July 19, 2011
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: InterDigital (Nasdaq: IDCC ) popped a whopping 29% in intraday trading today after it issued a press release indicating it has retained Evercore Partners and Barclays Capital to assist with a strategic review that could result in a sale of the company.
So what: The press release stated that InterDigital's "Board of Directors has initiated a process to explore and evaluate potential strategic alternatives ... which may include a sale or other transaction." Today's jump builds on a 17% pop on July 1, which resulted from investors reassessing the value of InterDigital's patent portfolio on the strength of bids for Nortel's patent portfolio.
Now what: The company has not set a timetable for the strategic review, and there is no guarantee any actions or transactions will result from the process. At today's intraday price of $52.48, the stock is trading at a reasonable 18.4 times P/E ratio, leaving plenty of room for an acquirer to justify a higher price. What's more, a consortium including Apple, Microsoft (Nasdaq: MSFT ) , Research In Motion (Nasdaq: RIMM ) , Sony (NYSE: SNE ) , EMC (NYSE: EMC ) , and Ericsson (Nasdaq: ERIC ) offered a stunning $4.5 billion for Nortel's patents. That's almost twice InterDigital's $2.3 billion market cap.
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