InterDigital, Inc.
Q4 2007 Earnings Call Transcript

Published: 4 Mar 2008

[Operator:]

Good day everyone and welcome to today’s InterDigital fourth quarter 2007 earnings results conference call. (Operator Instructions) I’d like to turn the conference over to Ms. Janet Point.

[Janet Meenehan Point:]

Good morning to everyone and welcome to our fourth quarter and full year 2007 financial results conference call. So, with me here this morning are Bill Merritt, our CEO; and Scott McQuilkin, our CFO. So consistent with last quarter’s call, we will offer some highlights about the quarter and the company, and then open up the call to questions. Before we begin our remarks, though, I do need to remind you that in this call we will make forward-looking statements regarding

[Scott A. McQuilkin:]

Good morning to everyone, since I expect that you’ve read the press release that we issued this morning, I will only highlight a few areas. The current patent license royalties in fourth quarter 2007 totaled $50.3 million, an increase from $48.1 million in fourth quarter 2006, despite the expected roll-off of nearly $5 million in 2G royalties from Sony Ericsson and Ericsson. Excluding these 2G royalties, the current patent license royalties for fourth quarter 2007 increased 16% over fourth quarter 2006. Among the notable contributors to fourth quarter 2007 recurring revenues were LG at 28%, Sharp 17%, and NEC at 11%. This quarter did reflect some softness in royalties from a few of our Japanese licensees, which overall showed declines from a very high level in the previous quarter. However, we also saw increased contributions from a number of our other licensees, including HTC, RIM, Toshiba and Sanyo. Our total recurring revenues for the fourth quarter 2007 were $51.4 million, which also includes some revenues from our customers Infineon, NXP, and SK Telecom. As I noted in today’s release, based on royalty reports received to date and the new contribution that we expect from our new Asian semiconductor customer, we expect to see a nice rebound in our recurring revenues back up to a range of $53 million to $55 million in the first quarter. In the licensing reports that we have seen thus far, we are seeing good sales growth from a number of licensees, which are largely influenced by 3G sales. Overall, we are pleased with the continuing contributions from our diverse base of licensees. We’re also very happy to have completed a new patent license agreement with Giant Electronics of China. So while the fourth quarter 2007 revenues were fairly solid, we reported a relatively small loss driven by an accrual associated with estimates for a potential reimbursement associated with one of our litigations with Nokia. Without that accrual, we would have reported net income of $3.1 million or $0.06 per diluted share. It’s also worth repeating that while we have accrued for the legal expense associated with the UKII case, we intend to argue to the UK court that having defeated Nokia in its attempt to have all of our UK 3G patents declared nonessential, we should not have to reimburse Nokia for the costs associated for the issues where Nokia may have prevailed. Turning to the balance sheet, it remains very strong, as does cash flow, which has been positive during this period of significant investment in our business. We ended the year with $177.5 million in cash and short-term investments, which represent $3.59 per share. Our free cash flow for the full year 2007 was $91.3 million. In first quarter 2008, we also expect to receive a scheduled $95 million royalty payment from LG. Based on our strong balance sheet and our high level of confidence in our ability to build value, our Board of Directors authorized a new $100 million common stock repurchase program in fourth quarter 2007. To the end of 2007, we repurchased one million shares under this program for $18.5 million. As we will report in our 10-K, as of February 22, our purchases under this program totaled $26.4 million, or about a quarter of the total authorization. Turning to the expense side, fourth quarter 2007 operating expenses were $49.8 million, excluding the litigation expense accrual. This represents a $3.7 million increase over third quarter 2007 and an $11.4 million increase over fourth quarter 2006. To better understand the trends in our operating expenses, it is useful to break these expenses into two basic components

[William J. Merritt:]

Good morning to everyone, as we announced this morning, 2007 was a very solid year for the company from both a financial and strategic perspective. As we typically do this time of year, I want to recap the major achievements from the previous year and compare those achievements against our stated goals. I also want to set out the company’s strategy for 2008 so you can know what the measure us against. On the yearend 2007 earnings call, I set out some pretty aggressive goals for the company. In a nutshell, those were

[Operator:]

(Operator Instructions) We’ll go first to R.D. Malik - Sidoti & Company.

[R.D. Malik:]

Could you talk a little bit about the timeframe for the Samsung litigation?

[William J. Merritt:]

Yes, the timeframe for the Samsung litigation, there are two types of litigation with Samsung. We have the ITC litigation, which involves them and Nokia in a combined case. We’re at a point where discovering those cases are wrapping up. We would expect in March that the staff opinions are positioned and the case will come in. And then, there’s a hearing scheduled for the later part of April. Then, there’s an initial determination by the judge in the June timeframe, and then, I think a final determination by the ITC Commission in the November timeframe. That’s a timeframe on that case. The other case involving Samsung involves the 2G dispute with them. We received a favorable decision from the District Court in New York with respect to the enforcement of the 2G award. That is now upon appeal, and that appeal will proceed this year. As far as we’ll move forward exactly when the appeals court will decide, that’s up to them. There is also an arbitration in which Samsung is challenging the application of the Nokia settlement agreement to them, and that is also pretty far along at this point as well. And of course, all of the litigation will get updated, you’ll see an update on that in the 10-K, which I guess we’re filing tomorrow.

[R.D. Malik:]

That was my next question, as to when would you would be receiving a payment for the New York ruling. I guess that’s sort of in limbo right now.

[William J. Merritt:]

Payment from the Samsung, just as a reminder what Samsung had to do to file an appeal on the arbitration award was to post a bond. That bond was in $150 million.

[Scott A. McQuilkin:]

166.

[William J. Merritt:]

$166 million range. Basically that moves the money into the court in effect. And so upon a successful resolution of the court and the money moves to us. So, that was actually a big step in the process to basically get the money into sort of a neutral party’s hands.

[R.D. Malik:]

Could you talk a little bit about that the UK court ruling of declaring one of your patents essential to 3G and its impact on your litigation with Samsung?

[William J. Merritt:]

The UK court case was actually two patents that we came out of that in effect to essentiality declarations. One with the one that the court opined on, and the second one was one that Nokia declined the challenge, the essentiality of the impact with that stuff. I’d say there’s no direct impact, for example, over to the ITC case because those patents are not involved in that case. I think what it does, though, is I’m unaware of any other company at this point that has gotten a confirmation of essentiality of any patent for 3Gs. I think it puts us a sort of head of the pack with respect to judicial confirmation of our patent decision. I think that gives you additional strength in licensing negotiations when you can. You are taking a lot of the debate away, because now you can point to a court decision and say, look, you’re arguing about infringement, but you have a UK court that is determined that there’s infringement, or essentiality and with essentiality necessarily comes infringement. So, I think it has a qualitative a sort of impact right now with respect to not only Samsung but a lot of our licensees. Obviously, we’re up against a very well-resourced company Nokia and they were unable to achieve their objective in that case. So again, I think it was very positive for us.

[R.D. Malik:]

How much is your exposure to the US market and how much impact do you expect from the slowing economy?

[William J. Merritt:]

Most of our revenue today, I would say, I don’t know what the percentage is, a very high percentage is actually non-US based revenue. Scott can come on top of me. But lot of its coming out of Japan, and lot of its comes from Korea, from LG and other, we got a bunch coming out of Taiwan, and there is actually not a significant level of a US-based companies which we’re deriving revenue from. And I guess the other part of the question would be, what about the effect of those non-US companies on shipping into the US of their products? And, so far what we’ve seen is good performance by those licensees.

[Scott A. McQuilkin:]

Just perspective on the US market, it’s about 16% total handset shipments worldwide. So, it’s a significant factor, but not an overwhelming factor. Secondly, our concentration right now is really outside of the US, where we have significant strength with some of the Japanese OEMs, and the Japanese market, because they were the, really, came first out there with 3G. So, right now in terms of our current revenue base, it is small.

[Operator:]

And we’ll take our next question from Tom Carpenter - Hilliard Lyons.

[Tom Carpenter:]

Couple of questions based on your remarks in the call, and I got some other questions. Bill, one of the things you said about, when you’re talking about 2008, you said the strength of our position relative to Nokia and Samsung should be readily apparent. Can you help us understand that more is that based on some of the legal proceedings that you have had with them at the ITC or any other matters that we should know off?

[William J. Merritt:]

Tom, I put into three categories, right. One is certainly the result of the litigations with them. I think they’re seeing the portfolio holdup. They’re seeing the ITC case move forward. And so, I think that they, the strength of the patent portfolio is becoming, I believe becoming evident to them there. One of the things, you can look to is the number of attempts by Nokia to get out of the case. If you thought you were going to win, you wouldn’t be making every move you can to try to get out.

[Tom Carpenter:]

I think an analyst wrote about that recently?

[William J. Merritt:]

Yes, so, and I plagiarized from that. So, but I think you are exactly right, and it’s certainly how we react. I look back frankly to the Nokia arbitration on the 2G matters, and we had lots of sort of ancillary litigation being filed by Nokia, in which I will say that they felt like they had a strong position in the main case, they would focus in the main case right. I think second, we continue to have licensing success. And last year we, while we didn’t signup everybody, we set an aggressive target for ourselves as we should, we didn’t get everybody we wanted, but the folks we got were very high quality and people that have a good ability to evaluate IPR, I means, RIM is a very strong IPR company and same thing with Apple. And so, the fact that those companies take licenses with us reflects very well, I think, on the portfolio of the company. And I think, as well, our continued success in the standard of body. I think that, Nokia and other companies are observing how well we’re positioned. I think that the, this is one of the soft benefits, but it’s a good, very good soft benefit of the product initiatives that we’ve become even more skilled at this technology, and more credible. We already had a high level of creditability; I think we’ve risen to even higher level with the product operations. We’re a force to be reckoned with now within the standard of bodies and I think they see that, too. So, it’s not only a current issue for them, but they say, “My God, this will continue for a quite some time.” So I think all of that positions us very well to hopefully work things out with these folks.

[Tom Carpenter:]

And any update on whether the ruling, the preliminary stock ruling on March 24 will be available to the public? I assume if you receive something, you’ll release what you can since that is such a big impact?

[William J. Merritt:]

I don’t know if it’s public or not. Certainly whether we have to release something, we’ll be judged as to whether it’s material and there’s a material update to the case that we need to make and we’ll let Steve Sprecher and this team sort of deal with that. But I think it’s an important milestone and one that a lot of people are looking at, because it’s again one of those points in case where risks begin to shift.

[Tom Carpenter:]

Have you received the $95 million payment from LG?

[Scott A. McQuilkin:]

It is actually due now. And we expect it any day.

[Tom Carpenter:]

And just so I’m clear, currently there is a $100 million buyback and you didn’t announce a second $100 million buyback. We’re still on the existing when you previously announced?

[William J. Merritt:]

That’s correct.

[Tom Carpenter:]

With the levels we have here, which are about half we were a year ago this time or the first half of ‘07, I would assume you would be very interested in expanding the buyback as and when you receive extra moneys from some of your licensees?

[Scott A. McQuilkin:]

I think that’s something that we are thinking about. We have announced a new program. Obviously, it’s dependent on how much cash we have on hand and we’d like to keep very strong balances for a number of reasons and also an outlook going forward in terms cash inflows and outflows. But our cash flow position is strong. I think that’s something that we regularly look at. And of course given the stock price, that’s why we announced first authorization and we’re working through that now.

[Tom Carpenter:]

Have you been buying back this quarter or have there been restrictions you have faced and catch you on the sidelines?

[Scott A. McQuilkin:]

We put together a 10b5-1 plan and we have been buying back.

[Tom Carpenter:]

Regarding Samsung and the 2G arbitration, I believe there’s a hearing on like the first or second week of February. I guess if you want to call it the third arbitration at ICC. Has the tribunal decided to move forward on that application? Have there been more hearings scheduled?

[William J. Merritt:]

I think at this point and again, I sort of defer to the 10-K disclosure tomorrow just, so you can get the full picture, but that hearing did take place. And, the tribunal now has to rule with respect to the issues on that, but that were in front of them there and that sort of determines, I think, the future issues, if any, in the case.

[Tom Carpenter:]

Just so I’m clear, that they haven’t ruled yet whether they’re going to move forward or not.

[William J. Merritt:]

Yes, they haven’t ruled subsequent to that second hearing. We’re still waiting for the ruling.

[Tom Carpenter:]

And just a follow up to that one, have you asked for the 2006 Samsung sales reports at that arbitration?

[William J. Merritt:]

Yes, I think one of the things we’re trying to do in the third arbitration is basically resolve any of the open financial questions, so part of that is 2006 royalties.

[Tom Carpenter:]

It’s my understanding that, whatever $166 million bonds is for their sales from 2005 and 2006. It doesn’t include their ‘06 sales, which was part of your license with them?

[Scott A. McQuilkin:]

That’s correct.

[Operator:]

And we’ll take our next question from Amit Kapur - Piper Jaffray.

[Amit Kapur:]

In terms of the recent semiconductor license you announced, Scott, maybe, could you give us a sense of how much revenue from that is included in the Q1 revenue guidance?

[Scott A. McQuilkin:]

There is revenue included in the Q1 guidance. It’s probably less than $1 million.

[Amit Kapur:]

And I know you can’t give guidance in terms of the out quarters, but philosophically, how should we think of kind of OpEx ramp throughout 2008?

[Scott A. McQuilkin:]

I think the what we have communicated is we’re pretty much fully ramped on the product side. And I would say that that still continues to be the case and that is the outlook going forward. What could change to the extent that we start engaging as we expect later in the year, with some customers and producing the chips in significant volumes, we may have costs associated with that? But of course, there would be revenue additions associated with that as well. So, I think we’re pretty much fully ramped in terms of the development for the product side. In terms of litigation, of course, the expense levels that we’re seeing right now are high compared to history. As we’ve said, it’s dependent on the level of case activity. I would say, generally, I don’t see a big increase there based on the current case list of cases. But what is hard to predict is whether or not there will be new actions or cases that we don’t have today.

[Amit Kapur:]

So just as it relates to the litigation expenses and patent and licensing what proportion of those expenses would you say are kind of at elevated levels? How should we think of the steady state levels of those expenses?

[Scott A. McQuilkin:]

Hard to predict, you’re asking specifically about the arbitration and litigation expenses.

[Amit Kapur:]

Yes. I know you’ve got a lot of caseloads going on right now. Once those end and kind of wind down how much expenses could be taken out.

[Scott A. McQuilkin:]

Yes. Well as a prospective last year, we were looking at I think $21 million litigation and arbitration expenses, closer to $40 million level kind of right now. Again, that may go up and down a little bit this year. I would like to believe that in terms of where we are in the technology licensing cycle, and given the historically high level of expenses we’re seeing there, that we would be close to a peak level. That said I don’t want to be making predictions, just because it’s hard to predict what kind of new case activity might come down the road.

[Amit Kapur:]

You kind of mentioned that there was maybe a little bit of weakness in some of the Japanese licensees. Can you kind of talk through what you’re seeing in the Japanese market? Is it some of your licensees losing share? And then what is your overall outlook for 3G market in 2008?

[Scott A. McQuilkin:]

The way I would characterize the situation with our Japanese licensees, first, the Japan market was, kind of, first out of the blocks in 3G, so it’s a well-developed market. And we had great success there in terms of licensing the major players. And with a couple exceptions, which aren’t significant, they’re all kind of variable-rate royalty payments. So, the royalties go up and down based on value. In terms of what’s happening in that market, we see ups and downs from quarter to quarter for all the players and it tends to be based on a couple things. One is whether or not they had success with new product activities with the operators over there. And secondly, there are shifts we see from quarter to quarter in terms of what’s happening at the wholesale shipments level versus the retail level. Sometimes they’ll be building inventories. Sometimes they’ll be drawing them down. Our royalties are based on wholesale shipments rather than retail shipments. With that said, what I would say is going back to our third quarter; we saw some very high levels of shipments at the wholesale level for a number of folks. And that was a function of both a very strong market share on the retail side plus significant increases in the retail inventory levels. That was, then, offset a bit in the fourth quarter by lower market share and drawing down some of those inventory levels. Importantly, at the same time, we saw decreases in, I think, three of the players. We also saw increases in three other players. So to some extent, they take turns going up and down. And what we just saw in the fourth quarter was a number of the larger ones went down following very sizeable shipments in the third quarter. Importantly, also, we’ve got some royalty reports from those folks looking forward to the first quarter. And with one exception, we’re seeing some good rebounds there, as we expected to see.

[Operator:]

And we’ll take our next question from Bennett Notman - Davenport & Company.

[Bennett Notman:]

Can you talk a little bit about whether or not there are any sort of changes in the rates from, I think you renegotiated a couple of the deals in the last year or so. I’m just wondering if that’s sort of flowing through and impacting any of the Japanese royalty reports.

[Scott A. McQuilkin:]

Yes, for one of the players, it is. And we had some adjustments that were reflected in royalties during the second half of the year, the third and the fourth quarter. And that’s pretty much done.

[Bennett Notman:]

So that’s played its way through for the most part?

[Scott A. McQuilkin:]

Yes.

[Bennett Notman:]

And then, would you expect any changes in Q1 in terms of who are 10% customers? I’m thinking, specifically to RIM and sort of the success that they’ve had. Are they going to be up at that level as we get into ‘08?

[Scott A. McQuilkin:]

Don’t expect that. We’ve seen good growth in RIM, but compared to some of the other players, they’re not yet close to the 10% level.

[Operator:]

And we’ll take our next question from Ben Mackovjak - Rivanna Capital.

[Ben Mackovjak:]

Can you update us on a share count?

[Scott A. McQuilkin:]

Fully diluted shares averaged about $49 million in the fourth quarter.

[Ben Mackovjak:]

And that’s your current share count as of today?

[Scott A. McQuilkin:]

Absolutely.

[Ben Mackovjak:]

And also, can you give us a CapEx estimate for this year?

[Scott A. McQuilkin:]

On the CapEx side, we expect the CapEx to go down. And I would say somewhere in the $10 million range would be reasonable.

[Ben Mackovjak:]

And that share count?

[Scott A. McQuilkin:]

Where’s the share count? $46.4 million as of February 22. I’m sorry, million dollar shares.

[Ben Mackovjak:]

Is there anything you can share with us on the deal that was announced yesterday? I know from an investor’s standpoint it’s kind of difficult with such a limited disclosure for us to kind of gauge the impact of these things.

[William J. Merritt:]

And we appreciate that. And on the other side, we had some commercial sensitivities with a customer who is obviously trying to get ready for market and may not want to let its competitors know it’s getting ready for a market. I think it’s a couple of things. I think that would be important. One is it’s certainly with a company that already has a good level of sales of ASICs into the world’s largest market in Asia. And I think we all know who that is, what market that is. So, I think that it’s a very good customer for us to be aligned with. It’s a situation like our other technology agreements where there’s a NRE component. And I think Scott already indicated sort of the range of that. Obviously, the bigger and more important component of the deal is the royalties on the sale of chips. It’s certainly a type of company that you would expect to move pretty aggressively into the market. Also, with respect to Asia, one of the things that we’ve talked about before was the importance of establishing ourselves as a technology innovator and someone who’s able to help local industry, particularly important in a number of countries over there. In particular, if you want to have as a follow-up opportunity patent licensing, I think it’s certainly what we’re doing with this customer is part and parcel of the overall patent licensing program, which has established the company as a strong technology contributor into the local industry. And then leverage that position into patent license agreements with the handset manufacturers in that region.

[Ben Mackovjak:]

And so last quarter, you guided for two deals to be signed by the end of last year or early last month? You had the Giant deal. This is not the second deal, is that correct?

[William J. Merritt:]

No, this was a different deal. What we were working on and continuing to work on, we had two patent licensing deals, Giant got done. The other one slipped sideways for a little bit but now it’s moving forward again.

[Ben Mackovjak:]

Do we still have that one in the pipeline?

[William J. Merritt:]

Yes. That’s right.

[Operator:]

And we’ll take our next question from Bill Nasgovitz - Heartland Funds.

[Bill Nasgovitz:]

You talked about the top five. Could you give us some more color on at least three of those? What’s happening and where do you think we are?

[William J. Merritt:]

With respect to the top five, I think that certainly what’s public is the litigation activity with Nokia and Samsung and the timetables associated with that litigation activity. And certainly, if you looked at statistics you’d say, okay, these are the type of things as they get to certain points in time in those litigations that they’re more likely than not to settle. I mean you can’t predict the outcome of any particular case. And I can tell you that with respect to those issues, we have a good level of dialogue ongoing. I think that at least certainly in one instance, I think there’s a reasonable attempt by the parties to try to come up with a structure. As I’ve often mentioned, these are difficult negotiations involving very significant sums of money. So the resolutions don’t come easy. But I do see initiative on both sides to try to work something. So I think that that’s a positive thing. Our activity, Bill, though, is not just limited to these folks that we’re in litigation against. We have discussions ongoing with others as well. I think that the litigation can incentivize not only the parties in the litigation but can incentivize parties outside the litigation, because certainly positive results for us in those litigations, we can use them as leverage in negotiations with the parties that are not in the litigations. So, I think both Scott and I are pretty upfront with respect to 2008 being a year I think we can deliver some high-quality deals. I think everything and the investments we made last year certainly are positioning us for that. We have those at the end of the day, but I think our positioning really couldn’t be much better at this point.

[Operator:]

And we’ll take our next question from Michael Ciarmoli - Boenning & Scattergood.

[Michael Ciarmoli:]

But I just want to expand a little bit, someone was asking about RIM possibly being a 10% customer in 2008. I know RIM has been putting up some very solid results and you just signed that expanded deal with them. Is your contract more weighted towards their 3G sales? Or is it equally weighted between 2G and 3G?

[Scott A. McQuilkin:]

We get paid on all sales 2G and 3G.

[Michael Ciarmoli:]

Is the rate rose higher on 3G or 2G?

[Scott A. McQuilkin:]

It is a function of their sales and so we look at numbers of 3G sales.

[William J. Merritt:]

You have a couple of things, Mike, there. Without getting into the specific rate structure, you do have on the 2G side, so overall price declines in 2G. And so whatever royalty rate you’re applying, it may get applied to a lower base, except the 2G sales. Scott said that there is compensation for that. In fact their level of 2G sales is much higher. As we always have in our deals, and it’s one of the things that people like about the way we structure deals. We have caps and floors and things like that, that also could affect it. So at this point, I think the 2G contribution is much higher and that really is just driven by the fact that the 2G sales are much higher.

[Operator:]

We’ll go next to Tom Carpenter with Hilliard Lyons.

[Tom Carpenter:]

In the UK, I wanted to ask some questions about those two patents. The 675 patent, which I think that’s the one Nokia drew out your challenge. That one is a system patent, is that correct?

[William J. Merritt:]

I don’t recall that. I know generally the vintage of those patents. But I don’t recall specifically what the patent coverage is. And it’s always hard to say whether something is system or whether the claims inside of that. The specification itself can be a system specification. But the claims can be directed to the bay stations, handsets, or some combination thereof.

[Tom Carpenter:]

But what about the 610, that was a handset patent, correct?

[William J. Merritt:]

I think with respect to both of these, we believe that they’re relevant to the handset products. Again, the question is, is it a direct handset claim, or is it a contributory handset claim? We’d have to get it back and read the claim language. And one of the nice things about being a CEO and General Patent Counsel, I don’t have to do that anymore.

[Tom Carpenter:]

Is the 610 patent, is it for kind of the vanilla WCDMA/UMTS, kind of a FDD portion, or will it also cover some higher speed data TDD?

[William J. Merritt:]

Both of those were pretty early on patents dealing with pretty fundamental stuff. One deals with, I think the pilot code, and the other one deals with power control. And they’re pretty, again, sort of just my sense, and I could be wrong in this, these are general fundamental aspects of CDMA systems. So it doesn’t really matter whether it’s 384 kilobits per second or 14.4 megabits per second. I think that they’re all going to rely on the same basic architecture.

[Tom Carpenter:]

This is looking at the ITC and how some of the stuff might progress this year; over the past couple of years, especially regarding your old dealings with Nokia and Samsung and also Qualcomm dealings with Nokia, the other parties are trying to prolong the proceedings as long as they could, file a lot of cases and you run out the clock. If you do wind up getting a favorable preliminary ruling and then a favorable ruling from Judge Walker, what’s to stop these companies from trying to prolong it as we go into 2009, and file appeals? And that a handset band is one of the potential remedies that definitely holds them a little more accountable, but what’s to stop them if they lose to keep on appealing the Samsung to run these 2G thing out two or three years past where should have? And that’s probably one of the worries in the investment community that when does this stop? When’s the end game?

[William J. Merritt:]

Let’s take it into two pieces. Let’s talk about the 2G piece with Samsung and then the ITC piece. I mean I think as I mentioned one of the prior questioners that the prevailing at the District Court was a big thing for us because it moved the money into a neutral party. The money is now sitting at the court. And you’re really in a process now of just getting through that remaining court proceeding. And I don’t believe that, and this is my view, is that they have any legitimate case before on appeal. They have even less of a case with respect any sort of rehearing or trying to get Supreme Court review of something like this. So I think that the time is pretty limited on what they can do with respect to that issue. So I don’t lose a lot of sleep worrying about whether that money comes our way. I believe it will, and I believe it’s not something that gets extended out for years and years. On the 3G side, I think Tom, I think you sort of answered your own question, which is one of the important aspects of the ITC is the fact that is, one, it moves quickly and second, it imposes import bans. Typically, those import bans are not a go into effect, notwithstanding an appeal of the case. There have been cases where the ban is restricted, but that typically, dealt with issues that we don’t have in our case. For example, you may not have had the customer that’s going to be the subject of the ban, wasn’t part of the case. Here the customers that we would be seeking to, or companies that we’d be seeking to have the imports are in the case. So I think all of that happens, absent some other thing happening in the cases, but right now, things are moving pretty well. That we believe that that import bans if we succeed, goes into place this year. And given the importance of the US market to Samsung, they’re obviously a very big player in the 3G market in the US. And Nokia, this is not one of their better markets. It’s one, I think, even at 3GSM this year that they were talking about how they’re really going to work on improving their sales into the US market. So I think I would be very surprised if, as a strategic move, either of those companies decided to exit the US market as a way to continue in some sort of legal battle with us. So I think that everything has lined up pretty well for us this year, and certainly my hope is that we don’t get to the imports bans. You want to resolve these things ahead of time on deals that make a lot of sense for both parties and that’s what we’re trying to do. But I think there is a backstop on this whole thing.

[Operator:]

And with no further questions in the queue, I’ll turn the call back over to our speakers for any additional or closing remarks.

[Janet Meenehan Point:]

Well, thank you very much. And we’re certainly around and available if you have any additional follow-up questions. And thanks for listening on us.