This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

InterDigital's Patent Power Petering Out

NEW YORK, ( TheStreet) -- Google (GOOG) and Apple's (AAPL - Get Report) recent patent-buying splurge has sent the values for some tech companies soaring.

With the going rate for mobile tech patents running about $742,679 a piece, you'd think InterDigital (IDCC - Get Report), a wireless tech specialist with 8,800 patents, would be holding a pretty hot hand.

Investors aren't so convinced. InterDigital's market value stands just shy of $3 billion, less than half the $6.5 billion value of its patent portfolio in this recently-frothy market.

"Do you think a 2G or 3G patent is as valuable as a 4G patent?" asked one industry strategist, referencing the quality -- not just the quantity -- of a group of patents a company might be considering.

The $742,679 yardstick is not an accurate measure of all intellectual property holdings, say Wall Street analysts.

"It's all about essential patents, not total patents," said Tavis McCourt, an analyst with Morgan Keegan. "And then it's up to the quality of lawyers and industry standard royalty payments to determine their worth."

In InterDigital's case, there have been some recent, unfavorable events that may have impacted how it's viewed by potential patent suitors.

The stock market crash certainly isn't helping InterDigital's value. And Google's pass on buying InterDigital -- Google took a good look at its assets and decided instead to pursue a $12.5 billion deal for Motorola (MMI) -- isn't exactly a ringing endorsement.

InterDigital has also had a colorful litigation history during the rise of cell phone market.

In years past, InterDigital won several settlements and entered licensing deals with giants like Nokia (NOK), Research In Motion (RIMM) and Samsung. But many of those cases involved earlier-generation wireless technology. And last month, InterDigital started a new round of patent infringement complaints against Nokia and added Huawei and ZTE to the list.

Another potential strike against the potential value of InterDigital's patents might be evident in the company's most recent earnings report. Second-quarter profits fell by half from year-ago levels on a 23% drop in revenue. The company pointed to a drop in patent royalty payments and rising legal costs as contributors to the declines.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $128.46 0.00%
GOOG $558.40 0.00%
IDCC $52.87 0.00%
FB $78.97 0.00%
TSLA $203.34 0.00%

Markets

DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs