Wireless-technology licensing firm and Motley Fool Stock Advisor recommendation InterDigital Communications (Nasdaq: IDCC) will deliver fourth-quarter earnings on Thursday. Here's what investors can expect.

What analysts say:

  • Buy, sell, or waffle? Six analysts follow InterDigital, with four maintaining a buy rating, while two recommend holding. In our Motley Fool CAPS investor database, more than 833 of our 84,000 users have rated the stock, giving it a five-star rating, the highest possible.
  • Revenue. On average, analysts look for revenue of $55.7 million, 14% below the same quarter last year.
  • Earnings. The average earnings expectation is $0.11 per share for the quarter.

What management says:
InterDigital already let a good deal of air out of the pre-earnings anticipation balloon: The company noted back in late November that earnings would not be as strong as many hoped. Unless the company uncovers additional royalties owed from licensees such as Sony Ericsson (a joint venture between Sony Corp. (NYSE: SNE) and Ericsson (Nasdaq: ERIC)), revenue will be in the tight range of $54 million to $55 million.

Even with the expected dip in revenue, InterDigital paints a bright long-term picture. The company's new president of patent licensing, Larry Shay, boldly states that "InterDigital's key objective remains securing revenue on every 3G [third-generation] mobile device sold." To reach this lofty goal, long-standing disputes with Nokia (NYSE: NOK) and Samsung would have to be resolved favorably.

What management does:
If and when InterDigital starts selling an ASIC product that it is now sampling, margins will trend down from the sky-high levels achieved from licensing intellectual property.

Margins

06/06

09/06

12/06

03/07

06/07

09/07

Gross

88.4%

89.2%

89.4%

88.7%

76.0%

73.0%

Operating

66.9%

68.7%

70.0%

68.5%

34.2%

27.6%

Net

53.7%

54.8%

46.9%

46.3%

21.6%

17.3%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Investors got a good lesson in revenue concentration this quarter, as softness in sales from InterDigital's Japanese customers apparently account for the lower revenue. But as more 3G devices are sold, InterDigital's revenue concentration should diminish. While InterDigital doesn't have the diversity of Qualcomm's (Nasdaq: QCOM) base of more than 140 licensees, recent licensees such as Apple (Nasdaq: AAPL) and Research In Motion (Nasdaq: RIMM) are no slouches in the mobile world.

But since details of each agreement are kept hush-hush, investors never know for sure just how large these high-profile contracts are. Collectively, InterDigital is positioned well for the future, but just how well remains to be seen.

More Foolishness:

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Fool contributor Dave Mock considers quarter-ante poker in the garage high stakes. He owns shares of Qualcomm and is the author of The Qualcomm Equation. The Fool's disclosure policy is five-star luxury at a one-star price.