InterDigital, Inc. (NASDAQ:IDCC) goes on a patent sharing spree

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Dallas, Texas 09/27/2013 (Financialstrend) – InterDigital, Inc. (NASDAQ:IDCC) on September 26 announced that it has signed a patent sharing agreement with Panasonic Mobile Communications. On September 16, it had tied up with DDD Group (DDDGY) for joint development of next generation “High Definition and Ultra High Definition of video processing technologies”. The importance of the timing and the overall value of these announcements to IDCC can be understood by analysing these below emerging news strains.

Company is into designing and selling of advanced patented technologies that enable wireless communications and is used extensively by the end manufacturers of digital, cellular and wireless communication devices and networks. These include the 2G,3G,4G and IEEE 802 enabled smart phones, tablets and hand held devices.

As of last calendar year, InterDigital through its subsidiaries had ownership of over 19,000 patents and patent applications which are actively being used by wireless communication enabled devices like Blackberry smart phones, HTC phones and tablets, network operator base stations.

InterDigital derived 48% of its revenue in 1H2013 from royalty it earned from cell phone manufacturers like Blackberry and HTC phones. These under pressure phone manufacturers are paying per unit royalty revenue to InterDigital for using its patented wireless technology in their handsets.

Over the past week, it has emerged that Blackberry sales has plummeted by over 40% in the past 6 months and the company contemplating its very existence as a cell phone maker. Hence InterDigital revenue numbers are bound to come under pressure. An additional headache for the company is the recent legal loss that one of its other key customers HTC suffered at hands of Nokia. HTC has been found guilty of patent infringement over Nokia’s wireless technology. In order to overcome this reversal HTC might end up entering into a patent sharing agreement with Nokia and thus ditching InterDigital. Hence yesterday’s tie up announcements assume a lot of importance to IDCC investors.

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