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InterDigital Shares Plunged: 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: InterDigital (Nasdaq: IDCC  ) dropped 23% in intraday trading today after news that Google (Nasdaq: GOOG  ) had agreed to acquire Motorola Mobility (NYSE: MMI  ) dampened hopes that Google might buy InterDigital.

So what: InterDigital has had three large pops in the past six weeks. It began with a 17% pop on July 1, as investors reassessed the value of InterDigital's patent portfolio based on strong bids for Nortel's patent portfolio. On July 19, the stock popped nearly 30% on news that InterDigital's board had initiated a "strategic review" that could result in a sale of the company. The following day it popped another 19% on news reports that Google was interested in bidding on InterDigital.

Now what: InterDigital's patent portfolio is rich in intellectual property in the hot wireless communications sector. Google bid on Nortel's patent portfolio but lost out to a consortium that paid $4.5 billion and included Apple, Microsoft, Research In Motion, Sony, EMC, and Ericsson. While Motorola Mobility's patents may lessen Google's interest in InterDigital, other consortium members -- along with InterDigital licensees such as Samsung Electronics, LG Electronics, and HTC -- are potential buyers of InterDigital.

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.

Read/Post Comments (1) | Recommend This Article (5)

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  • Report this Comment On August 15, 2011, at 12:44 PM, drbldr wrote:

    LG appears to have a decent 4G/LTE patent position, but Samsung is definitely lacking. Interdigital would definitely put it in a safer position getting through the next few years and seeing where the dust settles on the manufacturer/patent holder war. With Google not as motivated, now would be a great time to jump in and make a deal. Interdigital recognizes $100 million/year from Samsung, so just getting rid of that payment is worth something. Assuring cross licensing with Apple, LG, Motorola/Google, RIM, etc. would let them focus on the market share fight.

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