InterDigital, Inc.

InterDigital, Inc.'s (IDCC - Snapshot Report) share price recently spiked higher after analysts substantially boosted their earnings estimates. The company is also fresh off the heels of a $400 million patent settlement with Samsung.

Company Description

InterDigital, Inc., through its subsidiaries, designs and develops digital wireless technologies for cellular and wireless products. The company was founded in 1972 and has a market cap of $1.2 billion.

Third-Quarter Results

InterDigital's business has held up well in the volatile economy, with the company reporting solid third-quarter results on Oct 30 that were ahead of analyst estimates.

Income came in at $9.2 million, up from $8.7 million last year. This produced earnings of 16 cents per share, doubling analyst estimates of 8 cents. InterDigital has now matched or beat estimates in each of the last 3 quarters.

Revenue and Earnings Details

InterDigital noted that its recurring patent license royalties dropped in the quarter to $51.6 million from $55.7 million last year. Its technology solutions revenue increased to $2.2 million from $0.8 million, due to increases in license fees and recurring royalties associated with its licensees' sales of products containing the company's SlimChip IP.

Share Buyback

Showing confidence in its business, InterDigital recently completed a $100 million share buyback program.

Legal Dispute Settled

InterDigital recently settled a patent lawsuit with Samsung, one of the world's largest cell phone makers. The terms of the agreement call for SamSung to pay InterDigital $400 million over the next 18 months, with the agreement set to expire in 2012.

Estimates and Guidance

On December 2, InterDigital provided fourth-quarter revenue guidance, saying it expects sales between $57 and $60 million, with $7 million coming from non-recurring items.

The analyst community is bullish on the company's long-term prospects, with the next-year estimate pegged at $1.36 per share, a 129% earnings growth projection.

The Chart

Shares of IDCC have been rallying since late October, advancing from a short-term low just above $16 to a recent high just shy of $29. A trend line has been supporting prices as they have swung higher. The MACD indicator is also crossing over, a bullish signal. Take a look below.

Read the full analyst report on IDCC