InterDigital, Inc. (

IDCC

)

Q4 2011 Earnings Call

February 23, 2012 10:00 AM ET

Executives

Janet Point – EVP, Communications & IR

Bill Merritt – President and CEO

Scott McQuilkin – CFO

Analysts

Charlie Anderson – Dougherty & Company

Jonathan Skeels – Davenport & Company

Daniel Bretthauer – MDC Financial Research

Sarah – Barclays Capital

Nicholas Rodelli – CFRA Research

Ron Shuttleworth – M Partners

Bill Nasgovitz – Heartland Funds

Presentation

Operator

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Good day, and welcome to the InterDigital Fourth Quarter and Full year 2011Financial Results Conference Call. Today's call is being recorded. At this time I would like to turn the conference over to Janet Point. Please go ahead.

Janet Point

Alright and thank you. Good morning, everyone and welcome to InterDigital's fourth quarter and full year investor conference call. With me this morning are Bill Merritt, our President and Chief Executive Officer, and Scott McQuilkin, our Chief Financial Officer.

Before I turn the call over to Bill, I need to remind you that during this call, we will 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 the results and events contemplated by such forward-looking statements.

These risks and uncertainties include those set forth in the earnings press release published earlier today and those detailed in our annual report on Form 10-K/A for the year ended December 31, 2010, our subsequently filed quarterly reports on Form 10-Q and from time to time in other filings with the SEC.

These forward-looking statements are made only as of the date hereof and as 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 taken care of, I’ll turn the call over to Bill.

Bill Merritt

Thanks, Janet. And good morning to everyone. As you may have notice, we are busy preparing for the 2012 Mobile World Congress Show in Barcelona. Over the last week we have issued four press releases, two of which describe our technology demonstrations at the event, each driven by inventions that are redefining Mobile, which is the theme of this year’s Mobile World Congress. In turn, our licensing activities continue at pace, just last night we announced a new LTE license.

I would like to spend time this morning discussing those of these areas in more detail. First, an update on our core terminal unit licensing program and then second, our expectations for Barcelona.

We are very happy to announce last evening another 4G LTE patent license. This one with CR wireless. This expanded license agreement conform to our 4G business plan and is the first of what we expect to be a solid set of agreements that we hope to deliver during the year. Indeed the licensing pipeline remains very full, involving companies from large to small, and with the discussions ranging from technical details about the patent to the specific license agreement terms.

We also continue to move ahead with the current ITC infringement litigation involving Huawei, Nokia, ZTE and LG. We are approximately 30% of the 3G handset market share as of the end of 2011. We believe we have a very strong case. As such we hope that some of these parties will decide to negotiate a fair value creating license agreement prior to the case going to trial in the fall of this year. In that regard we remain open to entering that license agreement on fair terms.

We have shown the ability to be creative and flexible on how we structure deals, so long as we secure appropriate compensation for the use of our inventions. We are also open to broader business relationships with these and other companies involving patent sales and strategic technology developments. We believe our flexibility remains an important part of how we work within the wireless industry. That said, our flexibility is not without its limits and we will enforce our patents against any company to the extent we cannot arrive at an amicable solution.

As for the upcoming show in Barcelona, we have very high expectations. The theme of the show “Redefine mobile” speaks to InterDigital’s heritage and bright future. Both of which are defined by thinking about what the next generation of wireless should do and in creating the inventions to make that vision a reality. It is a history of consistent success that we correctly envision shift from analog to digital, from voice to data and from narrowband to broadband. Our current vision in no less precise.

For over five years we’ve been evangelizing a network of networks, in which people and things are intelligently, seamlessly and dynamically connected across the myriad of wide, local and personal area networks. Simultaneously addressing capacity, coverage, use of experience and cost. The cellular world has now borrowed that phrase and even more importantly, the cellular standards have begun to adopt that vision.

It is more than just a vision however, as we will demonstrate at Mobile World Congress, our researchers have created suite of technologies that will drive tomorrow’s network of networks, including policy driven bandwidth management techniques that enable users’ data to be routed over a single cellular or Wi-Fi network or dynamically switched to another network. Our solution can also combine signals across several networks to aggregate bandwidth or even split those signal to segregate different parts at a multimedia stream simultaneously among several networks.

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