InterDigital, Inc. (IDCC), the patent and technology licensing company run by CEO Bill Merritt, said it expects total third quarter 2016 revenue to be between $200 million and $225 million.
The Wilmington, Delaware-based company said it expects third quarter recurring revenues to be in the range of $80 million to $85 million and past sales to be between roughly $120 million and $140 million.
The recurring revenue figures compare favorably with the average estimate of $78.33 million, according to Yahoo Finance. InterDigital was previously expected to post recurring revenue of $95.54 million in the fourth quarter, $357.51 million for the year and $405.1 million for 2017.
InterDigital is issuing revenue guidance only a few days after announcing a long awaited, multi-year, worldwide, non-exclusive royalty bearing patent licensing agreement with Huawei Investment and Holding Co. Ltd. The company hasn’t said how much it expects to get from the royalty-bearing licensing agreement.
Richard Brezski, InterDigital’s chief financial officer, said the revenue guidance reflects sequentially lower per-unit royalties from certain Taiwanese licensees driven by the timing of anticipated new product introductions, offset by a higher fixed-fee royalty component based on the estimated impact of patent license agreements signed during the quarter.
Analysts said the Taiwanese licensees are probably Pegatron and Apple.
The guidance is based on preliminary accounting results that are subject to review and finalization. In addition, this revenue guidance is based primarily on royalty reports received to date, and does not include the potential impact of any other new patent license, technology solutions or patent sale agreements that may be signed, or any arbitration or dispute resolutions that may occur, during the balance of third quarter 2016.
In April, InterDigital announced that Chinese telecommunications giant Huawei had finally agreed to begin making royalty payments under a licensing agreement, which had been in arbitration in Paris.
An arbitration panel had ruled in InterDigital’s favor on the royalty amount and a Paris court had upheld the award.
InterDigital has said it is hoping that Huawei’s decision to begin paying the royalty will help it with discussions with other Chinese telecommunications companies, as well as LG Electronics and other unlicensed companies.
Merritt has said the the company expects to double its profit within a reasonable period of time by using agreements such as the one with Huawei to convince other alleged infringers of its patented technology to reach similar settlements.
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