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InterDigital Issues Q4 Revenue Guidance, Announces Dividend

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InterDigital, Inc. (IDCC - Free Report) recently provided revenue guidance for fourth-quarter 2018. In addition, the company’s board of directors announced a regular quarterly cash dividend and approved a hike to its existing share repurchase program.

For the fourth quarter, the company expects to report revenues in the band of $70-$76 million. This range incorporates non-recurring revenues of about $1 million. Notably, the company’s projected fourth-quarter revenues would have been in the range of $92-$96 million, under the accounting rules applicable before the adoption of the revenue recognition standard "ASC 606".

This outlook does not incorporate the probable impact of any patent license, patent or technology solutions sale contracts that the company might enter into during the balance period of fourth-quarter 2018.

Also, the board approved a $100 million hike to its existing share repurchase program, authorizing it to buy back $600 million of its shares. Subsequent to the increase, the remaining amount available under the company’s authorization program is around $187 million. Notably, the company has repurchased 1.2 million shares for $91.9 million this year.

This apart, InterDigital’s board declared a regular quarterly cash dividend of 35 cents per share. The dividend will be paid on Jan 23, 2019 to shareholders of record as on Jan 9.

Existing Business Scenario

The company’s global footprint, diversified product portfolio and the ability to penetrate in different markets are commendable. Apart from the company’s strong portfolio of wireless technology solutions, the addition of technologies related to sensors, user interface and video to its offerings are likely to drive significant value, considering the massive size of the market it licenses.

Moreover, InterDigital has completed the buyout of the patent licensing business of Technicolor, a global technology leader in the media and entertainment sector. This buyout is expected to provide the Zacks Rank #3 (Hold) company with an enhanced portfolio of video technologies while opening up new opportunities in the consumer electronics market.

However, the stock has lost 2.6% in the past month, wider than the industry’s decline of 0.4%. Also, ongoing tensions between the United States and China due to trade restrictions imposed on the sale of communication equipment and technology solutions to Chinese firms are likely to hurt the industry's credibility and induce loss for businesses.

Key Picks

Some better-ranked stocks from the same space are Ubiquiti Networks, Inc. , QUALCOMM Incorporated (QCOM - Free Report) and Juniper Networks, Inc. (JNPR - Free Report) . While Ubiquiti Networks and Qualcomm sport a Zacks Rank #1 (Strong Buy), Juniper Networks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ubiquiti Networks exceeded estimates thrice in the preceding four quarters, the average positive earnings surprise being 11.30%.

Qualcomm outpaced estimates in each of the preceding four quarters, the average being 18.47%.

Juniper Networks surpassed estimates in each of the trailing four quarters, the average being 10.99%.

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