Exclusive Focus Stock Report

InterDigital Communications Corp. (Nasdaq:IDCC)

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Introduction

InterDigital Communications Corp (IDCC) Deserves Your Attention Now    

Updated August 4, 2003       

1. InterDigital has what we judge to be the most positive risk to reward ratios among wireless communications firms. The company's financial fundamentals are extraordinarily strong:
1. Liquidity Heading toward becoming the "cash cow" of the wireless industry, this mid-cap company in mid-2003 had more than $100 million in cash reserves and is positioned to finish 2004 with an amazing $400+ million in cash. That translates to over $7 a share in cash! (See "Enviable Liquidity")
2. Earnings are positive now and are set to explode upward in 2004 and beyond. Management expects earnings to sky rocket to as much as an annualized $300 beginning in 2005 ($5 per share). (See: "Earnings Growth")
3. Share price targets Based on what appears to be reachable revenue goals, by the end of 2004, the share price could conservatively rise to $40 (based on earnings of $2 per share and a moderate PE of 20). Following Nokia's request for arbitration of its royalties to InterDigital, most of the analysts following InterDigital are indicating 12 month share price targets of $25 or more per share. (See "Valuation Outlook" and "Analyst Reports."
4. Nokia Arbitration Bottom line: In July,, 2003, Nokia has delayed (for up to a year), but NOT BYPASSED, payments of hundreds of million of dollars to InterDigital for 2G and 2.5G handsets and infrastructure. Wall Street has reatly overreacted by dropping IDCC shares 40% to mid-teen levels. WirelessLedger.com believes that this oversold condition 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")
2. .On March 17, 2003, the Company announced successful settlement of a patent infringement lawsuit it had brought against Ericsson Telecommunications Co. (Ericy) of Sweden. Management claims that the $50+ million settlement payable to InterDigital also establishes 2G (g) and 2.5G (g) licensing terms not only for Ericsson but for market-leading Nokia and Samsung as well. These two firms will owe InterDigital accrued royalties for 2002 of $120 million and forward royalties (2003 on) of $100 million annually. This amount does not include additional royalties for 3G (g) cell phones and infrastructure because rates have not yet been determined. (See "Watershed Event: Ericsson-InterDigital Settlement.")
3. The Company has a track record for very careful stewardship of its resources. Management has a reputation for integrity, carefully avoiding "hype" and often exceeding investor expectations. (See "InterDigital’s Management" and "30 Year Evolution of InterDigital’s Business Model.") Positioned at the very heart of wireless, InterDigital has the technology and patents essential in all five modes of the new 3G third generation (g) standards. (see: Understanding the Standards-Setting Process. )
4. 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)
5. InterDigital has a major "anchor relationship" with Infineon Technologies (IFX), one of the world’s leading wireless communications chip companies. InterDigital will develop a major portion of Infineon’s next generation integrated circuit (chip). (See "Chip Development Partnership with Infineon.")
6. InterDigital is an attractive takeover candidate. Some observers believe that the Company has already refused a buyout offer at $50 per share. With an expecting a 2004 cash position of almost a half billion dollars, plus rapidly increasing royalty revenue, potential suitors like Qualcomm, Microsoft, Intel, Cisco and others would probably have to offer a minimum of $100 per share simply to begin merger or buyout discussions. (See InterDigital’s "Acquisition Potential")
7. WirelessLedger understands that royalty rate discussions between Nokia and InterDigital were progressing well at mid-management level following the Company's successful March setlement with Ericsson. However Nokia's top brass, experiencing a bad quarter financially, realized that Nokia would be paying InterDigital a hundred million dollars annually in 2G and 2.5G royalties and they balked. By invoking the binding arbitration clause in its licensing contract with IDCC, Nokia has seized on a way to delay a $200 million payment otherwise due now and also to buy time for some hard nosed bargaining. (See: "Nokia Invokes Arbitration: 2G Royalty Obligation to IDCC")

If an investor is looking for a small to mid-cap company at the heart of the wireless telecommunications revolution, with an extraordinarily strong cash position and rapidly increasing earnings, InterDigital has one of the very best "risk to reward ratios" in the industry.

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