Cell-phone tech company InterDigital Communications (NASDAQ:IDCC) has proved to be a pretty popular stock among Motley Fool Stock Advisor subscribers. Since being recommended in April 2006, InterDigital has provided Stock Advisor members a market-thrashing 36% return -- about four times what the S&P has produced. Today, the company added yet another percent to those returns.

Why today's rise? Well, it seems we're not the only ones who like the stock -- InterDigital is pretty keen on its own shares as well. This morning, the company announced that after going through $187 million of an original $200 million share-buyback authorization, it's ready for a second helping and is upping the authorization to $350 million.

According to the press release announcing the buyback, InterDigital feels confident it can support the increased level of repurchasing based on its "strong positive cash flow generated in 2006, as well as anticipated high levels of free cash flow in 2007." More specifically, CEO William Merritt explained that in addition to continued revenues from its existing royalty streams, InterDigital next year expects to receive "either scheduled license fee payments or new pre-payments totaling approximately $120 million."

Based on trailing-12-month earnings, the company's P/E is a mouthwateringly low 7.7. Uncertainty over next year's earnings, however, gives it a forward P/E ratio of 38.6. To further illustrate the dilemma, over the first three quarters of this year, InterDigital has already booked two-and-a-half times the revenues it collected in all of last year. Because of the inherent lumpiness of the firm's royalty-based revenue model -- licensing technology to customers including Ericsson (NASDAQ:ERIC), Sony (NYSE:SNE), and Nokia (NYSE:NOK) -- I find it exceedingly difficult to value InterDigital myself. For that reason, it's hard for me to say for certain whether InterDigital is buying its shares at a good price or a bad one.

What is clear is that the company can easily afford the buybacks. Flush with cash from its latest bumper crop of royalties, it has more than $300 million in net cash on its balance sheet, sufficient to pay for its expanded buyback program nearly two times over. Based on that, and also on CFO Richard Fagan's comment that InterDigital intends "to initiate steps in 2007 to help reduce our weighted average cost of capital and further enhance shareholder value by introducing prudent levels of debt to our capital structure" [emphasis added], I wouldn't be surprised to see the buyback program increased further still.

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Want to learn more about InterDigital? There's no better source than the CEO himself. Find out what William Merritt has to say about his company in our recent interview: "Dialing InterDigital." To find out how InterDigital and other great Stock Advisor recommendations are beating the market, take a free 30-day trial.

Fool contributor Rich Smith does not own shares of any company named above.