Stability is a good thing in most contexts -- stable job, stable income, stable personality. But when it comes to investors' view of wireless-technology developer InterDigital Communications (NASDAQ:IDCC), stability is a good thing only if the stability means that things are trending upward. In its second-quarter earnings report, the technology licensor and Motley Fool Stock Advisor recommendation reported a dip in the recurring revenue it receives from licensees, and that left investors feeling a little insecure. Shares dropped more than 15% on the news.

InterDigital reported quarterly revenue of $55 million overall. Of that amount, $52.6 million was recurring royalty revenue from licensees, down slightly from last year's $54.9 million in part because of the absence of royalties from Sony Ericsson -- a joint venture between Sony (NYSE:SNE) and Ericsson (NASDAQ:ERIC) -- and from Ericsson itself. Higher expenses and one-time items led to a GAAP net loss of $4.4 million and a negative free cash flow of $2.5 million.

The company did trim some operating expenses a little lower than originally planned, as it pushed the launch of its ASIC chip from late summer to the fall. With the project being extended slightly, management now expects expenses to increase in the third quarter to the tune of 5% to 10%. The new ground InterDigital is breaking with its chip offering amounts to a risky bet, considering the intensity of the competition with giants Texas Instruments (NYSE:TXN) and Broadcom (NASDAQ:BRCM). But with device manufacturers keen on diversifying suppliers -- as Nokia (NYSE:NOK) recently announced it will do -- InterDigital does have a good shot at some new business from this product.

InterDigital also detailed that it spent $9.9 million in litigation and arbitration costs for the quarter -- an area of expense that it expects will increase in the future as it pursues more suspected abusers of its intellectual property. Indeed, the company even announced a new course of legal action against Nokia the night before it released its earnings report. In a page taken from Broadcom's tussle with Qualcomm (NASDAQ:QCOM) over patent infringement, InterDigital is now asking the U.S. International Trade Commission to ban certain products from Nokia that it claims violate two of its patents.

With several outstanding license disputes pending and costs going up, InterDigital will probably have a volatile stock for at least the balance of the year. Then again, investors looking for stability probably shouldn't be in this stock in the first place.

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Noting that stability is relative, Fool contributor Dave Mock refutes the notion that his personal demeanor is reason for alarm. He owns shares of Qualcomm. Dave is the author of The Qualcomm Equation. In Rochambeau, the Fool's disclosure policy takes a false sense of security in rock -- good ol' rock ... nothing beats rock ...