InterDigital Shares Popped: What You Need to Know

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.

Interested in more info on InterDigital? Add it to your watchlist by clicking here.

Fool contributor Cindy Johnson owns shares of InterDigital. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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