This column is for investors willing to take more risk and potentially receive more reward.  The stocks mentioned in this column are not recommended to buy or sell.  They're brought to your attention so you can investigate them further to determine if they fit your risk profile.  Most of the stocks will have less than $1 billion of market capitalization, have more volatility than other stocks, and oftentimes no earnings.  And some will have tremendous stories.

June 19, 2009 - InterDigital, Inc. (IDCC-NASDAQ) through its subsidiaries, engages in the design and development of digital wireless technologies for use in cellular and wireless IEEE 802 related products. The company licenses its technologies to semiconductor companies, and producers of wireless equipment and components, such as 2G, 2.5G, 3G, and IEEE 802 products worldwide.

InterDigital's solutions are incorporated in various products, including mobile devices, such as cellular phones, wireless personal digital assistants and notebook computers, and data cards; base stations and other wireless infrastructure equipment; and components for wireless devices. The company was founded in 1972 and is headquartered in King of Prussia, Pennsylvania.

InterDigital is having a turnaround year. After seeing earnings of $4.04 a share in 2006, the company reported 72 cents in 2007, then 57 cents in 2008. That's not the direction most investors like to see. But this year, the bottom line should show a definite improvement. The consensus among 4 anlaysts following the company is for earnings to be $1.57 a share, then for 2010, $2.42.

In the first quarter, revenues were up 26% compared to the same period last year thanks to a new license agreement with Samsung Electronics. The company settled a licensing litigation with Samsung Electronics in January. It granted Samsung a royalty-bearing license that covered Samsung's sale of all 3G products which include high-speed cellphones and smartphones through 2012. That should be worth about $400 million to IDCC. There's a similar suit ongoing with Nokia. IDCC has 3 main customers: Samsung with 30% of sales, LG with 20% and Sharp with 11%.

For all of 2009, expect revenues to increase by 31%. For 2010, look for an improvement of 16%. Over the next 5 years, the average per year should be about 10%. Earnings are forecast to grow by 20% a year, on average, in the same time frame. That compares to the last 5 years average annual growth in earnings of 25.5%. The better earnings will come from higher profit margins as litigation activity has been lowered recently and increased volume.

There's plenty of cash in the till, about $186 million or $4.25 a share. That gives the company plenty of flexibility, especially since debt is only 2% of the balance sheet. In 2008, it used some of its cash to buy back $82 million worth of its own stock. Another use of cash: investing in new technologies or buying other companies.

More numbers: Price to Sales is 4.39. Price to Book is 12.95. Operating margin for the last 12 months was 18.88% while Profit margin was 4.2%. Return on Equity was 9.75%. Total debt is $2.6 million. Current ratio is 2.06. Book Value per share is $1.885. There are 43.71 million shares outstanding. Insiders own about 1.67%, institutions 52.2%. There is no dividend.

InterDigital has a good story. Everybody likes a turnaround. But many investors have already heard it and believe. Valuations are fairly high even though the stock is well off its 52-week high of $33.70 set on February 2 of this year. If the stock continues to fade, it may be a good pick for aggressive investors looking for a way to participate in the wireless world.

- Company Web site: www.interdigital.com

- Ted Allrich