Sample M&A Pitch Book

NOMURA CASE STUDY

COMPETITION

Technology Case Study: Plexonix

Amit Rander Lokesh Bahety

DMS, IIT Delhi

OVERVIEW

• Computers and peripherals market has grown at a CAGR of

5.5% from 2005 to record $218.5bn in 2010

• China is all set to outpace USA in the next couple of years

with a high population using computers and a CAGR of 11.7%

in the last five years as against 3.6% achieved by the US

• Emerging economies like India and Brazil set to be major

players with 5 year CAGRs of 16.6% and 21.2% respectively

• The top five companies in this sector in US are Hewlett-

Packard, Dell, Apple, Acer and Canon while those in China are

Logitech (China), Microsoft (China), Dongguan Zhongyu

Electronics, Lenovo and Hewlett-Packard Asia

167.1

179.5

197.4

210.2

194.3

218.5

150

160

170

180

190

200

210

220

230

2005 2006 2007 2008 2009 2010

$bn

GLOBAL COMPUTER AND PERIPHERALS MARKET

FORECAST SALES IN DEVELOPED COUNTRIES

0.0

10.0

20.0

30.0

40.0

50.0

2011 2012 2013 2014 2015

USA Japan UK

CAGR: 5.5%

CAGR: (2.4%) CAGR: 1.2% CAGR: (0.8%)

FORECAST SALES IN DEVELOPING COUNTRIES

$bn

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2011 2012 2013 2014 2015

China Latin America India

CAGR: (2.4%) CAGR: 1.2% CAGR: (0.8%)

$bn

With the developed world struggling, the Emerging Economies are set to take Center-stage as evident from the sales forecast

Source: Euromonitor International

Note: Computers and Peripherals include desktops, portable computers, laptops, netbooks, tablets, monitors, printers and otherperipherals

Industry Landscape (Computer and Peripherals)

Amit Rander, Lokesh Bahety DMS, IIT Delhi 2

Industry Landscape (Smart Phones)

OVERVIEW

• For quarter ending March ’11, smartphone sales accounted for

25% of all mobile sales, up 17% year on year

• For the same period, global smartphone sales were at 100

million, up 85% year on year

• Considerable sales increase in developing market, specially

China and Brazil with CAGR in excess of 100%

• Top 5 vendors in the smartphone sector globally (by Q2’11

sales results) are Nokia, Samsung, LG, Apple and ZTE,

whereas Android, Symbian, iOS, RIM and Bada dominate the

OS market for smartphones

GLOBAL MOBILE PHONE SALES

SHIFTING COMPETITIVE ADVANTAGE (SHIPMENTS:MM UNITS) SMARTPHONE SALES FORECAST (MM UNITS)

• Smart phone market is poised to see some major upheavals as Wireless mobile access will continue to impact all aspects

of consumer behaviour and high-speed connectivity becomes a requirement of both business and personal use

• Feature phones category is expected to continue to decline over the forecast period, as OS-based smartphones become

the industry standard

Source: Euromonitor International

Vendor 2Q'11

Shipments 2Q'11

Mkt. Share 2Q'10

Shipments 2Q'10

Mkt. Share 2Q'11/2Q'10

change

Nokia 88.5 24.2% 111.1 33.8% (20.3%)

Samsung 70.2 19.2% 63.8 19.4% 10.0% LG Electronics 24.8 6.8% 30.6 9.3% (19.0%)

Apple 20.3 5.6% 8.4 2.6% 141.7%

ZTE 16.6 4.5% 12.2 3.7% 36.1%

Others 145 39.7% 102.3 31.2% 41.7%

Total 365.4 100.0% 328.4 100.0% 11.3%

111.0

126.8

153.3

170.7 166.9

197.0

100

120

140

160

180

200

220

2005 2006 2007 2008 2009 2010

$bn

CAGR: 12.2%

0

50,000

100,000

150,000

200,000

250,000

2010 2011 2012 2013 2014 2015 2016

US China India Brazil

DMS, IIT Delhi Amit Rander, Lokesh Bahety 3

• Under-penetration in emerging market . Seeks foray

in Chinese and Indian markets

• Mired by patent infringement

• Dependence on third party IP and digital content

• PC, mobile & digital music player manufacturer

• Sells software, 3rd party digital content and

applications

• Online and retail stores (300). Online reach of more

than 25 countries

• Target customers: retail , small & mid-sized

businesses

• Market cap of $300 billion

Desktop & Laptop

Music player

Smart phone

Tablet

Hardware

Software

P

O

R

T

F

O

L

I

O

27%

25% 15%

20% 13%

Revenue break up by geography

America

EMEA

Japan

Asia Pacific

Online Retail

10% 6%

13%

14% 32%

10%

15%

Revenue break-up by product segment

Software

Desktop

Laptop

Music Player

Smart phone

Tablet

Other Hardware

Year 2010 2009

Total revenue 59.3 39.0

Total assets 68.3 43.1

EBITDA 17.6 11.4

Cash and near cash 10.2 4.8

EPS 15.15 9.08

OVERVIEW

Looking at geographical leaders in design and distribution

CHALLENGES

FINANCIAL METRICS (IN $ BILLION EXCEPT EPS)

Increased focus on R&D

Decreasing brand loyalty

Changing technology

Aggressive price wars

The Acquirer: Plexonix

Source: Nomura Technology Case Study 4 Amit Rander, Lokesh Bahety DMS, IIT Delhi

0

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4,000

6,000

8,000

10,000

12,000

14,000

16,000

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80

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3/4/2011

5/4/2011

7/4/2011

9/4/2011

11/4/2011

'00

0

Volume Share price

COMPANY OVERVIEW

• Provides advanced technologies that enable wireless

communications

• Portfolio comprises of 1,300 US and 7,500 non US patents of

technologies enabling wireless communications

• More than 90% of the revenue comes from patent licensing

operations

• Offers licenses of their patents to equipment producers

that manufacture, use and sell digital cellular products

• Products incorporating their patented inventions include:

mobile devices, tablets, notebook, wireless PDA

• Works on technology including next-generation wireless air

interfaces and technologies to enhance connectivity and

mobility across networks

44%

31%

15%

10% Korea

Japan

North America

Other Asia

REVENUE BREAKUP BY GEOGRAPHY (2010) SHARE PRICE MOVEMENT

KEY FINANCIAL METRICS ($MN EXCEPT PER SHARE DATA)

Year 2010 2009

EPS (diluted) 3.43 1.97

Total Assets 874 908

Total revenue 394 297

EBITDA 260 135

Total debt 468 1,052

P/E 8.34 12.45

Total revenue: $394 mn

Target 1: InterDigital Inc.

Source: Company Annual Filing, yahoo finance 5

Amit Rander, Lokesh Bahety DMS, IIT Delhi

COMPANY OVERVIEW

• Chip designer of mobiles, digital music players, and other

digital devices

• Builds processor designs for consumer electronics and

embedded devices, such as computing, digital TV,

microcontrollers, networking and smartcard

• World’s leading semiconductor intellectual property

supplier

• Cheaper for semiconductor companies to license ARM

technology than reproduce it in-house

• 75% of global devices use 32-bit processors use ARM tech

• More than 800 processor licenses

• On an average, there are 2.5 ARM processor-based chips in

every mobile phone handset

32%

13%

12%

11%

8%

24%

United States

Taiwan

South Korea

Japan

China

Others

REVENUE BREAKUP BY GEOGRAPHY (2010) SHARE PRICE MOVEMENT

05001,0001,5002,0002,5003,0003,5004,0004,5005,000

0

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11/2/2011

Mill

ion

s

Share price Volume

Year 2010 2009

EPS(diluted) 9.34 5.45

Total assets 1,084 844


EBITDA 184 120

Total debt Nil Nil

P/E 31.90 22.56

KEY FINANCIAL METRICS (£MN EXCEPT PER SHARE DATA)

Total revenue: £406 mn

Target 2: ARM Holdings



COMPANY OVERVIEW

• Digital music service provider

• Focus on music business which consists of music content,

distribution channel and music service rendered to users

• Based on research data from Ovium, global market size of

digital music will reach $20bn by 2015

• Mobile internet market in China, with a market size of

RMB20.25 billion which represents a YoY growth of 31.1%

• Holds original music contest and positions A8.com as an

online theme collection platform to gather music contents

• Provides B2B and B2C content platform

• Strategy to focus on various end user devices focusing on

cloud computing

• Plans to expand cooperation with domestic handset

manufacturer

REVENUE BREAKUP BY BUSINESS (2010) SHARE PRICE MOVEMENT

0

5

10

15

20

25

30

0

1

2

3

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11/4/2009

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Mill

ion

s

Share price Volume

23%

47%

23%

7%

Ringtone

Ringback tone

IVR Music

Other

*Note: All figures converted from RMB to USD using average of yearly RMB/USD quotes


Target 3: A8 Music

Year 2010 2009

EPS 0.01 0.03

Total assets 94 88


EBITDA 7 18

Total debt Nil Nil

P/E 6.20 2.26

KEY FINANCIAL METRICS ($MN EXCEPT PER SHARE DATA)*



COMPANY OVERVIEW

• Live television, Internet video, and Video of Demand

services under one package

• Generates revenues through consumer service (direct

subscribers), developing technology for television service

providers and media services

• Advertisement solutions including interactive advertisement

and audience measurement services

• Detailed anonymous aggregated reporting on actual viewing

and screen by screen interaction by consumers

• Owns around 200 patents, 370 patents pending • Big spender in R&D ($81.6 mn), and wants to continue the spend

despite losses ($84.5 mn) in the last quarter • Outsource manufacturing of their products to third-parties

REVENUE BREAKUP BY BUSINESS (2010) SHARE PRICE MOVEMENT

Source: Company Annual Filing, yahoo finance

0

10

20

30

40

50

60

70

80

02468

101214161820

11/4/2009

1/4/2010

3/4/2010

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3/4/2011

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Mill

ion

s

Share price Volume

Note: All figures have been converted from RMB to $ using average of yearly RMB/$ quotes

Year 2010($) 2009($)

EPS(diluted) (0.22) 1.01

Total assets 310 266


EBITDA (16) 97

Total debt Nil Nil

P/E NA 10.14

64% 12%

24%

Service

Technology

Hardware


KEY FINANCIAL METRICS ($MN EXCEPT PER SHARE DATA)

Target 4: TiVo

8 Amit Rander, Lokesh Bahety DMS, IIT Delhi

Zeroing Down on InterDigital

IDCC continues high quality invention

Tablet Smart phones 42%

ALL ABOUT PATENTS/IPR

• IDCC owns patents in mobile, tablets and

notebooks

• 19000 (patents + patents pending)

• One of the largest LTE/4G patent portfolios

• LTE/4G technology expected to be the dominant

technology by the second half of this decade

IDCC has stated publicly (Sep/Oct) that it is open for bids

ASSUMPTION

• Most major smart phone and tablet players

license patents from IDCC

• List includes: HTC, Samsung, RIM, Apple

• Plexonix will save on licensing fees (based on

assumption)

• Offset patent assertions by competitors

• Better chances of winning litigations

• License to competitors with favorable terms for

Plexonix

BENEFITS

R&D

187 500

Plexonix licenses some or most of its patents from IDCC

• IDCC’s top 3 customers by revenue:

Samsung: 34%

RIM: 15% HTC: 15%

Number of engineers Number of patents produced in 2011

PLEXONIX REVENUE

Source: IDCC Investor presentation, Annual filing, Equity Research 9


Many players fight the IPR battle…

0.00

50.00

100.00

150.00

200.00

250.00IDCC QCOM ACTG TSRA RMBS DLB MIPS ARMH MSD

24.6% 19.0%

45.2%

(32.7%)

(10.2%)

(53.0%) (63.1%)

79.8% 68.4%

Has emerged as an asset class

• Large chunk of revenues from licensing

Patent acquisitions changing landscape

• Large corporate consortiums hunting patents

IPR lawsuits proliferating

• The more the patents, stronger the fight

Wireless IPR Market very competitive

• Many players to eat from the pie

I

P

R

Diversified

Technology

Leaders

Leading

Wireless

Companies

Financial and

IP-Focused

Entities

Source: IDCC Investor Presentation, Yahoo finance DMS, IIT Delhi Amit Rander, Lokesh Bahety

10

8th April, 2011: Novell

• Provides network operating system, system management solutions and collaboration solutions

• Acquired by a software holding company, The Attachment Group for $2.2bn

• 882 patents to be sold to CTPN holdings (a consortium of Microsoft, EMC, Apple and Oracle)

27th Oct, 2011: Mosaid

• A patent licenser in semiconductor and communication technology

• Mosaid turned down a$500.6mn bid ($42 per share) hostile takeover bid by rival patent house Wi-Lan

• Acquired by Sterling Partners for $590mn

And recent activities suggest further consolidation

Google’s acquisition of Motorola Mobility for $12.5bn

• New patents (14,600) acquired thwart anti-competitive

threats from Microsoft, Apple etc.

15th Aug, 2011

Bankrupt Nortel’s patent bid war • Patents on 3G, wireless networking, semiconductor • Winning bid ($4.5bn) from a consortium including

Apple, Microsoft and RIM

30th Jun, 2011

Samsung’s license renewal • $100mn per annum 3G renewal with IDCC in 2012

• Renewal more damaging if rivals (Apple, Google) take over IDCC

Apple’s license renewal • Apple 3G renewals in 2014.

• Competitive acquisition might lead to punitive renewal

OTHER ACQUISITIONS

Source: Company press release 11 Amit Rander, Lokesh Bahety DMS, IIT Delhi

20%

10%

8%

6% 5%

23%

5%

4%

3% 3%

13%

Global 3G Handset Market Share

Others

SOLID 3G LICENSE BASE

• As of December 31, 2010, 49% of the

global 3G handset market (Samsung,

Apple, LG, RIM, HTC) was under license

by IDCC

• 13% of the market which belongs to

regional and local players contains

companies under the 3G license base of

IDCC

• The company targets to license 100% of 3G

market

• The 3G/4G market would present a 1.2 bn

unit , hence licensing opportunity by 2015

for which IDCC is in a good position to

handle.

STRONG POSITION IN LTE GIVES IDCC THE EDGE OVER OTHER COMPETITORS

0

100

200

300

400

2007 2008 2009 2010

"No of IDCC Patents and applicationsdeclared to ETSI for E-UMTS

(LTE)"

0

200

400

600

800

1000

2007 2008 2009 2010

Cumulative No of LTE Patents

Cumulative No of UMTS (WCDMA) Patents

Source: IDCC Investor Presentation

Note: UMTS and E-UMTS stand for Universal Mobile Telecommunications System and Evolved Universal Mobile Telecommunications System, respectively.

Some patents and applications have been declared to ETSI by InterDigital for both UMTS and E-UMTS and therefore are included in both the UMTS and the E-UMTS data above.

The data above has been adjusted to reflect withdrawals of, and corrections made to, declarations of patents and applicationsasof October 27, 2010.

Significantly bigger opportunity in LTE as more devices available (tablets, e-readers, etc.)

3G Patents give IDCC an Edge


Financial Considerations

0

500

1000

1500

2000

2500

$mn Senior Convertible Notes Market Value of Equity

91.3%

8.7%

Total = $2,191mn

1

9%

11%

29%

39%

–

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

0

50

100

150

200

250

300

350

400

450

2007 2008 2009 2010

Net revenues Net Margins

Source: IDCC 10Q 30/09/2011 1 Market value of equity as of 08/11/11

Note: Net Margins represent net income applicable to common shareholders divided by revenues

CAPITAL STRUCTURE OVERVIEW

LIQUIDITY ANALYSIS

• The company has cash and cash equivalents worth

$409.7mn as of September 30, 2011. In addition, it also had

$280.9mn in short term investments

• The senior convertible notes ($190.6mn) which were issued

in April 2011 would mature in March 2016

• Licensing Contracts give rise to a predictable revenue

stream and hence the cash flows to accrue in future years


Company P/E EV/EBITDA Market Cap/

Sales

Mosaid 21.5 9.7 5.0

Acacia Research 26.1 16.1 5.5

Tessera Technologies 22.4 21.7 NA

Qualcomm 15.5 10.4 5.1

Rambus NM NA 6.2

Dolby 11.0 5.4 3.4

MIPS 30.5 17.4 4.0

ARM Holdings 53.3 47.2 17.6

Average (all companies) 25.7 18.3 6.7

IDCC FY1 24.8 13.2 6.8

IDCC FY2 14.9 8.5 5.0

Brokers are bullish on IDCC

ANALYST COMMENTARY

INDUSTRY

M Partners, Nov 9, 2011: “We reiterate our BUY recommendation and our takeout share price target of $118.0” The outlook for IDCC’s patent is positive as the report goes on to say, “Essential patent royalties are long lasting, consistent and guaranteed revenue streams that can benefit a patent holder in one of two ways for many years. First it can be used to offset patent assertion made by competitors. Secondly, FRAND royalties can be used to bleed Competitors of gross margin, while at the same time enriching earnings. Barclays Capital Equity Research, 27 Oct, 2011: “We believe that the company’s asymmetric licensing model supported by its rigorous internal R&D processes is well positioned to capitalize on the mass adoption of 3G devices, the transition to 4G and the broader adoption of wireless technologies by Non-traditional devices.” It has been given a stock rating of “overweight” which implies the stock is expected to outperform the un-weighted expected total return of the sector coverage universe over a 12 month investment horizon.

0%

10%

20%

30%

40%

50%

60%

Buy Hold Sell

Brokers

BROKER RECOMMENDATION*

TARGET PRICE

Mean 64.6

Median 66

High 118

Low 26

Source: Equity Research, Thomson First Call

*Total no. of brokers: 5


Source: Company reports,

Note: The data is just a sample of one pair of values of Beta and Terminal growth rate. Please refer to the excel sheet for the entire valuation

IDCC Valuation – Discounted Cash Flow analysis

DMS, IIT Delhi

2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E

Free Cash Flow

EBIT 127 208 237 270 304 392 431 474 512 553

Tax on EBIT (39) (65) (75) (86) (97) (129) (142) (157) (169) (183)

Profit After Tax 88 142 162 184 207 263 289 318 343 371

Depreciation and Amortization 23 24 27 30 35 41 50 60 76 91

(Inc) Dec in Operating Working Capital (21) 4 (13) (12) (11) (10) (9) (8) (7) (7)

(Inc) Dec in Deferred tax assets (net) 20 - - - - - - - - -

(Inc) Dec in Other Long Term Assets (net) (0) - - - - - - - - -

Inc (Dec) in Long Term Deferred Revenue (152) (54) (6) (6) (6) (5) (5) (5) (5) (4)

Inc (Dec) in Other Long Term Liabilities 4 - - - - - - - - -

(Inc)/Dec in Short Term Investments 45 - - - (28) - - - (31) -

Capital Expenditures on Patents (30) (40) (46) (62) (70) (98) (107) (158) (170) (184)

Free Cash Flow (23) 76 123 133 127 190 217 207 206 267

Weighted Average Capital Cost

Risk Free rate 3.1% Effective tax rate 33.0% Share Price 43.97

Market Risk Premium 5.7% Credit Spread 0.52% Shares Outstanding (Diluted) 45

Levered Beta 0.90 Debt Cost Pre Tax 3.6% Market Capitalization 2,000

Equity Cost 8.2% Debt Cost Post Tax 2.4% Total Debt 191

Total Capital 2,191

EV 1,976

Capital Structure (% Equity) 91.3%

Capital Structure (% Debt) 8.7%

WACC 7.7%

Terminal Growth rate 1.75%

Discounting Model

Year Count 0.5 1.5 2.5 3.5 4.5 5.5 6.5 7.5 8.5 9.5

PV of FCF (22) 68 103 103 91 127 134 119 110 132

Terminal Value 4,584.92

NPV 3,236

Intrinsic Value 71.12

15

Sensitivity Analysis

0.65 0.75 0.85 0.95 1.05 1.15

0.50% 78.6 71.1 64.7 59.3 54.6 50.5

0.75% 81.3 73.2 66.5 60.7 55.8 51.5

1.00% 84.1 75.5 68.3 62.3 57.1 52.6

1.25% 87.3 78.0 70.4 63.9 58.4 53.7

1.50% 90.8 80.8 72.6 65.7 59.9 55.0

1.75% 94.6 83.8 74.9 67.6 61.5 56.3

Beta Terminal growth rate

The values denote the intrinsic share price of the company.

Low High

Share Price 62.3 70.4

Market Value 2,791.4 3,154.0

Enterprise Value 2,625.4 2,988.0

P/E 21.0 23.8

EV/EBITDA 11.3 12.9

• With $10.2bn of cash and cash equivalents and another

$13.1bn in short-term marketable securities, the deal

should be an All-Cash deal with Plexonix buying out the

entire stake

• the projected share price represents a premium of 9% -

23% to the average price of Interdigital over the last 3

months

• The premium reflects the inherent value of the

patents of IDCC. The premium also reflects the tug of

war between various technology companies for

acquiring IPR assets

Source: Company reports, Capitaline

Note: The P/E and EV/EBITDA are forward multiples. They represent the FY12 ie December’12 multiples

FINANCIAL METRICS @ ACQUISITION PRICE DEAL DYNAMICS

(#) DMS, IIT Delhi 16

Past patent transactions render IDCC still undervalued

Target Acquiror Date Acquisition Price ($mn) No of Patents Price/Patent

Mosaid Sterling Partners October, 2011 594 3,489 170,249

Motorola Google August, 2011 12,500 24,500 510,204

Nortel Apple, Microsoft, RIM, Sony, EMC, Ericcson July, 2011 4,500 6,000 750,000

Novell CPTN Holdings April, 2011 450 882 510,204

RECENT TRANSACTIONS IN THE IPR DOMAIN IN NORTH AMERICA

• Essential patents, although encumbered by FRAND (Fair

Reasonable and Non-Discriminatory pricing) bring consistent

and long term patent royalties. They can be used to

• Offset patent assertions by competitors

• Shrink Gross Margins of competitors while enhancing

earnings. (By 2015, 1% GM would be worth ~ $3-4bn

per annum in the wireless industry)

• Since the closing of the Nortel transaction, the last few

months have seen elevated patent litigation amongst the

global device manufacturers

• With 19,000 patents (~90% in the wireless domain), IDCC is

the most significant IP portfolio currently available

INTERDIGITAL PATENT PORTFOLIO VALUATION

No of patents held (as of 3Q’11) 19,000

Current EV1 ($mn) 1,781.4

Price per Patent 93,757

High Low

Acquisition Price ($mn) 2,625.4 2,988.0

Price per patent 138,177 157,261

Source: Company filings for the respective transaction, Equity Research for the Demand Scenario

Note: The acquisition price range is the mean Enterprise value calculated using DCF method keeping Beta at 0.85 and 0.95 and terminal growth rate at 1.00% and 1.25% respectively 1TCurrent EV is as of 08/11/2011

DEMAND SCENARIO IN THE IPR MARKET

(#) DMS, IIT Delhi 17

TOP INSTITUTIONAL SHAREHOLDERS

Institutional Holding Shares % Outstanding Value ($mn)

BlackRock Institutional Trust Company, N.A. 2,275,769 5.00 93.0

Vanguard Group, Inc. 2,210,001 4.86 102.9

The Roosevelt Investment Group, Inc. 1,396,491 3.07 57.1

State Street Global Advisors (US) 968,269 2.13 45.1

Opus Capital Management, Inc. 692,835 1.52 32.3

Emerald Advisers, Inc. 666,476 1.46 31.0

C.S. McKee, L.P. 638,700 1.40 26.1

Cardinal Capital Management, L.L.C. 626,098 1.38 25.6

Mellon Capital Management Corporation 515,623 1.13 24.0

Wells Capital Management Inc. 503,902 1.11 20.6

Hussman Econometrics Advisors, Inc. 500,000 1.10 23.3

JP Morgan Asset Management 460,430 1.01 18.8

Managed Account Advisors LLC 439,733 0.97 18.0

Wentworth, Hauser & Violich, Inc. 436,860 0.96 17.9

Dimensional Fund Advisors, LP 417,114 0.92 17.0

Top 15 shareholders 12,748,301 28.02 552.59

IDCC TOP MANAGEMENT

Name Age Designation

Steven Clontz 60 Chairman of the Board

William Merritt 52 President & CEO

Scott McQuilkin 56 Chief Financial Officer

James Nolan 50 EVP - Research and Development

Lawrence Shay 52 EVP - Intellectual Property & Chief IP Counsel; President of InterDigital Patent Holding Sub

Richard Brezski 38 VP, Chief Accounting Officer, Controller

Naresh Soni 52 VP, Strategic Engineering, Chief Technology Officer

Gary Isaacs 51 Chief Administrative Officer

Steven (Steve) Sprecher 55 General Counsel, Secretary

RISK FACTORS

• Challenges related to the company’s ability to enter into new license agreements could cause the revenue and cash flow to

decline

• Revenue may be impacted by the deployment of 4G or other technologies in place of 2g and 3g technologies or by the need to

extend or modify certain existing license agreements to cover additional later patents

• Royalty rates could decrease for future license agreements

• Revenues are derived primarily from a limited number of customers.

• Delays in renewing or an inability to renew existing license agreements and challenges in defending and enforcing patent rights

could cause the revenue and cash flow to decline

• The wireless IPR industry is subject to rapid technological change, uncertainty and shifting market opportunities.

• The technologies created by the company may not be adopted by the market or widely deployed

Source: Company Filings, proxy

Other Key Considerations


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