KING OF PRUSSIA, Pa.—(BUSINESS WIRE)—October 30, 2008— InterDigital, Inc. (NASDAQ: IDCC) today announced results for the third quarter and nine months ended September 30, 2008. Highlights for third quarter 2008 include:

• Net income of $9.2 million, or $0.20 per diluted share;
• Revenue of $55.1 million; and
• Cash and short-term investments totaling $187.7 million

“We are very pleased to report another solid quarter,” commented William J. Merritt, President and Chief Executive Officer. “While we saw softness in sales for some of our licensees in Japan, we nonetheless reported a very profitable quarter driven by our large base of fixed-payment licensees, growth in per unit royalties from other patent licensees, increased recurring IP royalties in connection with rising sales of products containing our SlimChip™ IP, successful audits of our licensees and diligent management of costs.”

“We also saw our SlimChip baseband technology generate a great deal of interest from potential customers and partners,” added Mr. Merritt. “While we are pleased with the progress of SlimChip, the landscape of suppliers and customers of digital baseband technology is evolving rapidly and we must keep pace with this change. Consequently, we are evaluating a number of options for the modem business in line with our focus to create shareholder value. These options could include an acquisition or a partnership to achieve the appropriate scale needed to succeed in the market, as well as the sale of that part of our business to a company that requires a world class modem solution.”

“As for patent licensing, we continue to be confident in our ability to grow our base of 3G patent licensees including finalizing agreements with unlicensed top tier handset manufacturers,” continued Mr. Merritt. “The proceedings before the U.S. International Trade Commission (USITC) against Samsung relative to certain 3G products are moving closer to the November 25th date for the Administrative Law Judge’s Initial Determination. In addition, the dispute regarding Samsung’s 2G obligations for over $150 million is moving forward and we are very confident that it will be resolved in our favor. Lastly, the USITC investigation regarding Nokia’s sales of certain 3G products is back on track. All these positive developments create the right environment for the resolution of these patent license disputes on favorable terms.”

“Given our strong position and our confidence in our ability to drive continued financial returns in the business, we continue to invest in the company and recently completed the repurchase of $100 million of our common stock,” concluded Mr. Merritt.

Third Quarter Summary

The company’s net income of $9.2 million, or $0.20 per fully diluted share, in third quarter 2008 posted a 6% increase compared to third quarter 2007 net income of $8.7 million, or $0.18 per fully diluted share.

Revenue in third quarter 2008 totaled $55.1 million compared to $56.5 million in third quarter 2007. Softness in sales for some of our licensees in Japan contributed to a decrease in recurring patent license royalties. Recurring patent licensing royalties in third quarter 2008 were $51.6 million compared to $55.7 million in third quarter 2007. Technology solutions revenue increased to $2.2 million in third quarter 2008 from $0.8 million in third quarter 2007, driven primarily by increases in license fees and recurring royalties associated with our licensees’ sales of products containing the company’s SlimChip IP. Licensees that accounted for 10% or more of the $53.8 million of recurring patent license royalties and technology solution sales were LG (27%), Sharp (16%), and NEC (13%).

Excluding a $2.7 million reduction in a third quarter 2008 litigation contingency associated with the Nokia UK matters, operating expenses of $44.7 million in third quarter 2008 decreased by $1.3 million from $46.0 million in third quarter 2007 and decreased by $6.1 million compared to second quarter 2008. The year-over-year decrease primarily resulted from a decrease in litigation and arbitration expenses (which totaled $5.8 million in third quarter 2008 compared to $10.7 million in third quarter 2007), offset in part by increased investment in the development of the company’s SlimChip product family. The decrease in third quarter 2008 operating expenses from second quarter 2008 was attributable to a decrease in litigation and arbitration expenses as well as SG&A expense, offset in part by a modest increase in technology development expenses.

Net interest and investment income of $1.1 million in third quarter 2008 decreased from $2.1 million in third quarter 2007 due primarily to lower investment balances and interest rates in third quarter 2008 compared to 2007.

The company’s third quarter 2008 effective tax rate was 35%.

Nine Months Summary

Net income for first nine months 2008 totaled $22.4 million, or $0.48 per fully diluted share, compared to $22.0 million, or $0.44 per fully diluted share, in first nine months 2007.

For first nine months 2008, total revenue totaled $169.8 million compared to $179.4 million in first nine months 2007. First nine months 2007 revenues included $11.2 million of non-recurring revenue associated with prior period sales of Sony Ericsson ’ s covered 2G products identified in a routine audit. Recurring patent license royalties in first nine months 2008 decreased 3% to $160.9 million from $165.8 million in first nine months 2007. Decreases in royalties from key licensees ’ sales in Japan and the absence of recurring 2G revenues from Sony Ericsson both contributed to the decline. These decreases were partially offset by a $16.1 million increase in recurring revenue for all other new and existing licensees.