Wireless technology developer and Motley Fool Stock Advisor recommendation InterDigital Communications (NASDAQ:IDCC) put another quarter of profitable operations behind it Tuesday morning. The company earned pretty much what it said it would for the first quarter in updated guidance only three weeks ago: $17.7 million on $67.8 million in revenue.

But wait, what's this -- $93.3 million in free cash flow in the quarter? How could a company reporting $67.8 million in revenue generate $93.3 million in cash?

No, the firm doesn't operate a modified heavy-paper printing press division or launder money through offshore banks. Licensing companies like InterDigital often defer revenue from large payments if these agreements cover licensing of intellectual property over several quarters or years. While an entire payment isn't counted as revenue in a particular quarter -- in this case, a $95 million license payment from Korea's LG Electronics -- it is counted as cash flow to the business.

The company has been busily putting this excess cash to work, too, completing a $350 million share buyback program that sucked up roughly 20% of outstanding shares. In addition to research and development, management also prudently invests in technology licenses and patents that complement and enhance its position as a key source of technology included in wireless products.

Good thing the cash has been rolling in lately, because operating expenses rose as well -- 33% compared with last year. Expenses have been going up largely due to development efforts in InterDigital's fabless semiconductor business, aimed at providing advanced wireless chips to modem makers such as Sierra Wireless (NASDAQ:SWIR) and Novatel (NASDAQ:NVTL). More money is also being spent to argue in court cases and arbitration hearings, so the company expects legal expenses to continue to increase.

So while InterDigital is spending heavily now, the investment should help bring in even more cash down the line. Nothing is certain, however, because large companies like Ericsson (NASDAQ:ERIC), Sony (NYSE:SNE), and Nokia (NYSE:NOK) will fight to limit license payments to any company. As Qualcomm (NASDAQ:QCOM) investors have seen, though, tenaciously investing in patents and their protection can be very lucrative.

Ring up more Foolishness:

To see what other stocks Tom and David Gardner think will beat the market, take a free 30-day trial to Stock Advisor.

As the breadwinner in the family, Fool contributor Dave Mock pays now, later, and in every dimension of time in between. He owns shares of Qualcomm. Dave is the author of The Qualcomm Equation. The Fool's disclosure policy won't throw you away like a cheap suit.