly from 0.8 million in third quarter of 2007. Importantly, third quarter 2008 technology solutions revenue incurred a significant increase in per unit base recurring revenue, driven by sales of our customers’ products continuous SlimChip modem IP.

While weak global economic conditions may put pressure on royalties near-term, we remain optimistic about the fundamental growth prospects for the 3G handset market, which will drive revenue growth over time. More importantly, we remain confident in our ability to successfully add major re-licensees, which can significantly increase our royalty revenues.

Consistent with past practice, we will provide revenue guidance for fourth quarter of 2008 following the receipt and review of royalty reports from our patent and products licensees. At this time, we are very encouraged by strong sales of our licensees products, continuous SlimChip Modem IP.

On the expense side, third quarter 2008 operating expenses totaled 42 million. This represents an 8.9 million decrease from second quarter 2008 and a 4 million decrease from third quarter 2007. Excluding a 2.7 million reduction related to the resolution of our UK mandates with Nokia, third quarter 2008 operating expenses totaled 44.7 million, representing a 6.1 million from second quarter 2008 and a 1.3 million decrease from third quarter 2007.

To better understand the trends in our operating expenses, we focus on two basic components. Operating expenses other than patent litigation and arbitration costs and patent litigation and arbitration cost.

Let me address the fundamental trends for each of these components in more detail. First, our operating expenses other than patent litigation and arbitration costs were 39 million in third quarter 2008. This represents a modest 0.7 million or 1.7% increase from comparable second quarter 2008 expenses. The modest increase is due to the development cost associated with our product development program.

Importantly, our SG&A, and other cost actually declined by 0.7 million or about 5% from second quarter of 2008 and increased a modest 0.4 million or 2.6% from third quarter 2007. These trends reflect our focus in actively managing expenses during a period of significant investment in our business.

Looking forward, we will maintain our focus on controlling discretionary spending and aggressively managing our investment initiatives. The level of operating expenses other than litigation and arbitration costs in fourth quarter 2008 will reflect this focus. Given the number of options that we are evaluating to create value for the product business, we cannot provide any meaningful guidance for the fourth quarter.

The second major component of our operating expenses is patent litigation and arbitration costs. These costs totaled 5.8 million in third quarter 2008 excluding the reduction related to the resolution of our UK mandates with Nokia. This is 6.8 million less than the second quarter 2008 and 4.9 million less than third quarter 2007. The significant in patent litigation and arbitration cost is due primarily to the elimination of ongoing expenses following the resolution of our UK mandates with Nokia as well as a reduction in cost associated with our ITC proceedings with Samsung and Nokia.

We are pleased by the significant decrease in our patent litigation and arbitration expense and believe that our investment today help positions us very well with respect to a number of important actions, currently resolution of Samsung’s 2G obligation for 150 million and our ITC proceedings with Samsung and Nokia.

Going forward, we will continue to invest when necessary to vigorously defend our strong and a well diversified patent portfolio. Therefore, we expect that these activities will continue to be in the execution of our business and that these expenses will vary from quarter to quarter depending on the level of activity.

Turning to the balance sheet. Our cash position remains very strong. We ended third quarter 2008 with 188 million in cash and short-term investments, representing $4.12 per diluted share. Our cash position has remained strong even in this period of significant investment in our business. Free cash flow was 77 million for the first nine months of 2008.

Importantly, our cash position remains strong even during the period of significant investment in the business and stock repurchases. In the first nine months, we purchased 73.1 million or 3.4 million shares of our common stock. In the fourth quarter, we completed our $100 million stock repurchase program, having purchased a total of 4.7 million or about 10% of our common shares. This reduced our common shares outstanding to 43.2 million at the end of October.

In summary, our third quarter represents solid performance in terms revenue generation and expense control and we are well positioned to aggressively pursue our objectives in securing revenue from every 3G device sold. Maintaining a strong financial position and building value for our shareholders.

Now I will turn the call over to Bill.

William J. Merritt - President and Chief Executive Officer

Thanks Scott and good morning to everyone. As Scott already mentioned, while the overall financial markets are very turbulent, we delivered another very good quarter from a financial perspective. We also has a equally good quarter from the standpoint of strategic positioning, both with regard to our progress on signing 3G licensees, as well as brining our family of SlimChip products to market.

Let me discuss both of those with particular emphasis on our SlimChip product business. After adding new 3G licensees we are reaching an important point in time for the company. As many of you know, in our action against Samsung involving 3G products at the International Trade Commission the ALJ is scheduled to render his initial determination on or before November 25, 2008, less than one month from now.

The Second Circuit Court in New York has scheduled argument for this December on our $150 million 2G case against Samsung and which we believe Samsung has no meaningful defense. Lastly the Nokia ITC case involving its 3G products is now moving forward again at the ITC. And while the ITC trial with Nokia is scheduled for May of next year I think it’s clear to say that even before the trial gets started, the Nokia case could be affected at least in some ways by the ALJ's determination next month in the Samsung case. Since Nokia case involves many of the same patterns as the Samsung case.

In this kind of environment, company is due tend to discuss options for settlement and those discussion tend to be at senior levels, straight forward and purposeful. That holds to here as well. And while we cannot predict whether the cases will settle, we can say if they do so, the economic results will be substantially positive for InterDigital.

Indeed as I mentioned at other conference calls, we have had the opportunity to except financial terms that may have been okay for us a long time ago. However, today we are stronger as a company both in terms of our portfolio of technological inventions and solutions as well as our balance sheet and cash flow. We believe that this position supports higher levels of payments. So that is what we are driving for and what we believe we deserve for what we have contributed.

As for our SlimChip product business, we are happy with the success in producing a market leading baseband solution. InterDigital has always been a leader in identifying the future needs of the wireless market in creating solutions for those markets. In this case two years ago we saw an opportunity to build an advanced slimed and high data rate modem product targeted at the emerging data centric market. We successfully built that product and has met with a very favorable response for potential customers, partners and industry analyst.

For example, in an independent analysis conducted by Signal's Research Group earlier this year, our mobile broadband modem turned in market leading performances and we were one of only three companies to submit a Category 8 HSDPA Solution for evaluation. Moreover the advance technology used in our ASA Solution is also finding very good success in the market to our relationship with Infineon and their success with the I.

So we successfully delivered on what we were the key part of our plan to build a market relevant data centric modem solution. With that being said, we also know that the cellular market is very dynamic and that we would need to react with the current. For one, the market consolidation and many predicted years ago was now happening in a big way and fast. Just in the last three months NXP, STMicro, Ericsson, TI, Freescale, Renesas, and others have all announced significant changes in how they would approach this market or whether they would participate at all.

The data centric market itself is also evolving. We targeted the data centric market, because it was an attractive niche where we could enter the market, establish the presence and grow overtime as the market grew. However, that market grew at a much faster pace attracting very large players, before we could firmly establish presence.

Further the rate of technology changes also accelerating with operators increasing their demands for the next technology releases that customer begin to use more and more data on the go. All of these changes point in the same direction. That the profitable niches in cellular are quickly disappearing and as a result to participate long-term in the cellular baseband market requires significant scale in terms of development, customer support, marketing and sales resources.

On that front InterDigital did develop a level of scale needed to produce a world class modem solution for the market. We did long-term and comprehensive development relationship with Infineon, as well as other offshore partners. However, we have recognized the need for even greater scale.

So as we indicated in the press release yesterday, we like many others in this space are considering options that would allow us to gain even greater scale to push the product into the market more rapidly and grow share. And since gaining scale at the right prices by no means of certainty we are in parallel evaluating other options for the modem portion of our business. The path we chose is the one that will deliver the highest shareholder value.

Now I don’t this announcement should come as a surprise to anyone, our goal is to find the highest value strategy for our business in which we have made a significant, meaningful investment. Fortunately, our product and technology roadmap, strong patent portfolio, and financial strength gives us more options than others in the market. We intend to leverage those strengths.

Equally important I think the market dictates that we move quickly to determine whether we can participate profitably in the market and get about doing so or decide we cannot and exit that business preferably through a sale and if not through a repositioning. That should have been an exit, we are also different from others in this space and that the 3G modem business was just one of our future growth drivers.

Certainly, our main value driver remains our ability to develop advance wireless technology relevant to future markets. In that regard our LTE development continues to move forward as does the market introduction of the mobility solutions that we talked about on our last call. These technologies and others we are developing within our R&D groups will give access to new and future markets. So irrespective of the path we chose on the modem business we will continue to have good opportunities for expansion and value creation.

In view of all that and despite the current economic conditions and the challenges in the 3G baseband market, we remain very confident in the value that we can create for shareholders. As evidence of that we have repurchased $450 million in our common stock over the past two years with nearly $75 million of that investment coming this year. I believe there is no better indicator of confidence than where management and deficits money and here the investment is in the company and its future.

Thank you for listening this morning and let me open up the call for questions.

Question-and-Answer Session

Operator

Thank you, sir. (Operator Instructions). And we will take our first question from Tom Carpenter with Hilliard Lyons.

Tom Carpenter

Good morning Jane and Bill and Scott.

William Merritt

Good morning.

Janet Point

Good morning.

Scott McQuilkin

Good morning.

Tom Carpenter

I will keep my comments brief. I hear there might be [pride in town if you keep one attempt]?

William Merritt

That’s true.

Tom Carpenter

With the news on the SlimChip, I can understand some of the factors you are considering the markets changing rapidly, with some new entrants. One of things you guys have talked in the past is how having product solutions help wise your discussion here, not just due to the tax collector, can you discuss that if one of the options the sale when you do accomplish that or achieve that, how do you see that impacting licensing discussions going forward if at all Samsung and Nokia may not matter to the big players like them or it might matter to some second to your folks?

William Merritt

Sure, I think that that thesis is still correct that I think with respect to the patent licensing program the patent licensing program benefits from a complimentary product program. And even if we aggregate the modem chip business we would continue to have other product opportunities as I discussed on the call. So for example the modem, the mobility product is one that we are now moving into the market and I think that is complimentary to the patent licensing program, because its targeted at the same space, it’s the handset space.

Tom Carpenter

Is that the thing you are working on with SK Telecom?

William Merritt

That’s correct.

Tom Carpenter

Okay. Thank you.

William Merritt

And similarly, I think the LTE development is the same. You know, LTE and LTE Advance will provide us an opportunity to create solutions there that, one, the first part of that development process drives the patent creation. The second part of that drives the creation of IP that could again be useful to the handset folks. So I think that we will continue to have complementary asset, it’s just the one we have maybe a little different than the once we have today. All that being said, I think the other thing is we expected the modem program is I think the option for buildings scale with that and retaining that business is real live option for us. And I think that’s there because of our financial strength. We are pushing down all three paths pretty hard here. I think the key thing for us is just to come to a decision on this in near-term so that we can push hard in the right direction.

Tom Carpenter

Got it. Switching gears to of a topic of lot of people. I want to know about the ITC and Samsung. I known through out the process there is formal settlement meetings. Are there any more meetings between now and the ruling any scheduled meetings that the Judge is holding?

William Merritt

I am not aware of anything that Judge is scheduled.

Tom Carpenter

Okay. Well are there any that the Judge has not scheduled?

William Merritt

I think that as I indicated at this point in time, we would expect that the parties would be talking and that’s what happens at this point in time. So we are in conversations with these folks to see if we can arrive at a solution that that makes sense for everybody.

Tom Carpenter

Okay, I am very glad. In your prepared remarks, you are speaking of the third person, now you are speaking the first person about me, that’s good news. So if we look at the case of Qualcomm and Nokia had almost settled about it at the day of the ruling and the day before, and (inaudible) day before was going to start? I know its hard to handicap the stuff, but is this one that if you don’t quite get every thing you are looking for, are you willing to roll the dice on the 25th and await if ruling, Judge (inaudible) both parties want to settle this because the outcome is so divergent?

William Merritt

I can't speak for them, before I said, I think and I will speak for us. And certainly from our perspective we have a plan for licensing the market and we intend to hit that plan. And if you we can do that in advance of the decision by the Judge, then we will do that. If not and if the decision were to be adverse that’s not the only set of patents we have for this market. And so, I think I have been pretty clear that we are going to drive towards the economic results that we think we deserve. And we are not going to compromise those interests just because there is a decision coming out that could go one way or the other.

Tom Carpenter

Okay. Switching gears to Nokia, you had the scheduling order there. Back in March, you guys put on 8-K that you were in -- you had settlement discussion with Nokia that were apparently material enough provided in 8-K. There were some legal issues that might have side tracked those back in March, for Nokia hadn’t out. Now they are back at the ITC, is this mean some of the settlement terms that you guys had or at the table or you are going to comeback and revisit those between the Samsung ruling in their meeting?

William Merritt

I think with the -- I might get into the specifics, but generally when you have a passage or time between a particular deal structure, you are working on and now you have to revisit things, right. Things like market size, market share, other things you know, the impact of whatever deals that parties may have done in between, you have got to evaluate that. So I think the positive thing with respect to both of these companies is that -- we have had an active dialogue and we know them well. And so we are not starting from scratch by any mean, but you also do you have – we have some work to do that kind of progressing other, but as I said I think the trial calendar help force timing here right. And so, I think that’s a good thing, we will see if it get works out now.

Tom Carpenter

Okay. A few quick questions and I will let you guys get onto the next person. Going back to the Samsung, Fuji saga last time you talked about you guys -- do you have now the track you know, had the 2006 sales figures for Samsung?

William Merritt

I think that there has been discovery on that and I think that’s an issues that the Trigano will have to weigh in on exactly where that process is as far as you know, are there still some issues between the parties on exactly what the royalty basis. I am not familiar with that detail, but it gets in the grant scheme of things. The other difference exists between us that there is one on 2006 royalties, it's rather, I would say it’s rather minor in the context of………

Tom Carpenter

Agreed it’s not worth the legal fees.

William Merritt

Yeah.

Tom Carpenter

And then one final question for Scott. In the next quarter, I know it’s early, but based on IFX's 3G, chip sales, should we start to see a noticeable uptick and licensing revenue in that area?

Scott McQuilkin

Yeah, I think the short answer to that Tom is yes. I mean, if you look at what's happening in the market place and read what's happening with Apple and such, you know, they are doing very well and as we have said before, when Infineon does well we are pleased, because we do well. So short answer is yes.

Tom Carpenter

Okay. Great, thank you enjoy the parade.

William Merritt

Thanks Tom.

Operator

And we will move on to Bennett Notman with Davenport.

Bennett Notman

Good morning. Just a question maybe I didn't quite understand exactly, but are you both looking at potentially buying things to flush out the product business as well as divesting it. Just exactly sort of what are the parameters of the potential outcomes that you are looking at in that business?

William Merritt

Sure, I agree, the answer to your question yes. And the three options on the table would be one, to build scale, to participate in the market and I think certainly where we are repositioned the assets we have and particularly the financial strength that have, I think makes that a viable option for us. The second option would be the sale of the assets to a third party and which of those two you pick would be religious driven by which one do you think is going to create the greater value. I think if those two don’t work then you move to the third option which would be the repositioning of the assets that will deliver the least value so we will focus on the first two. But I think both of those first were very viable options for us.

Bennett Notman

Okay. And then just to make sure I cut right, was there a $2.7 million benefit in this quarter that we are just reporting now from the Nokia settlement as well as the one from the previous quarter?

Scott McQuilkin

That's correct.

Bennett Notman

Okay. And then finally given the amount of activity the November Samsung hearing and then the December litigation should we expect legal expense to maybe go back towards second quarter level from the fourth quarter?

Scott McQuilkin

We haven’t provided guidance on that. And at this point, I would say in terms of the work with Samsung is -- we are pretty much in a awaiting mode for that. And as I said in my prepared remarks, the UK litigation is really behind us.

Bennett Notman

Yeah, all right. Thank you.

William Merritt

Thank you.

Operator

And then we will move on to [Andy Shafik with Novac Security].

Andy Shafik

Thank you. Question, I would like to ask is whether or not you can simply tell us what percent of your current royalty -- stream of royalty from licensees is tied to per unit contract agreements. Have you ever released that type of detail?

Scott McQuilkin

Sure. Andy I think, I mentioned that its 57%.

Bennett Notman

I did not hear that.

Scott McQuilkin

Yeah.

Bennett Notman

Okay. And has that changed significantly over the past year or two?

Scott McQuilkin

No, not over the last year or two.

Bennett Notman

Is it expected to change in the mix going forward?

Scott McQuilkin

That really is going to depend on the nature of new deals. I don’t really see a material change outside of new deals. Obviously, the fix portion will remain fixed. And as the 3G market grows, you would expect that to represent a bigger percentage over time. But I think, the real issue there is in terms of material changes would be a function of significant new deals that we do and the structure of those deals.

Bennett Notman

Okay, thanks. Best of luck for all this litigation.

Scott McQuilkin

Thank you.

Operator

We will move on to Kevin Sharbatoni with Boenning & Scattergood.

Kevin Sharbatoni

Good morning Bill, Scott and Janet.

William Merritt

Good morning.

Janet Point

Good morning.

Scott McQuilkin

Good morning.

Kevin Sharbatoni

First off, on the SlimChip, just to be clear, was the reason from kind of looking at options for that basically just that the manufacturing capacity wasn't there. With the priority of issue at Infineon what was kind of the main driver there?

William Merritt

I think it's probably a couple of things, right. One, its not really a manufacturing capacity issue, because there we have access, our second chip is coming out of our (inaudible) and we got good relationship there. It really is being driven by the development scale right? We had sufficient scale to get it here, but I think everyone is looking at the development team and saying you have to move faster because the market is moving faster quickly to build that scale, because you do have some competitors with scale that our moving at there and you can't let the distance between us and them get greater you have to start closing that gap. I think second, the data centric market where we were targeting has moved from a niche kind of market with less price pressure to move in this market type situation with more price pressure and there you need volume scale. And so I think there you are looking at and trying to create situation were you are taking a solution into many markets and getting this economic to scale with that solution. So I think it’s kind of those two things. And given how quickly others are moving to consolidate even if you thought you had more time to get these things done. You may not, because ultimately, if you are going to build scale, you got to make sure that there is somebody left to dance with and never no if it’s pairing up, but we better do that too.

Kevin Sharbatoni

Okay, that works. And on that same topic, can you give us some color as to were you see the development spending going on the SlimChip, because I know that’s been -- that has increased the R&D spending over the last few quarter. Is it still going to be at the same level of spending going forward even though you are looking at options for that?

William Merritt

As Scott mentioned today, depending upon which option we choose, I think that the development spend in the fourth quarter could be affected by that. And since, we intend to move very quickly on this analysis, I think we still have the -- there is still fair amount of time left in the fourth quarter. If we get to a decision quickly we can have affect -- this is going to affect on the spend rate in the fourth quarter. So, I think Scott was correct, we are trying to -- we will manage it appropriately, but that level will be highly dependent on the option that we pick.

Kevin Sharbatoni

Okay. I am looking out a little bit at the LTE development, would that be purely kind of a patent licensing thing or would there be possibly hardware solutions involved there?

William Merritt

That’s one of the option under discussion. Certainly there is the patent component there so that will for sure move forward. The opportunity -- there is two other opportunities with respect to LTE though, because I think with LTE you get renewed opportunities to license the IP. I think licensing the IP on the 3G side is largely impact us, right. So people have that now and so, but with LTE if the market is moving very quickly that could be an opportunity for licensing that IP and that would mean you take the development program a little bit further. And then there is possibly the opportunities as well for sort of a co-processor type chip, I think that we wouldn’t make decision today whether we are going do that. I think for sure you do the patentees, I think as you are doing the platforms build up for the patentees, you are starting to do what you need to do for IP, that option you could probably pick a little later in time. And then as you drive down that path you can then create the option to do a co-processor chip which you would pick at further time. Suddenly we need to make all those decision today, but I think they would be available to us if we want them to.

Kevin Sharbatoni

Okay. And just to clarify something I missed. So with the Samsung 2G case going through the Second Circuit, that you said was for December of this year, organized for beginning?

William Merritt

Yeah, that’s correct.

Kevin Sharbatoni

Okay. I think that’s all I have. Thanks.

William Merritt

Thank you.

Operator

(Operator Instructions). And we will move on to the Bill Nasgovitz with Heartland Advisors.

Bill Nasgovitz

Good morning all.

William Merritt

Good morning.

Scott McQuilkin

Hey Bill.

Janet Point

Good morning.

Bill Nasgovitz

Though the big shrink is down here, you are down to 43.2 million shares, fantastic, with the 4 million shares short position. Did I hear right, 450 million has been repurchased over the past how many years?

William Merritt

Yeah, its not where exactly when we started, but it was 2006.

Bill Nasgovitz

2006.

William Merritt

Its relatively short period of time.

Bill Nasgovitz

And what was the average price, do you have that?

Scott McQuilkin

I can tell you the average price for the most recent $100 million program was about $21 a share.

Bill Nasgovitz

Yeah, I got that. Thank you. Okay, terrific, did you say that you are going to continue it, I might have misheard?

Scott McQuilkin

Yeah. We did not and obviously that’s an option we have and option we are always considering, but we haven’t announced a continuation of that program at this point.

Bill Nasgovitz

So you are waiting development at the end of the year here, perhaps?

William Merritt

Well, as I think, its always on table and I think we are not shy about it, right. And we have a good level of confidence in the future of the company. So you have to measure that against as for example the other things we are looking at as well as the scale building option on the product size. So it’s a question of – I think though we have done a pretty good job of trying to figure it out where is the best place to deploy our cash to deliver high value.

Bill Nasgovitz

Okay, fair enough. Well we stand in -- I think it's terrific you have done so. In the past, you have said several times that your corporate goal has been to receive royalties on every 3G devise sold in the world? And I didn’t hear that this time, or maybe I didn’t listen carefully, what's your opinion today.

William Merritt

Actually, I gave Scott the line to say this time (Multiple Speakers)

Bill Nasgovitz

You said, it’s Scott, I am sorry, I missed that.

William Merritt

Okay. That remains the goal of the company.

Bill Nasgovitz

And where do you think you share is today?

William Merritt

Maybe near 30, 35% in that range, it depends upon the share of our licensees, right, but….

Bill Nasgovitz

So it really hasn’t moved much this year?

William Merritt

That’s right. I mean I think that’s driven by the nature of the market. The market is highly consolidated within the first the top three players. And so I think that the -- those are the -- while we continue to have good success in discussion with the second and third tier licensees, they are not going to move the needle all that much, and if going to move the needle now is Nokia, Samsung and other folks.

Bill Nasgovitz

Okay. Thank you very much.

William Merritt

Thank you.

Operator

And there are no further questions at this time. Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. And have a wonderful day.

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