KING OF PRUSSIA, Pa.--(BUSINESS WIRE)--
InterDigital, Inc. (NASDAQ: IDCC) today announced the company's decision
to expand its technology development and licensing business through
targeted new investment in both cellular and non-cellular wireless
technologies. InterDigital(R) also intends to cease further
product development of its SlimChip(TM) HSPA technology and
proceed to monetize the product investment through technology licensing.
As a result of the alignment of activities, the company anticipates that
its core operating expenses, excluding arbitration and litigation
expenses, will decline by approximately $33 million pre-tax on an
annualized basis compared to 2008.
"The decisions made today will result in substantially higher levels of
profitability for the company and further enhance InterDigital's
position as a key innovator of wireless technologies," said William J.
Merritt, President and Chief Executive Officer of InterDigital. "Our
strength as an organization has always been invention, whether it is
contributing fundamental solutions to the leading standards bodies or
driving the development of entirely new systems and solutions to serve
the needs of wireless users in the future. The rapid expansion of
wireless technologies and services and the increasing needs of users
present a tremendous opportunity for InterDigital to create the
solutions that will make true wireless ubiquity a reality."
InterDigital's expanded development efforts will include increased
participation in core cellular development and wireless standards
bodies, which has historically generated significant value for the
company. Driven by the rapid expansion of wireless beyond cellular
technologies, the company's development efforts will also move beyond
core cellular into other areas of the overall wireless segment, building
on InterDigital's current successful efforts in wireless handover,
security and other areas.
The refocusing of the SlimChip business on IP licensing opportunities
results from the company's decision to evaluate options for the business
announced in October 2008. Discontinuing the development and
commercialization of silicon products and focusing on IP-related
opportunities significantly reduces the company's cost structure and
enables InterDigital to capitalize on the significant interest in the
SlimChip technology that was revealed during the evaluation process.
"The SlimChip is a clear technology success and all the people who
contributed to it should feel proud of that achievement," added Mr.
Merritt. "However, an increasing proportion of costs were associated
with silicon production and support. Given the significant
commoditization of the baseband modem business, we believe this is the
right time to cease further investment in chip development and
aggressively seek to monetize that investment through technology
licensing. Indeed, we already have successfully licensed the 3G modem IP
to Infineon, NXP, and Spreadtrum, and we expect to continue to receive
revenue under these agreements."
The realignment of the SlimChip business will result in a reduction in
force of approximately 100 employees across InterDigital's three
locations. The move is expected to result in annualized pre-tax cost
savings of approximately $33 million, 65 percent of which would be
cash-related. With the repositioning in place, the company expects its
development expense for second quarter 2009 to be in the range of $14
million to $15 million, compared to the $22.7 million recorded in second
quarter 2008.
In addition, the company expects to recognize a repositioning charge of
approximately $45 million in first quarter 2009, comprised of $35
million in non-cash charges and $10 million in cash charges associated
with severance and other obligations. The non-cash charges relate
primarily to intangible assets associated with development licenses of
approximately $21 million and property, equipment and other assets of
approximately $14 million.
Conference Call Information
InterDigital will host a conference call on Monday, March 30, 2009, at
12:00 noon Eastern Time (ET) to discuss this announcement and other
company matters. For access to the conference call within the United
States, please dial (888) 802-2225 by 11:50 a.m. ET on March 30th
and ask the operator for the InterDigital Conference Call. Participants
calling from outside the United States should dial (913) 312-1254.
InterDigital will also provide live access to the call on its web site
at www.interdigital.com.
The company encourages participants to take advantage of the Internet
option if possible. For the live Internet broadcast, click on the link
to the Live Web Cast on the homepage.
In addition, a replay of the call will be available from 3:00 p.m. ET on
March 30th through 3:00 p.m. ET on April 4th. To
access the recorded replay, dial (888) 203-1112 or (719) 457-0820 and
use the replay passcode 1046318. A replay of the conference call will be
available for 30 days on InterDigital's web site, in the Investing
section.
About InterDigital
InterDigital designs, develops and provides advanced wireless
technologies and products that drive voice and data communications.
InterDigital is a leading contributor to the global wireless standards
and holds a strong portfolio of patented technologies, which it licenses
to manufacturers of 2G, 2.5G, 3G, and 802 products worldwide.
InterDigital's differentiated technology delivers time-to-market,
performance and cost benefits.
For more information, visit www.interdigital.com.
Safe Harbor Statement
This press release contains forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. Such statements include information regarding our current
beliefs, plans and expectations, including, but not limited to,
statements with respect to: (i) expansion of the company's technology
development and licensing business; (ii) realignment of the SlimChip
business; (iii) fiscal 2009 operating expenses excluding patent
arbitration/litigation expense; (iv) increased profitability as a result
of the restructuring efforts; (v) revenues from the company's licensing
agreements with Infineon, NXP, and Spreadtrum; (vi) the reduction in
force and pre-tax cost savings in connection with the realignment of the
SlimChip business; (vii) second quarter 2009 development expenses; and
(viii) a repositioning charge in first quarter 2009. Words such as
"intends," "anticipates," "will," and "expect" or similar expressions
are intended to identify such forward-looking statements.
These forward-looking statements are based on management's current
expectations, estimates, forecasts and projections about the company and
are subject to risks and uncertainties that could cause actual results
and events to differ materially from those stated in the forward-looking
statements. These risks and uncertainties include, but are not limited
to, those identified in this press release, as well as the following:
(i) unexpected deterioration of the company's financial condition; (ii)
unanticipated developments in the cellular or non-cellular wireless
markets; (iii) our ability to continue to attract, retain and motivate
qualified personnel with specialized licensing, engineering and other
skills; (iv) our ability to leverage our strategic relationships and
secure new licensing agreements for the SlimChip technology on
acceptable terms; (v) changes in technology preferences, needs,
availability, pricing and features of competitive technologies; (vi)
unanticipated development or other operating expenses and the timing of
such expenses and costs; (vii) unanticipated delays or difficulties in
our technology development efforts, testing and evaluations; (viii) the
failure of either the company or Infineon, NXP or Spreadtrum to observe
the covenants under their respective license agreement for any reason;
and (ix) changes to generally accepted accounting principles and/or the
company's existing accounting policies.
Risks and uncertainties that could cause the company's actual results to
differ from those set forth in any forward-looking statement are
discussed in more detail under "Risk Factors," "Business" and
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" in the company's Annual Report on Form 10-K for the year
ended December 31, 2008, as well as similar disclosures in the company's
subsequent Securities and Exchange Commission filings. Forward-looking
statements contained in this press release are made only as of the date
hereof, and the company undertakes no obligation to update or revise the
forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required by applicable law,
regulation or other competent legal authority.
InterDigital is a registered trademark and SlimChip is a trademark of
InterDigital, Inc.
Source: InterDigital, Inc.
Contact: InterDigital, Inc.
Media Contact:
Jack Indekeu, +1 (610) 878-7800
jack.indekeu@interdigital.com
or
Investor Contact:
Janet Point, +1 (610) 878-7800
janet.point@interdigital.com