Post on 08-Oct-2014
NOMURA CASE STUDY
COMPETITION
Technology Case Study: Plexonix
Amit Rander Lokesh Bahety
DMS, IIT Delhi
OVERVIEW
• Computers and peripherals market has grown at a CAGR of
5.5% from 2005 to record $218.5bn in 2010
• China is all set to outpace USA in the next couple of years
with a high population using computers and a CAGR of 11.7%
in the last five years as against 3.6% achieved by the US
• Emerging economies like India and Brazil set to be major
players with 5 year CAGRs of 16.6% and 21.2% respectively
• The top five companies in this sector in US are Hewlett-
Packard, Dell, Apple, Acer and Canon while those in China are
Logitech (China), Microsoft (China), Dongguan Zhongyu
Electronics, Lenovo and Hewlett-Packard Asia
167.1
179.5
197.4
210.2
194.3
218.5
150
160
170
180
190
200
210
220
230
2005 2006 2007 2008 2009 2010
$bn
GLOBAL COMPUTER AND PERIPHERALS MARKET
FORECAST SALES IN DEVELOPED COUNTRIES
0.0
10.0
20.0
30.0
40.0
50.0
2011 2012 2013 2014 2015
USA Japan UK
CAGR: 5.5%
CAGR: (2.4%) CAGR: 1.2% CAGR: (0.8%)
FORECAST SALES IN DEVELOPING COUNTRIES
$bn
0.0
10.0
20.0
30.0
40.0
50.0
60.0
2011 2012 2013 2014 2015
China Latin America India
CAGR: (2.4%) CAGR: 1.2% CAGR: (0.8%)
$bn
With the developed world struggling, the Emerging Economies are set to take Center-stage as evident from the sales forecast
Source: Euromonitor International
Note: Computers and Peripherals include desktops, portable computers, laptops, netbooks, tablets, monitors, printers and otherperipherals
Industry Landscape (Computer and Peripherals)
Amit Rander, Lokesh Bahety DMS, IIT Delhi 2
Industry Landscape (Smart Phones)
OVERVIEW
• For quarter ending March ’11, smartphone sales accounted for
25% of all mobile sales, up 17% year on year
• For the same period, global smartphone sales were at 100
million, up 85% year on year
• Considerable sales increase in developing market, specially
China and Brazil with CAGR in excess of 100%
• Top 5 vendors in the smartphone sector globally (by Q2’11
sales results) are Nokia, Samsung, LG, Apple and ZTE,
whereas Android, Symbian, iOS, RIM and Bada dominate the
OS market for smartphones
GLOBAL MOBILE PHONE SALES
SHIFTING COMPETITIVE ADVANTAGE (SHIPMENTS:MM UNITS) SMARTPHONE SALES FORECAST (MM UNITS)
• Smart phone market is poised to see some major upheavals as Wireless mobile access will continue to impact all aspects
of consumer behaviour and high-speed connectivity becomes a requirement of both business and personal use
• Feature phones category is expected to continue to decline over the forecast period, as OS-based smartphones become
the industry standard
Source: Euromonitor International
Vendor 2Q'11
Shipments 2Q'11
Mkt. Share 2Q'10
Shipments 2Q'10
Mkt. Share 2Q'11/2Q'10
change
Nokia 88.5 24.2% 111.1 33.8% (20.3%)
Samsung 70.2 19.2% 63.8 19.4% 10.0% LG Electronics 24.8 6.8% 30.6 9.3% (19.0%)
Apple 20.3 5.6% 8.4 2.6% 141.7%
ZTE 16.6 4.5% 12.2 3.7% 36.1%
Others 145 39.7% 102.3 31.2% 41.7%
Total 365.4 100.0% 328.4 100.0% 11.3%
111.0
126.8
153.3
170.7 166.9
197.0
100
120
140
160
180
200
220
2005 2006 2007 2008 2009 2010
$bn
CAGR: 12.2%
0
50,000
100,000
150,000
200,000
250,000
2010 2011 2012 2013 2014 2015 2016
US China India Brazil
DMS, IIT Delhi Amit Rander, Lokesh Bahety 3
• Under-penetration in emerging market . Seeks foray
in Chinese and Indian markets
• Mired by patent infringement
• Dependence on third party IP and digital content
• PC, mobile & digital music player manufacturer
• Sells software, 3rd party digital content and
applications
• Online and retail stores (300). Online reach of more
than 25 countries
• Target customers: retail , small & mid-sized
businesses
• Market cap of $300 billion
Desktop & Laptop
Music player
Smart phone
Tablet
Hardware
Software
P
O
R
T
F
O
L
I
O
27%
25% 15%
20% 13%
Revenue break up by geography
America
EMEA
Japan
Asia Pacific
Online Retail
10% 6%
13%
14% 32%
10%
15%
Revenue break-up by product segment
Software
Desktop
Laptop
Music Player
Smart phone
Tablet
Other Hardware
Year 2010 2009
Total revenue 59.3 39.0
Total assets 68.3 43.1
EBITDA 17.6 11.4
Cash and near cash 10.2 4.8
EPS 15.15 9.08
OVERVIEW
Looking at geographical leaders in design and distribution
CHALLENGES
FINANCIAL METRICS (IN $ BILLION EXCEPT EPS)
Increased focus on R&D
Decreasing brand loyalty
Changing technology
Aggressive price wars
The Acquirer: Plexonix
Source: Nomura Technology Case Study 4 Amit Rander, Lokesh Bahety DMS, IIT Delhi
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
0
10
20
30
40
50
60
70
80
11/4/2009
1/4/2010
3/4/2010
5/4/2010
7/4/2010
9/4/2010
11/4/2010
1/4/2011
3/4/2011
5/4/2011
7/4/2011
9/4/2011
11/4/2011
'00
0
Volume Share price
COMPANY OVERVIEW
• Provides advanced technologies that enable wireless
communications
• Portfolio comprises of 1,300 US and 7,500 non US patents of
technologies enabling wireless communications
• More than 90% of the revenue comes from patent licensing
operations
• Offers licenses of their patents to equipment producers
that manufacture, use and sell digital cellular products
• Products incorporating their patented inventions include:
mobile devices, tablets, notebook, wireless PDA
• Works on technology including next-generation wireless air
interfaces and technologies to enhance connectivity and
mobility across networks
44%
31%
15%
10% Korea
Japan
North America
Other Asia
REVENUE BREAKUP BY GEOGRAPHY (2010) SHARE PRICE MOVEMENT
KEY FINANCIAL METRICS ($MN EXCEPT PER SHARE DATA)
Year 2010 2009
EPS (diluted) 3.43 1.97
Total Assets 874 908
Total revenue 394 297
EBITDA 260 135
Total debt 468 1,052
P/E 8.34 12.45
Total revenue: $394 mn
Target 1: InterDigital Inc.
Source: Company Annual Filing, yahoo finance 5
Amit Rander, Lokesh Bahety DMS, IIT Delhi
COMPANY OVERVIEW
• Chip designer of mobiles, digital music players, and other
digital devices
• Builds processor designs for consumer electronics and
embedded devices, such as computing, digital TV,
microcontrollers, networking and smartcard
• World’s leading semiconductor intellectual property
supplier
• Cheaper for semiconductor companies to license ARM
technology than reproduce it in-house
• 75% of global devices use 32-bit processors use ARM tech
• More than 800 processor licenses
• On an average, there are 2.5 ARM processor-based chips in
every mobile phone handset
32%
13%
12%
11%
8%
24%
United States
Taiwan
South Korea
Japan
China
Others
REVENUE BREAKUP BY GEOGRAPHY (2010) SHARE PRICE MOVEMENT
05001,0001,5002,0002,5003,0003,5004,0004,5005,000
0
100
200
300
400
500
600
700
1/2/2009
3/2/2009
5/2/2009
7/2/2009
9/2/2009
11/2/2009
1/2/2010
3/2/2010
5/2/2010
7/2/2010
9/2/2010
11/2/2010
1/2/2011
3/2/2011
5/2/2011
7/2/2011
9/2/2011
11/2/2011
Mill
ion
s
Share price Volume
Year 2010 2009
EPS(diluted) 9.34 5.45
Total assets 1,084 844
Total revenue 406 305
EBITDA 184 120
Total debt Nil Nil
P/E 31.90 22.56
KEY FINANCIAL METRICS (£MN EXCEPT PER SHARE DATA)
Total revenue: £406 mn
Target 2: ARM Holdings
Source: Company Annual Filing, yahoo finance 6
Amit Rander, Lokesh Bahety DMS, IIT Delhi
COMPANY OVERVIEW
• Digital music service provider
• Focus on music business which consists of music content,
distribution channel and music service rendered to users
• Based on research data from Ovium, global market size of
digital music will reach $20bn by 2015
• Mobile internet market in China, with a market size of
RMB20.25 billion which represents a YoY growth of 31.1%
• Holds original music contest and positions A8.com as an
online theme collection platform to gather music contents
• Provides B2B and B2C content platform
• Strategy to focus on various end user devices focusing on
cloud computing
• Plans to expand cooperation with domestic handset
manufacturer
REVENUE BREAKUP BY BUSINESS (2010) SHARE PRICE MOVEMENT
0
5
10
15
20
25
30
0
1
2
3
4
5
6
7
11/4/2009
1/4/2010
3/4/2010
5/4/2010
7/4/2010
9/4/2010
11/4/2010
1/4/2011
3/4/2011
5/4/2011
7/4/2011
9/4/2011
11/4/2011
Mill
ion
s
Share price Volume
23%
47%
23%
7%
Ringtone
Ringback tone
IVR Music
Other
*Note: All figures converted from RMB to USD using average of yearly RMB/USD quotes
Total revenue: $100 mn
Target 3: A8 Music
Year 2010 2009
EPS 0.01 0.03
Total assets 94 88
Total revenue 100 103
EBITDA 7 18
Total debt Nil Nil
P/E 6.20 2.26
KEY FINANCIAL METRICS ($MN EXCEPT PER SHARE DATA)*
Source: Company Annual Filing, yahoo finance 7
Amit Rander, Lokesh Bahety DMS, IIT Delhi
COMPANY OVERVIEW
• Live television, Internet video, and Video of Demand
services under one package
• Generates revenues through consumer service (direct
subscribers), developing technology for television service
providers and media services
• Advertisement solutions including interactive advertisement
and audience measurement services
• Detailed anonymous aggregated reporting on actual viewing
and screen by screen interaction by consumers
• Owns around 200 patents, 370 patents pending • Big spender in R&D ($81.6 mn), and wants to continue the spend
despite losses ($84.5 mn) in the last quarter • Outsource manufacturing of their products to third-parties
REVENUE BREAKUP BY BUSINESS (2010) SHARE PRICE MOVEMENT
Source: Company Annual Filing, yahoo finance
0
10
20
30
40
50
60
70
80
02468
101214161820
11/4/2009
1/4/2010
3/4/2010
5/4/2010
7/4/2010
9/4/2010
11/4/2010
1/4/2011
3/4/2011
5/4/2011
7/4/2011
9/4/2011
11/4/2011
Mill
ion
s
Share price Volume
Note: All figures have been converted from RMB to $ using average of yearly RMB/$ quotes
Year 2010($) 2009($)
EPS(diluted) (0.22) 1.01
Total assets 310 266
Total revenue 238 250
EBITDA (16) 97
Total debt Nil Nil
P/E NA 10.14
64% 12%
24%
Service
Technology
Hardware
Total revenue: $238 mn
KEY FINANCIAL METRICS ($MN EXCEPT PER SHARE DATA)
Target 4: TiVo
8 Amit Rander, Lokesh Bahety DMS, IIT Delhi
Zeroing Down on InterDigital
IDCC continues high quality invention
Tablet Smart phones 42%
ALL ABOUT PATENTS/IPR
• IDCC owns patents in mobile, tablets and
notebooks
• 19000 (patents + patents pending)
• One of the largest LTE/4G patent portfolios
• LTE/4G technology expected to be the dominant
technology by the second half of this decade
IDCC has stated publicly (Sep/Oct) that it is open for bids
ASSUMPTION
• Most major smart phone and tablet players
license patents from IDCC
• List includes: HTC, Samsung, RIM, Apple
• Plexonix will save on licensing fees (based on
assumption)
• Offset patent assertions by competitors
• Better chances of winning litigations
• License to competitors with favorable terms for
Plexonix
BENEFITS
R&D
187 500
Plexonix licenses some or most of its patents from IDCC
• IDCC’s top 3 customers by revenue:
Samsung: 34%
RIM: 15% HTC: 15%
Number of engineers Number of patents produced in 2011
PLEXONIX REVENUE
Source: IDCC Investor presentation, Annual filing, Equity Research 9
Amit Rander, Lokesh Bahety DMS, IIT Delhi
Many players fight the IPR battle…
0.00
50.00
100.00
150.00
200.00
250.00IDCC QCOM ACTG TSRA RMBS DLB MIPS ARMH MSD
24.6% 19.0%
45.2%
(32.7%)
(10.2%)
(53.0%) (63.1%)
79.8% 68.4%
Has emerged as an asset class
• Large chunk of revenues from licensing
Patent acquisitions changing landscape
• Large corporate consortiums hunting patents
IPR lawsuits proliferating
• The more the patents, stronger the fight
Wireless IPR Market very competitive
• Many players to eat from the pie
I
P
R
Diversified
Technology
Leaders
Leading
Wireless
Companies
Financial and
IP-Focused
Entities
Source: IDCC Investor Presentation, Yahoo finance DMS, IIT Delhi Amit Rander, Lokesh Bahety
10
8th April, 2011: Novell
• Provides network operating system, system management solutions and collaboration solutions
• Acquired by a software holding company, The Attachment Group for $2.2bn
• 882 patents to be sold to CTPN holdings (a consortium of Microsoft, EMC, Apple and Oracle)
27th Oct, 2011: Mosaid
• A patent licenser in semiconductor and communication technology
• Mosaid turned down a$500.6mn bid ($42 per share) hostile takeover bid by rival patent house Wi-Lan
• Acquired by Sterling Partners for $590mn
And recent activities suggest further consolidation
Google’s acquisition of Motorola Mobility for $12.5bn
• New patents (14,600) acquired thwart anti-competitive
threats from Microsoft, Apple etc.
15th Aug, 2011
Bankrupt Nortel’s patent bid war • Patents on 3G, wireless networking, semiconductor • Winning bid ($4.5bn) from a consortium including
Apple, Microsoft and RIM
30th Jun, 2011
Samsung’s license renewal • $100mn per annum 3G renewal with IDCC in 2012
• Renewal more damaging if rivals (Apple, Google) take over IDCC
Apple’s license renewal • Apple 3G renewals in 2014.
• Competitive acquisition might lead to punitive renewal
OTHER ACQUISITIONS
Source: Company press release 11 Amit Rander, Lokesh Bahety DMS, IIT Delhi
20%
10%
8%
6% 5%
23%
5%
4%
3% 3%
13%
Global 3G Handset Market Share
Others
SOLID 3G LICENSE BASE
• As of December 31, 2010, 49% of the
global 3G handset market (Samsung,
Apple, LG, RIM, HTC) was under license
by IDCC
• 13% of the market which belongs to
regional and local players contains
companies under the 3G license base of
IDCC
• The company targets to license 100% of 3G
market
• The 3G/4G market would present a 1.2 bn
unit , hence licensing opportunity by 2015
for which IDCC is in a good position to
handle.
STRONG POSITION IN LTE GIVES IDCC THE EDGE OVER OTHER COMPETITORS
0
100
200
300
400
2007 2008 2009 2010
"No of IDCC Patents and applicationsdeclared to ETSI for E-UMTS
(LTE)"
0
200
400
600
800
1000
2007 2008 2009 2010
Cumulative No of LTE Patents
Cumulative No of UMTS (WCDMA) Patents
Source: IDCC Investor Presentation
Note: UMTS and E-UMTS stand for Universal Mobile Telecommunications System and Evolved Universal Mobile Telecommunications System, respectively.
Some patents and applications have been declared to ETSI by InterDigital for both UMTS and E-UMTS and therefore are included in both the UMTS and the E-UMTS data above.
The data above has been adjusted to reflect withdrawals of, and corrections made to, declarations of patents and applicationsasof October 27, 2010.
Significantly bigger opportunity in LTE as more devices available (tablets, e-readers, etc.)
3G Patents give IDCC an Edge
DMS, IIT Delhi Amit Rander, Lokesh Bahety 12
Financial Considerations
0
500
1000
1500
2000
2500
$mn Senior Convertible Notes Market Value of Equity
91.3%
8.7%
Total = $2,191mn
1
9%
11%
29%
39%
–
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
0
50
100
150
200
250
300
350
400
450
2007 2008 2009 2010
Net revenues Net Margins
Source: IDCC 10Q 30/09/2011 1 Market value of equity as of 08/11/11
Note: Net Margins represent net income applicable to common shareholders divided by revenues
CAPITAL STRUCTURE OVERVIEW
LIQUIDITY ANALYSIS
• The company has cash and cash equivalents worth
$409.7mn as of September 30, 2011. In addition, it also had
$280.9mn in short term investments
• The senior convertible notes ($190.6mn) which were issued
in April 2011 would mature in March 2016
• Licensing Contracts give rise to a predictable revenue
stream and hence the cash flows to accrue in future years
DMS, IIT Delhi Amit Rander, Lokesh Bahety 13
Company P/E EV/EBITDA Market Cap/
Sales
Mosaid 21.5 9.7 5.0
Acacia Research 26.1 16.1 5.5
Tessera Technologies 22.4 21.7 NA
Qualcomm 15.5 10.4 5.1
Rambus NM NA 6.2
Dolby 11.0 5.4 3.4
MIPS 30.5 17.4 4.0
ARM Holdings 53.3 47.2 17.6
Average (all companies) 25.7 18.3 6.7
IDCC FY1 24.8 13.2 6.8
IDCC FY2 14.9 8.5 5.0
Brokers are bullish on IDCC
ANALYST COMMENTARY
INDUSTRY
M Partners, Nov 9, 2011: “We reiterate our BUY recommendation and our takeout share price target of $118.0” The outlook for IDCC’s patent is positive as the report goes on to say, “Essential patent royalties are long lasting, consistent and guaranteed revenue streams that can benefit a patent holder in one of two ways for many years. First it can be used to offset patent assertion made by competitors. Secondly, FRAND royalties can be used to bleed Competitors of gross margin, while at the same time enriching earnings. Barclays Capital Equity Research, 27 Oct, 2011: “We believe that the company’s asymmetric licensing model supported by its rigorous internal R&D processes is well positioned to capitalize on the mass adoption of 3G devices, the transition to 4G and the broader adoption of wireless technologies by Non-traditional devices.” It has been given a stock rating of “overweight” which implies the stock is expected to outperform the un-weighted expected total return of the sector coverage universe over a 12 month investment horizon.
0%
10%
20%
30%
40%
50%
60%
Buy Hold Sell
Brokers
BROKER RECOMMENDATION*
TARGET PRICE
Mean 64.6
Median 66
High 118
Low 26
Source: Equity Research, Thomson First Call
*Total no. of brokers: 5
DMS, IIT Delhi Amit Rander, Lokesh Bahety 14
Source: Company reports,
Note: The data is just a sample of one pair of values of Beta and Terminal growth rate. Please refer to the excel sheet for the entire valuation
IDCC Valuation – Discounted Cash Flow analysis
DMS, IIT Delhi
2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Free Cash Flow
EBIT 127 208 237 270 304 392 431 474 512 553
Tax on EBIT (39) (65) (75) (86) (97) (129) (142) (157) (169) (183)
Profit After Tax 88 142 162 184 207 263 289 318 343 371
Depreciation and Amortization 23 24 27 30 35 41 50 60 76 91
(Inc) Dec in Operating Working Capital (21) 4 (13) (12) (11) (10) (9) (8) (7) (7)
(Inc) Dec in Deferred tax assets (net) 20 - - - - - - - - -
(Inc) Dec in Other Long Term Assets (net) (0) - - - - - - - - -
Inc (Dec) in Long Term Deferred Revenue (152) (54) (6) (6) (6) (5) (5) (5) (5) (4)
Inc (Dec) in Other Long Term Liabilities 4 - - - - - - - - -
(Inc)/Dec in Short Term Investments 45 - - - (28) - - - (31) -
Capital Expenditures on Patents (30) (40) (46) (62) (70) (98) (107) (158) (170) (184)
Free Cash Flow (23) 76 123 133 127 190 217 207 206 267
Weighted Average Capital Cost
Risk Free rate 3.1% Effective tax rate 33.0% Share Price 43.97
Market Risk Premium 5.7% Credit Spread 0.52% Shares Outstanding (Diluted) 45
Levered Beta 0.90 Debt Cost Pre Tax 3.6% Market Capitalization 2,000
Equity Cost 8.2% Debt Cost Post Tax 2.4% Total Debt 191
Total Capital 2,191
EV 1,976
Capital Structure (% Equity) 91.3%
Capital Structure (% Debt) 8.7%
WACC 7.7%
Terminal Growth rate 1.75%
Discounting Model
Year Count 0.5 1.5 2.5 3.5 4.5 5.5 6.5 7.5 8.5 9.5
PV of FCF (22) 68 103 103 91 127 134 119 110 132
Terminal Value 4,584.92
NPV 3,236
Intrinsic Value 71.12
15
Sensitivity Analysis
0.65 0.75 0.85 0.95 1.05 1.15
0.50% 78.6 71.1 64.7 59.3 54.6 50.5
0.75% 81.3 73.2 66.5 60.7 55.8 51.5
1.00% 84.1 75.5 68.3 62.3 57.1 52.6
1.25% 87.3 78.0 70.4 63.9 58.4 53.7
1.50% 90.8 80.8 72.6 65.7 59.9 55.0
1.75% 94.6 83.8 74.9 67.6 61.5 56.3
Beta Terminal growth rate
The values denote the intrinsic share price of the company.
Low High
Share Price 62.3 70.4
Market Value 2,791.4 3,154.0
Enterprise Value 2,625.4 2,988.0
P/E 21.0 23.8
EV/EBITDA 11.3 12.9
• With $10.2bn of cash and cash equivalents and another
$13.1bn in short-term marketable securities, the deal
should be an All-Cash deal with Plexonix buying out the
entire stake
• the projected share price represents a premium of 9% -
23% to the average price of Interdigital over the last 3
months
• The premium reflects the inherent value of the
patents of IDCC. The premium also reflects the tug of
war between various technology companies for
acquiring IPR assets
Source: Company reports, Capitaline
Note: The P/E and EV/EBITDA are forward multiples. They represent the FY12 ie December’12 multiples
FINANCIAL METRICS @ ACQUISITION PRICE DEAL DYNAMICS
(#) DMS, IIT Delhi 16
Past patent transactions render IDCC still undervalued
Target Acquiror Date Acquisition Price ($mn) No of Patents Price/Patent
Mosaid Sterling Partners October, 2011 594 3,489 170,249
Motorola Google August, 2011 12,500 24,500 510,204
Nortel Apple, Microsoft, RIM, Sony, EMC, Ericcson July, 2011 4,500 6,000 750,000
Novell CPTN Holdings April, 2011 450 882 510,204
RECENT TRANSACTIONS IN THE IPR DOMAIN IN NORTH AMERICA
• Essential patents, although encumbered by FRAND (Fair
Reasonable and Non-Discriminatory pricing) bring consistent
and long term patent royalties. They can be used to
• Offset patent assertions by competitors
• Shrink Gross Margins of competitors while enhancing
earnings. (By 2015, 1% GM would be worth ~ $3-4bn
per annum in the wireless industry)
• Since the closing of the Nortel transaction, the last few
months have seen elevated patent litigation amongst the
global device manufacturers
• With 19,000 patents (~90% in the wireless domain), IDCC is
the most significant IP portfolio currently available
INTERDIGITAL PATENT PORTFOLIO VALUATION
No of patents held (as of 3Q’11) 19,000
Current EV1 ($mn) 1,781.4
Price per Patent 93,757
High Low
Acquisition Price ($mn) 2,625.4 2,988.0
Price per patent 138,177 157,261
Source: Company filings for the respective transaction, Equity Research for the Demand Scenario
Note: The acquisition price range is the mean Enterprise value calculated using DCF method keeping Beta at 0.85 and 0.95 and terminal growth rate at 1.00% and 1.25% respectively 1TCurrent EV is as of 08/11/2011
DEMAND SCENARIO IN THE IPR MARKET
(#) DMS, IIT Delhi 17
TOP INSTITUTIONAL SHAREHOLDERS
Institutional Holding Shares % Outstanding Value ($mn)
BlackRock Institutional Trust Company, N.A. 2,275,769 5.00 93.0
Vanguard Group, Inc. 2,210,001 4.86 102.9
The Roosevelt Investment Group, Inc. 1,396,491 3.07 57.1
State Street Global Advisors (US) 968,269 2.13 45.1
Opus Capital Management, Inc. 692,835 1.52 32.3
Emerald Advisers, Inc. 666,476 1.46 31.0
C.S. McKee, L.P. 638,700 1.40 26.1
Cardinal Capital Management, L.L.C. 626,098 1.38 25.6
Mellon Capital Management Corporation 515,623 1.13 24.0
Wells Capital Management Inc. 503,902 1.11 20.6
Hussman Econometrics Advisors, Inc. 500,000 1.10 23.3
JP Morgan Asset Management 460,430 1.01 18.8
Managed Account Advisors LLC 439,733 0.97 18.0
Wentworth, Hauser & Violich, Inc. 436,860 0.96 17.9
Dimensional Fund Advisors, LP 417,114 0.92 17.0
Top 15 shareholders 12,748,301 28.02 552.59
IDCC TOP MANAGEMENT
Name Age Designation
Steven Clontz 60 Chairman of the Board
William Merritt 52 President & CEO
Scott McQuilkin 56 Chief Financial Officer
James Nolan 50 EVP - Research and Development
Lawrence Shay 52 EVP - Intellectual Property & Chief IP Counsel; President of InterDigital Patent Holding Sub
Richard Brezski 38 VP, Chief Accounting Officer, Controller
Naresh Soni 52 VP, Strategic Engineering, Chief Technology Officer
Gary Isaacs 51 Chief Administrative Officer
Steven (Steve) Sprecher 55 General Counsel, Secretary
RISK FACTORS
• Challenges related to the company’s ability to enter into new license agreements could cause the revenue and cash flow to
decline
• Revenue may be impacted by the deployment of 4G or other technologies in place of 2g and 3g technologies or by the need to
extend or modify certain existing license agreements to cover additional later patents
• Royalty rates could decrease for future license agreements
• Revenues are derived primarily from a limited number of customers.
• Delays in renewing or an inability to renew existing license agreements and challenges in defending and enforcing patent rights
could cause the revenue and cash flow to decline
• The wireless IPR industry is subject to rapid technological change, uncertainty and shifting market opportunities.
• The technologies created by the company may not be adopted by the market or widely deployed
Source: Company Filings, proxy
Other Key Considerations
DMS, IIT Delhi Amit Rander, Lokesh Bahety 18