Slide 1: May 2011 Investor Presentation
May 2011 Investor Presentation
Slide 2: Forward-looking statements
This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding InterDigital, Inc.'s current beliefs, plans and expectations as to: (i) future results, p
Slide 3: InterDigital Snapshot
3 InterDigital Snapshot 3 All trademarks are the sole property of their respective owners R&D, Montreal, Canada R&D, Melville, NY Headquarters, R&D, King of Prussia, PA InterDigital provides the technology that enables wireless communication ~ 180 engineers developing technology used in every cellul
Slide 4: Investment Highlights
Investment Highlights Vendor agnostic wireless communications pure play Continuously developing fundamental wireless technology intellectual property that is incorporated into industry standards Secular revenue growth with large and growing addressable market $203bn handset market in 2010(1) ~ 50% p
Slide 5: Wireless Communications Provide a Significant Opportunity
Wireless Communications Provide a Significant Opportunity 5 InterDigital's standards-based innovation in wireless allows us to address a significant TAM Series 1 Series 2 Series 3 Series 4 Series 5 Series 6 Series 7 Series 8 2010E 202.612 1100 233 3961 2876 1297 466 267 2011 205 1100 269 3691 2876 1
Slide 6: InterDigital is a Wireless Industry Pioneer
InterDigital is a Wireless Industry Pioneer 6 Our technology is used in every cellular wireless communications device Invent Wireless Technologies Contribute to Standards License Patents Long history of developing wireless IP Provided technology to a number of industry leading innovations: Wideband
Slide 7: Our Core Market Presents a Large, Growing Opportunity
2G / 2.5G 3G 4G 2009A 811 340 0 2010E 855 433 6 2011E 826 590 11 2012E 784 725 21 2013E 735 843 47 2014E 652 970 84 2015E 611 1049 129 Our Core Market Presents a Large, Growing Opportunity... 7 Trends Projected 1.2 billion unit opportunity in 3G / 4G in 2015 Target is to license 100% of 3G market 4G
Slide 8: We Have A Solid 3G License Base
....We Have A Solid 3G License Base... 8 Deals Samsung 0.202 Apple 0.096 LG 0.082 RIM 0.06 Sony Ericsson 0.052 Nokia 0.224 HTC 0.046 ZTE 0.043 Motorola 0.033 Huawei 0.032 Others 0.128 Under License as of 12/31/2010 Not Under License as of 12/31/2010 Mixed Others ___________________________ Source: S
Slide 9: A Strong Position in LTE
....A Strong Position in LTE... 9 Number of InterDigital US Patents and Applications Declared to ETSI for E-UMTS (LTE) (By Year Declared to ETSI) Number of InterDigital US Patents and Applications Declared to ETSI for UMTS (WCDMA) and E-UMTS (LTE) (Cumulative, by Year) ___________________________ Th
Slide 10: Positioned to Benefit from Next-Generation Networks
Sensors ....And We Are Positioned to Benefit from Next-Generation Networks Cellular WiMax WiFi Mesh Ambiance Femto Relays Ubiquitous Connectivity: - Billions of subscribers - Trillions of connections - Seamlessly connected and fully integrated 10
Slide 11: Driving Value from our Investments: Increasing Royalty Rates
Driving Value from our Investments 11 Increasing Royalty Rates Can Generate Significant Value for InterDigital Royalty Rate Increase Indicative NPV of Incremental Handset Royalties(1) 0.05% $600 million 0.10% $1,200 million 0.15% $1,800 million 0.20% $2,400 million Significant leverage in model Cont
Slide 12: Drivers of InterDigital's Success
Drivers of InterDigital's Success 12 Extensive licensing expertise, with 80% of 2G and 50% of 3G mobile device markets licensed at YE '10 ~18,500 issued and pending patents as of 12/31/2010 Financial strength enables us to build portfolio both organically and through acquisitions Investment targeted
Slide 13: Seasoned Management Team with Strong Track Record
William J. Merritt President and Chief Executive Officer 15 Scott A. McQuilkin Chief Financial Officer 4 Lawrence F. Shay President, InterDigital's Patent Holding Subsidiaries, EVP, Intellectual Property, and Chief IP Counsel for InterDigital, Inc. 10 Naresh Soni Chief Technology Officer 2 James J.
Slide 14: Financial Highlights
Financial Highlights Strong balance sheet Cash and short term investments of $527 million as of March 31, 2011 $230 million in senior convertible notes issued on April 4, 2011 in private placement transaction $78.5 million of revenues, net income of $23.3 million in first quarter 2011 Predictable re
Slide 15: Demonstrated Steady Revenue Growth
Demonstrated Steady Revenue Growth Series 1 2001 52.6 2002 87.9 2003 114.6 2004 103.7 2005 163.1 2006 227.5 253 480.5 2007 234.2 2008 228.5 2009 297.4 2010 394.5 Historical Revenue Performance ___________________________ Red dotted bar represents $253mm of revenue recognition related to resolution o
Slide 16: Secular Revenue Growth and Strong Leverage
Net Margin 2007 0.09 2008 0.11 2009 0.29 2010 0.39 EPS 2007 0.4 2008 0.57 2009 1.97 2010 3.43 Secular Revenue Growth and Strong Leverage Revenues EPS 2007 234.2 -0.2 2008 228.5 0.59 2009 297.4 0.7 2010 394.5 0.88 ($ in Millions) Historical Revenues Historical Net Margins(1) 16 (% of Revenues) ($) Hi
Slide 17: R&D Spending By Selected Technology Licensing Companies
17 R&D Spending By Selected Technology Licensing Companies Annual R&D Spending (2007 - 2010) 2007 2008 2009 2010 Series 5 Series 6 Series 7 Series 8 IDCC 85.2 98.9 64 71.5 2876 1297 466 267 TSRA 37.5 61.6 65.9 74.1 2876 1027 1333 303 ACTG 0.9 0.9 1.7 2.1 RMBS 82.9 76.2 67.3 92.7 ARMH 136 141.8 181.7
Slide 18: R&D Investment Well-Aligned to Business Priorities
18 R&D Investment Well-Aligned to Business Priorities Source: Company Management R&D Investment = Planned 2011 R&D Spending and Related Capex, CTO Office and Platform Development Cellular Evolution 41% Incubation 17% Advanced Networks 42% Core (51%) Adjacent (49%) R&D Investment
Slide 19: — interDigital’ {J —____________
— interDigital’ {J —____________ © 2011 InterDigital, Inc. All rights reserved.