InterDigital, the King of Prussia-based wireless company, saw its shares jump by about 5% last week when the S&P and NASDAQ were down by around 2%. The reason for this optimism was the news that InterDigital (IDCC) and Nokia (NOK) have agreed to end two legal proceedings in the
In July 2005, Nokia asked a London High Court declare InterDigital's intellectual property as non-essential to UMTS (3G standard encompassing WCDMA and HSDPA). InterDigital, in turn, filed a suit against Nokia in December 2006. The companies recently decided to drop these lawsuits. The terms of the agreement are unknown. Besides, the companies continue to be at loggerheads in front of the
For Nokia, it means lesser distractions from its focus of retaining and growing its mobile market share and its fight to match new niche players like Apple (AAPL). For InterDigital, ending the
I also see the amicable end to the
As I have said before, I don't doubt that IDCC has important 3G IP. The question really is when the industry will be interested in this technology, and how much it is willing to pay. It is possible that we will know the answers to many of these questions over the next few months. Earlier coverage on InterDigital can be found here, here and here.
For me, and many other InterDigital investors, this week will answer some other questions to bring more good news. This Friday, I will watch out for the many 3G iPhone teardowns that will follow its worldwide release. If my analysis is right, we will see InterDigital's 3G protocol stack inside the new iPhone. IDCC is guaranteed per-unit royalty from Infineon for each of its 3G chipset sold. I will let you guesstimate what it means to InterDigital's revenue for the next few quarters!
Disclosure: Long IDCC at the time of writing.
[Disclaimer: All thoughts expressed by