InterDigital Shares Popped: What You Need to Know

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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: Shares of InterDigital (Nasdaq: IDCC  ) , a digital wireless technology specialist, surged as much as 15% in early trading before closing up more than 13% for the day. The stock rallied on news that Samsung could make a bid for its patents.

So what: And Samsung isn't the only one. Bloomberg reports that Apple (Nasdaq: AAPL  ) and Google (Nasdaq: GOOG  ) are also looking at InterDigital's portfolio, touching off speculation that there could be a bidding war. It wouldn't be surprising. Nortel's patents fetched billions recently.

Now what: But a rumor is still a rumor until proven true. Here's hoping this one is -- because if it isn't, speculators who bought in today could be in for a whipping now that the stock trades for more than twice the long-term growth rate analysts expect. Do you agree? Disagree? Weigh in using the comments box below.

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

Fool contributorTim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Apple and Google at the time of publication. Check out Tim'sportfolio holdings andFoolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insightsdelivered directly to your RSS reader.

The Motley Fool owns shares of Google and Apple.Motley Fool newsletter services have recommended buying shares of InterDigital, Google, and Apple and creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insights makes us better investors. The Motley Fool has adisclosure policy.

Read/Post Comments (2) | Recommend This Article (5)

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  • Report this Comment On August 03, 2011, at 7:33 PM, drbldr wrote:

    IDCC currently trades at about 30x ttm earnings. Earnings for 2011 are expected to be a little lower, but if they are successful in renewing their agreement with LG, they will be much higher. 2012 is expected to be even better. This doesn't take into consideration a very low rate they get from Apple because the deal was a fixed price deal struck before they knew Apple would become such a force in the business. That deal will reset in 2014. IDCC's portfolio is much stronger in 4G/LTE - the next generation technologies, so their licensing strength will only get better. Considering they could be bought for twice the current price (M Partners estimate is $118-167/share), today's price doesn't seem out of line.

  • Report this Comment On August 03, 2011, at 7:57 PM, joshpritchard wrote:

    Google should seriously consider buying Motorola Mobility (MMI). The company has a 6.6B market cap, but has $3.2B in cash ($225M more still coming from MSI), $2.4B in deferred tax assets, and more patents than Nortel or InterDigital. With the value of the patents somewhere north of $3B, that’s more than $8.5B (~$2B over market) *before assigning any value to the mobile or set-top businesses*, which are on pace to do $14B in revenue this year. I’d imagine that they could potentially make the purchase with a partner (like Samsung or HTC) and have them take the operating businesses while keeping the patents to defend Android and the Open Handset Alliance.

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