4. At a time when most small and mid-cap wireless technology firms are scrounging for capital for research and development, InterDigital is one of the most liquid firms in its class, amassing a heap of cash (over $100 million in 3Q 2003 and $400 million ($8 per share) projected for year end 2004) for R & D, acquisition of attractive small firms, possible dividends and other purposes (see InterDigital's "Enviable Liquidity" )

If you are looking for a small to mid cap company at the heart of the wireless telecommunications revolution, InterDigital has one of the very best "risk to reward ratios" in the industry.

Read the full Focus Stock Report on InterDigital Communications Corp.

Questions and Answers related to the above report summary.

How will Nokia’s recent invocation of binding arbitration for its royalty rate as an InterDigital licensee affect InterDigital share values? Following Nokia’s request for arbitration and its petition to the federal court for access to sealed documents from the Ericsson-InterDigital litigation, the IDCC share price took a 40% hit, to the mid-teens. WirelessLedger.com believes that this represents a substantially oversold condition that will be corrected in the near term. InterDigital retains the distinction of having the best risk to reward ratio (minus 10% risk to plus 200% reward potential) in the wireless industry. . (See: “ Nokia Invokes Arbitration: 2G Royalty Obligation to IDCC ”)

How Big Is the Worldwide Wireless Market? The worldwide market for next generation wireless telecommunications is growing exponentially. Americans may not be aware of that yet, since the U. S. is behind both Europe and Asia, where wireless is used extensively by people in the course of ordinary daily life. Mobile subscribers worldwide today total more than a billion. Industry analysts predict that this number will double by the end of 2006. In several countries, mobile devices already outnumber wireline phones. In the world's largest market, China, wireline will be completely bypassed by wireless devices. (See "3G: Fact or Fiction?" and "Industry Outlook.")

So how does this company make money? InterDigital designs and develops technology content and systems solutions for advanced digital wireless communications applications. InterDigital's remarkably healthy revenue stream comes from licensing its wireless communications patents (2G (g), 2.5G (g) and 3G (g)) and providing engineering services to firms designing next generation wireless products. Beginning in 2004, it will be offering specialized chips that make use of the Company's immense patent portfolio in TDD (g) technology. (See: InterDigital's "Revenue Streams")

The Company makes money by:

(1) Licensing its patented technology
Besides having technology, patents or patents pending in all five modes of the international third genertion standards, InterDigital holds fundamental patents for the operating system underlying most of the world's digital wireless phone systems. The largest cell phone maker in the world, Nokia, and many others have recognized these patents and are paying InterDigital royalties and licensing fees. Current licensees are a very impressive group: American Telephone & Telegraph, Ericsson, Qualcomm, NEC Corporation, Nokia Corporation, Ubinetics, Samsung Electronics Co, Ltd., Sanyo Electric Corporation, Siemens AG, Toshiba Corporation, Sharp Corporation, UbiNetics Ltd., Alcatel Espana, Hughes Network Systems, Matsushita Electrical Co, Ltd. (Panasonic), Mitsubishi Electric Corp., Hitachi, Ltd., Denso Corporation, Japan Radio Company, Kyocera Corporation, Iwatsu America, Inc., Kokusai Electric Co., Ltd., Oki Electric Industry, Ltd., Pacific Comm. Sciences, Inc., Robert Bosch GMBH, Shintom Corporation, TDD Technology, Iwatsu America, Inc., TETRA. Ubinetics, one of InterDigital's most recent licensees, is a very impressive addition, recognized as the up and coming developer of very advanced second generation products for Europe's leading telecom carriers. For a complete listing of InterDigital licensees, and the technology they each license, see "InterDigital licensees."

Although next generation (3G (g)) devices will be very important for earnings in 2004 and beyond, between now and then InterDigital will be realizing strong revenue from the rapidly expanding market for 2G and 2.5G wireless devices, most of which are based on InterDigital's patented technology. (See "Valuation Outlook", "Risk Factors," and "Risk-Reward Ratio" for details.)

Does every manufacturer license InterDigital's patented technology? Not yet. A number of firms have still not recognized InterDigital's intellectual property rights. But with the successful settlement on March 17th, 2003 of the patent infringement lawsuit against Ericsson, remaining holdouts are expected to join Ericsson, InterDigital's most recent licensee. InterDigital has licensed the manufacturers of about 70% of the worldwide market for 2G (g) and 2.5 (g) cell phones and infrastructure. (See "Watershed Event: Ericsson-InterDigital Settlement.")

(2) Providing engineering services
InterDigital designs next generation wireless architecture. Whether due to exceptionally good foresight, shear luck or a combination of the two, InterDigital has been concentrating its efforts for the past decade on what has just recently been recognized worldwide as the predominant wireless technology for the coming decade: wideband wireless technology (WCDMA (g)) with its TDD(g) and FDD (g) variants. Interestingly, the Company did not anticipate wideband being needed for mobile wireless. (The Internet almost overnight sparked that need.) InterDigital was developing wideband for "wireless local loop (g))" last mile applications. (That is, "fixed wireless" a hybrid that involves wires at each end, but radio signals in between.) Fortunately, the engineering required for fixed wireless works as well for mobile wireless. Thus, InterDigital has more experience than any other firm in the world in the engineering of next generation wideband wireless communications, especially the TDD (time division) technology that will permit massive data transmission wirelessly. This next generation technology is based, in part, on the TDMA technology that InterDigital pioneered and patented in the 1980's. (See "InterDigital's Role in Developing Digital Wireless Technology.") The major developers, worldwide, of TDD technology are Germany's Siemens, China's Datang, InterDigital and Japan's Panasonic. Knowledgeable observers believe that InterDigital has provided more patented technology incorporated into the TDD portion of the new WCDMA (g) and TD-SCDMA (g)) standards than any other firm. (See "Leapfrogging into Mobile Wireless and "Understanding the Standards-Setting Process."