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Robert McDonald

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  • 4 Buy, 2 Sell Ideas by Cramer [View article]
    In any case Cramer makes another marginal call to put it politely. In this particular case he was clueless on the reason to be holding IDCC, particularly at this point in time. IDCC is in play because it has IP and patents, and IP skills, in the wireless and mobile worlds that are now very valuable. Anyone who read the papers would know that the Nortel patents in this area were sold at a very high premium. This mobile and wireless world is growing very rapidly and is very competitive. Patents are now being used as a competitive tool and at this point in time Google is on the short end of the stick. If Google ponies up for IDCC which is likely they will immediately have bargaining chips that can used to protect their Android and Honeycomb customers and they will get a turnkey division that can continue to grow IP and patents in this valuable area with immediate results. They will have gotten two birds with one stone. I predict that the IDCC buyout will be at $100 plus per share vs. the current $75 price.

    I will never forget Cramer's Citigroup buy recommendations that was made about 2 years ago when it was obvious that all the big banks had broken business models with any replacement likely to be highly scruitinized by new financial regulation. As it that were not enought, these banks also did and still do have unresolved legal and on and off the balance sheet debt issues. Those that followed that Citi recommendation are under water big time.

    Anyone who follows a Cramer's recommendation should do a lot of homework before buying or selling. I am amazed at the information he carries around in his head but on the other hand, giving recommendations to others based on a shoot from the hip process is a bit irresponsible and dangerous, putting it politely a second time.
    Jul 24 05:01 PM | 2 Likes Like |Link to Comment
  • Interdigital Can Force the Future to Pay for the Past [View article]
    The constitution was written over 200 years and could not possibly have properly anticipated globalization or the proper use of patents that protect modern day Intellectual Property or a need for patents to cover software. The good news is that the founding fathers anticipated a need for a judicial system to keep the law of the land relevant and flexible to meet inevitable needs for enhancement and change to the original constitution.

    You, Michel Bachman, Sarah Palin and tea party members need to go back and study history and political science so that there is a functional understanding of the making of a successful a democracy. And why an evolutionary legal system, a free powerful education system, a cost-effective single payer health system and taxes are necessary to maintain a competitive modern civil society. All of this is required if America is to successfully compete in the global market place without undermining prosperity at home.
    Jul 24 10:35 AM | Likes Like |Link to Comment
  • Apple Is Still Dirt Cheap [View article]
    Oops! Typo -- $5000 will get you 12 shares as of Friday, maybe less by end of day Monday if congress agrees to raise the U.S. debt limit over the weekend.
    Jul 23 07:25 PM | Likes Like |Link to Comment
  • Apple Is Still Dirt Cheap [View article]
    Buy backs are an inefficient way to increase stock valuation. Witness MSFT and CSCO. And there are many other examples.
    Jul 23 02:26 PM | 1 Like Like |Link to Comment
  • Apple Is Still Dirt Cheap [View article]
    Traders are already heavily involved in Apple stock -- a stock split is not going to make a lot of difference in this ownership. An Apple stock price of less than $100 via a 5:1 split will open the door to a lot of new ownership demand. I would submit this is true for Google as well. For example, if you have less than $5000 to allocate to your next purchase, as is the case for many investors, it is psychologically discouraging to only be able to buy a little over a 100 shares. I am not saying it is rational but people are people and these are additional customers for the stock. Stock splits by well run and successful companies are almost always followed by an increase stock valuation or overall market cap. Baidu's 10:1 stock split in May of last year resulted in an immediate 8% surge in valuation and it has been uphill ever since.
    Jul 23 02:19 PM | Likes Like |Link to Comment
  • Interdigital Can Force the Future to Pay for the Past [View article]
    The Linux part of it is indeed open source but this does not cover phone control, phone operation and interface systems. I don't think you understand patents nor why it is so important to be able to protect IP with patents whether it be hardware or software.

    I have done a lot of homework on this issues as Chief Technology for a start up and was asked to jump in and put a patent portfolio together that included software with multiple man years of development investment. Without patents on our key development successes we could not have gotten additional venture cap funding for very good reason. Our very valuable software based control system that uniquely enabled automated operation of complicated mass spectrometers could have been easily stolen by others.

    The company ultimately failed for other reasons however the final fight was over who got to own the patent portfolio that had been created including the sofware patents.

    The HTC case will be settled by out of court agreements that we may know or not know about. But because Apple had completed the IP protection homework an ounce of blood or two will have been extracted and they will be allowed to go about their business after licensing what HTC or Google should have licensed in the first place. In this process a warning shot will have been fired for others in the mobile business, others who will now be less troublesome.

    Google has a major problem in that they seem to be IP naive in the mobile operating system area and are without ammunition to help protect their Android customers.

    This is the reason I am forecasting that Google will buy IDCC lock stock and barrel giving them IP they do not have and an IP arm in the mobile world. They will then have a lot of patents i nthe wireless and mobile areas that they can use as bargaining chips to push back even on Apple. As it is, they have left their customers exposed, customers who may think twice next time. For example before adopting a highly marginal Tablet operating system called Honeycomb -- especially with Windows 8 coming down the pipe. I am sure MSFT will have done their homework.

    I don't know what to say about Google's vulnerabilty to the Oracle Java IP attack, except that I am sure they are going to have to make some kind of deal in order to keep the Android operating system and its decedents free of harassment.

    As an aside, I am sure Google management will be more than happy to explain to you why having proper software IP in place to protect their search and ad functions has been an important asset in keeping of their business as successful as it has been.
    Jul 22 07:58 PM | 1 Like Like |Link to Comment
  • Interdigital Can Force the Future to Pay for the Past [View article]
    Software for today's successful products can cost millions of dollars and take years to develop and debug. It is a product just like a hardware invention and must be protected if we are to sufficiently motivate new development which in turn provides jobs. It is also more easily stolen when one has access to the source code or can be reverse engineered at lower cost if you can see the time consuming inputs, outputs and functionality created by the original inventor. If you think China's IP theft is a problem now, I don't think any American would want to see the results if they and other IP thieves n the world thought they could just take functional software and use it with impunity. Maybe you should join the tea party if you are not already a member -- they are also working to take America backward.
    Jul 22 01:49 PM | Likes Like |Link to Comment
  • Interdigital Can Force the Future to Pay for the Past [View article]
    IDCC has many current and relevant patents. Companies like Google, Samsung, Nokia, Apple need to own significant Intellectual Property coverage (IP) in the areas in which they are developing and marketing products. Not only does this IP ownership provide product protection it is used as bargaining chips to avoid royalty payments on IP that a company is using but does not own. QCOM and TI in earlier days have demonstrated that you can make a lot of money off of patent coverage, even if you do not manufacture anything that contains that particular IP. There was a time when TI, I believe it was in the 80's or early 90's, survived because of its patent royalites and may not still be here today otherwise.

    I would say that the IDCC takeout price is well over $100/share

    Due disclosure: Long on IDCC, GOOG and AAPL
    Jul 22 11:49 AM | Likes Like |Link to Comment
  • Apple Earnings: A Rare Growth Opportunity [View article]
    I would add that Apple is a different kind of company than Wall Street and Main Street have seen before. These folks are still coming up to speed on the potential value here. There is also the fact that some do get it and have the leverage and or it is their business to benefit from a trading platform where they can count on an ever increasing underlying value. In other words they have been given the benefit of trading in a stock that is moving in fits and starts for lots of reasons, but where ultimately the market price of the stock is on a strong upward trend. Water, or valuation in this case, will ultimately seek its own level.

    Why don't may Wall Street and Main Street investors get what is going on here? Here are some of the reasons:

    1. Apple is not a tech company or a internet company or a type of investment. It is a powerful and unique business enterprise that has no equivalent precedent.
    2. Apple is a successful business enterprise that has a number of integrated synergistic businesses that are as well managed as anyone could hope. These businesses are all in or are benefiting from the highest growth areas in the worldwide economy. These include mobile, the mobile web, mobile computing, the use of Aps vs. software suites in all computing areas, customer friendly and reliable software (vs. MSFT and ADBE for example), entertainment, games and not to be ignored, cloud computing services, consumer now enterprise later. In addition they are a retailer with cutting edge marketing skills and techniques, and they produce very functional products with Gucci like design features. As if this were not enough, the Apple enterprise, despite its size, is an unprecedented inventor of highly popular cutting edge products that people want independent of place in the world or culture; products that people did not know they wanted because they did not exist yet.
    3. I am not aware of any company that has integrated so many synergistic and successful businesses into a successful enterprise system under one management roof, an ecosystem that has unprecedented customer friendliness and stickiness. In the past no one company has been able to pull this kind of thing off. What is also amazing is that customers love this and are not pushing back as the systems where they have beed defacto trapped, e.g., Microsoft Windows and Office.

    I say, take advantage and buy Apple while it remains undervalued and enjoy the ride. This is also a great stock for use of LEAP strategies and time weighted averaging techniques. Buy some when it is sold off, usually between Jan and July, and buy some before dynamite earnings reports are likely, like the one next week. Consider yourself having been given an investment gift that only occurs a few times in an investment lifetime.
    Jul 17 02:15 PM | 7 Likes Like |Link to Comment
  • To Trade or Not to Trade: An Apple Earnings Preview [View article]
    The whisper numbers have been almost as far off as those of the sell side analysts. I supposed it is good to know this overall trend but I do not see that their numbers are useful or actionable information in Apple's case.
    Jul 15 12:07 PM | 2 Likes Like |Link to Comment
  • Apple: January 2012 Call Holders Faced With Difficult Choices [View article]
    You are making things way too complicated. In my mind simple analyses are better because the ordinary mortal can cope with these much better, especially in the stock market where mathematical calculations seldom apply very well to future stock and market valuations -- they just get in the way of decision based on simple observations and educated guesses (guesses with some calculations like I show below behind them)..

    By way of "simple analysis" I will use my experience with a LEAP I am currently holding. I could just as well have used other LEAPs that I have purchased and made lots of money on in the past but this LEAP is still active making for a more interesting and relevant discussion. As an aside I am happy to note that only Apple LEAP I have not made money on over the last 5 years is a big one I held going into the 2008-2009 market crash where I broke even after having been ahead by >60%.

    if you bought the AAPL JAN 2012 strike price 270 LEAP as I did, which was approx. at the money on the purchase date of 6/23/2010, you would have paid $56.44/share. That LEAP is now worth $94.10 bid price, a gain of 66.64% in a little over a year. I now have six more months to time my sale of this LEAP up to and including right after the Jan 2013 earnings report. If the stock goes to $400 in the Fall, a conservative estimate, the LEAP will be worth about $122, or greater than 100% return in about 18 months. If Apple should go to $500 this LEAP will be worth something like $225/share, or a 300% return. I get the $122 value using the value of the 230 strike price Jan 2012 LEAP today.

    Yes as you go forward in time you burn off the time value of the LEAP but the value of deep in the money LEAP increases at the rate of the stock, in other words as the stock goes up a buck the LEAP goes up a buck. This gives you huge leverage if the LEAP is in a dependable high growth stock like Apple.

    I have been buying the Jan 2013 at the money LEAPs at various periods over the last few months and am expecting a similar scenario to the 2012's I still hold. I actually feel this is a relatively low risk process, at least at this moment in time with Apple. Obviously I have my eye out over my shoulder on the various messes in Europe and in US politics but so far have not seen something that would motivate me to sell early.

    Take a look at the Apple LEAP valuation tables here if you are not familiar with real world behavior:
    Jul 9 06:40 PM | 2 Likes Like |Link to Comment
  • What Would Apple Look Like at $500/Share? [View article]
    PS: Apple is much bigger than a company that sells " cell phones, computers, and other consumer electronic devices ." In fact it is much more than a "tech" company. It is a successful retailer whose marketing is at the cutting edge. It is an entertainment company selling games, music and video all within its sticky ecosystem. A Apple home entertainment system including HDTV cannot be far behind and one more time this entry will transform yet another marketplace providing useful functionality and services which do not exist today. In the tech area it is also a cutting edge software company and is now providing cloud computing services; in the consumer market today, but also in the enterprise tomorrow.
    Jul 8 01:55 PM | 2 Likes Like |Link to Comment
  • What Would Apple Look Like at $500/Share? [View article]
    Water seeks its on level. Apple will go to $500 per share by the first quarter of 2012. Then take some profits and be prepared to buy the Jan 2013 calls when the hedgies and fund managers take the stock back down in the first half of 2012 just as they did this year. You could have bought the stock at fire sale prices in mid June:
    Jul 8 01:45 PM | 2 Likes Like |Link to Comment
  • Apple: January 2012 Call Holders Faced With Difficult Choices [View article]
    Yes, thank you
    Jul 8 09:59 AM | Likes Like |Link to Comment
  • Apple: January 2012 Call Holders Faced With Difficult Choices [View article]
    I would add one more comment. Just as I have said in earlier postings water eventually seeks and finds its own level. Apple remains very undervalued and now the hedgies and fund managers, after having beaten down the stock to as far as $312/share less than 5 weeks ago, are now trying to get back in big time before the blowout Q1 earnings release:

    l would agree with Andy that the stock price could easily go to to $460/share by January but would submit that is a conservative forecast. By then Apple's earnings predictions will have been raised several times again, just as they have been in the past, and stock could easily see $500.

    Time to ride the wave. I would not fool around with collars or straddles or any of the other hamstringing advice that is bantied about. Simply purchase 1 1/2 year out expire date Jan 2013 at the money calls (or LEAPs as they are sometimes called).
    Jul 7 03:42 PM | Likes Like |Link to Comment