You don't know what you're missing now.
Any little song that you know
Everything that's small has to grow.
And it has to grow!
-- "The Song Remains the Same," by Led Zeppelin, 1973
Wireless technology developer InterDigital
However, InterDigital seems to be stuck in a rut as the same issues are recycled in every earnings report. There's always "high interest" in InterDigital's technologies for making mobile networking more efficient but only a modest number of new, actual license agreements. In particular, a renewed agreement with major customer LG Electronics always seems to be just around the corner but never completed. That reminds me of how OLED technologist Universal Display
Just get it done, guys.
The same refrains were sung in last night's first-quarter report. High interest, one significant new deal (this time with Acer), and "discussions with LG continue." The song remains the same.
InterDigital's stock price ran up by about 4.5% in the days leading up to this report, and then it dropped back by the same amount in early morning trading before rebounding late in the day. Nothing much has changed, so why move the share price? The post-earnings drop happened in spite of both earnings and sales beating analyst estimates by a small margin, which shows that investors are losing patience with the all-too-familiar backstory.
All that said, I think it'd be a mistake to sell InterDigital today.
LG's absence explains most of the 33% year-over-year revenue drop, and I think it's likely that the Korean giant will come back and sign a fresh agreement eventually. The current largest contributor to InterDigital's sales, Samsung Electronics, reached that status after a protracted legal dispute that eventually settled in InterDigital's favor, and that case should serve as a template for LG's direction. Here, I'd like to summon the ghost of DVR pioneer TiVo
InterDigital needs to become a little more like TiVo and a little less like Universal Display in order to unlock the stock's true potential. That's InterDigital's stairway to heaven. Until that happens, the song remains the same: Nothing new under the sun.
Want to learn more about InterDigital, and stay up-to-date with its licensing discussions? Add the stock to your Foolish watchlist by clicking here.