Yahoo Finance

We're focused on 3 things. The first is driving our mobile device licensing program, leveraging both our strong cellular wireless assets and now the strong video-related assets from Technicolor. Second, we're leveraging those very same assets in the consumer electronics space with the goal of driving meaningful revenue with a high degree of profitability. Last, we're positioning ourselves for the expected growth of the IoT market with technologies that drive both the billions and billions of wireless connections themselves and the middleware to organize and manage all those connections. Tying all these together, we believe our significant investment in 5G technologies will enhance each of these opportunities, with 5G invigorating the smartphone space, enabling a richer and more seamlessly connected home and entertainment environment and creating the network topology to help drive the full IoT vision. In a nutshell, we have access to 3 huge markets using one core set of technology -- technologies, which translates into highly profitable revenue growth.

On the first item, mobile device licensing, while we are in discussions with many customers, we are currently primarily focused on licensing 6 Chinese customers: Xiaomi, Lenovo, OPPO, Vivo, Huawei and ZTE. These 6 represent the vast majority of the unlicensed market for us and collectively represent hundreds of millions of dollars in potential annual licensing revenue. In fact, if you look at the handset market today, we have 90% of the non-Chinese manufacturer market license, so our growth opportunity is China and it's big. No surprise, these discussions have been long and hard and impacted to a degree in the short term by the trade discussions ongoing between the U.S. and China. While the trade talks and the related issues like the Huawei ban have created some short-term uncertainty, the long-term trajectory of the trade discussions and IP rights remains positive for us. The U.S. government is solidly focused on protecting American IP, and that will be hugely important to us.

In fact, just last week, in the administration's press statement announcing the upcoming trade talks, intellectual property was the first issue listed as central to the talks. Here, I want to take a moment to send a clear message about something we see as very important to the health of the continued technological advancement in many important deals, especially in light of the efforts in both the U.S. and Europe, our major resource locations, to secure their positions in future technologies.

We are strong believers that neutral, binding arbitration, either mandated as part of standards commitments or through regulation, is the best option for resolving industry disputes around licensing. Licensing disputes are generally contractual disputes, and companies have long looked to arbitration to resolve their business disputes. This type of dispute should be no different. We also believe that arbitration has the greatest potential to balance interest, reduce friction and ensure continued technological advancement in these important areas. Arbitration has the potential to make sure that the cost to implement this is fair, that this licensing cost is tied to the innovations that are included in the relevant standards and that innovators are fairly rewarded for their success and able to profitably invest in future research.

Arbitration is also perfectly in line with the global collaborative process that leads to standards development. Our engineers and those from other companies around the globe try their best to tear down national boundaries and establishing worldwide standards. Disputes around licensing should not impact that collaborative spirit. Today, we're more active than ever in advocating arbitration across the industry through our relationships with our fellow innovators, manufacturers, operators and regulators, many of whom want a more reliable solution to resolving licensing disputes. Over the years, we've seen arbitration go from something that was viewed very skeptically by many to something that market participants are looking at with more interest.

We have more work to do on this, but we are encouraged by the greater reception being given to arbitration. If you're listening and you're an industry peer, regulator or member of an industry organization, we urge you to support our effort or to reach out to us to engage further in the discussions. Moving on to the Technicolor R&I transaction. That transaction closed at the start of June, and we're very excited to have the approximately 150 researchers in Rennes, France and Palo Alto join our research team. The R&I researchers bring exceptional talent in the area of video coding and other visual technologies, networking, artificial intelligence and machine learning. Viewed as a whole, the capabilities of the combined team of approximately 350 InterDigital and former Technicolor engineers and scientists represents one of the strongest research teams in the world focused on advanced research for mobile and consumer electronic devices.

As I've mentioned before, while each technology area is exciting in its own right, it's at the intersection of the technologies where the additional magic can happen. For example, AI and machine learning will drive disruptive change in how wireless networks are designed and deployed. Having scientific expertise in these technologies, combined with significant domain expertise in wireless systems design, will allow us to determine how best to deploy this capability to drive system performance and lower cost. Similarly, AI and machine learning will have major impact on how video is processed, discovered, transported and viewed. And of course, wireless and video technologies are also highly complementary. You can view the technologies as 3 circles overlapping in the middle, and it's in the middle where the greatest and most disruptive innovation lies and where we are now as a company.

With that, let me turn it over to Kai.

Kai Olavi Oistamo -- Chief Operating Office

Thanks, Bill. Hello, everyone. Thanks for joining us today. Let me provide a brief review of some of our research activities and also a review or current status of our licensing efforts. As Bill mentioned, this quarter, we completed the acquisition of Technicolor Research and Innovation team. That acquisition makes InterDigital one of the largest pure long-term research and licensing companies in the world with strong competence in key technologies of wireless, video, display, AI, machine learning and home connectivity. The integration of new research is progressing very well. As Bill mentioned, there are a number of areas where our wireless research intersects very well with those new research areas, and our teams are already collaborating to explore those technologies.

We are currently exhibiting some of those new areas, in this case, immersive technologies and digital doubles, at the very prestigious SIGGRAPH Computer Graphics Conference in Los Angeles. The dramatic expansion of our research capabilities in new fields and broader technology footprint gave us a chance to examine our previous efforts at technology diversity and continue the process of bringing our operating costs down to 2017 levels. As a result, this quarter, we made the decision to sell the Hillcrest Labs business to CEVA. Importantly, the Hillcrest patent portfolio remains with InterDigital. It was and it is a tremendous portfolio.

And with the expansion of our business into consumer electronics licensing, we believe that the portfolio is more valuable to us today than it was at the time when we bought it. Selling Hillcrest business helps us to reduce our footprint, reduce our costs and also gives Hillcrest business and employees the best chance for success. We wish them well, and we thank them for their contributions. On the licensing front, Bill mentioned the U.S. trade negotiation backdrop, which, overall, we see as a positive. Some people might think that it is -- it would be impossible to continue to have meaningful discussions with potential licensees against that backdrop.

But I'm pleased to say that, that is far from the case. Our licensing business development -- licensing and business development teams have been very active, going to enormous lengths to maintain and build momentum in licensing talks. And in the last couple of months, we have been able to meet with almost every major potential licensee. As the typical case in these very high-value discussions, the ultimate economic discussions are difficult, particularly with the Chinese OEMs who do not have a long history of licensing. To help bridge gaps with these customers, we continue to rely on the creative approach of licensing, recognizing that one size does not always work well for all. And as Bill mentioned, we are also in favor of arbitration to resolve any issues. I also continue to be encouraged by the movement in our new CE licensing business covering digital TVs, set-top boxes, computer displays and other related devices.

That business is contributing nicely to revenue today, and we see additional growth on the horizon as we -- as the discussions with manufacturers move from technical diligence to economic discussions. It remains early days for this portion of our business, but the signs are good. So to summarize, our integration and research capabilities are proceeding very, very well. And we are encouraged by the momentum of our licensing discussions with some key customers.

With that, I'll turn over to Rich.

Richard J. Brezski -- Chief Financial Officer

Thanks, Kai. We delivered another solid quarter in Q2 2019 with 10% year-over-year growth in recurring revenue and with expenses that came in below our expectations. I'll say a few words on each of these operating headlines and then provide some details on the nonoperating items impacting our results related to our new convertible debt issuance and our May 31 acquisition of Technicolor's R&I division. The year-over-year increase in recurring revenue was driven by a new license agreement signed in second half 2018 plus the addition of revenue associated with our new CE licensing business. With those items, during the first half of the year, we maintained annualized recurring revenue at a $300 million run rate.

This is a solid platform on which we plan to add additional revenue from new consumer electronics and wireless agreements, with the lion's share of such teams dropping to the bottom line. Our expenses increased year-over-year due to the Technicolor acquisitions, neither of which had closed before second quarter 2018 had ended. On a sequential basis, lower integration costs helped drive a small decrease in operating expenses as compared to first quarter 2019. This came despite carrying 1 month of expenses related to the R&I team we acquired from Technicolor on May 31 of this year. As previously discussed, there was no cash consideration associated with the May 31 acquisition. However, as part of the transaction, we assumed certain liabilities associated with the acquired team, and Technicolor agreed to reduce its rights to a revenue-sharing arrangement that was established under our July 2018 acquisition of Technicolor's licensing business.

In second quarter 2019, we recorded a onetime nonoperating gain of $14 million to record the net effect of the transaction. Unrelated to the acquisitions, on June 3, we issued $400 million of unsecured convertible notes that will come due in 2024. These notes are convertible at a price of about $81 per share. But as was the case in our prior convertible debt issuances, we used a portion of the proceeds to enter into a call spread transaction that increases the point at which we feel dilution. With the call spread in place, the effective point of dilution for the 2024 notes is over $109 per share.

In addition, we used a portion of the proceeds from the note issuance to repurchase 70% of our 2020 convertible notes. We also repurchased approximately $20 million of our common stock in connection with the transaction, bringing our total share repurchases in first half of 2019 to 2.5 million shares. After these uses of proceeds and the expenses related to the offering, we have approximately $120 million of proceeds remaining, which we have earmarked to pay off the balance of the 2020 notes. In connection with the second quarter repurchase of 70% of the 2020 convertible notes, we recognized a onetime nonoperating loss on extinguishment of debt of about $6 million.

We also have broken out the interest expense components for both the 2020 and 2024 notes in the long-term debt footnote of our Form 10-Q that we filed this morning. Moving on to taxes. We reported a provision of $6 million in the quarter at an effective tax rate of a little more than 50%. The high effective tax rate is primarily attributable to our new consumer electronics program, which has presently resulted in losses in foreign jurisdictions.

As such, we currently maintain a valuation allowance against the related tax benefits. Of course, our plan is to grow the consumer electronics program and reverse the valuation allowance. We'll provide guidance for third quarter revenue once we receive second quarter per-unit reports and can assess the impact of any true-ups. We'll also provide some additional guidance on expenses that will factor in a full quarter of the acquired R&I team.

I'll now turn it back over to Patrick.

Patrick Van de Wille -- Chief Communications Officer

Thanks very much, Rich. Lori, you can now turn the call over to questions.

Questions and Answers:

Operator

[Operator Instructions] And we'll move first to Charlie Anderson at Dougherty & Company. Your line is open.

Charlie Anderson -- Dougherty & Company -- Analyst

Yeah. Good morning everyone and thanks for taking my questions. Bill, I want to start with your comments about arbitration. You're clearly trying to send a message here. So I guess I'm wondering what goal you have in mind here. Are you hoping that the trade discussions lead to some mechanism for agreement to arbitrate among parties within a country? Just any additional color on sort of what the endgame is here. And then I've got a follow-up.

William J. Merritt -- President and Chief Executive Officer

Sure. So you're right. I mean we are pushing arbitration within the context of the trade discussions. We -- one of the things we're observing is you have different courts in different regions of the world approaching the licensing rates setting differently, and that's a problem. And we think a uniform system would be much better. You have issues like Huawei reaching out to Verizon and others for patent licensing. And I think the operators have always been wanting a solution to the licensing issues, and I think that having something more certain like arbitration would be helpful to them.

Overall, if you look at the licensing environment, the litigation that can occur around licensing can be acrimonious and kind of take people's eye off the ball, which is really to develop new technology. And we think arbitration actually is a way to settle things in a more friendly manner. Obviously, arbitration is not -- there's a back and forth between people in the arbitration, but it's a better form. So I think all those things are coming together, Charlie.

We're also sensing a greater appreciation for it in the market. We were kind of a lone voice for a while, and then some of the innovators began to pick up steam on it. What we're seeing now is -- you even saw it in the decision with the FTC and Qualcomm, where she pointed -- that Judge Koh pointed to arbitration as maybe a way to resolve these things. So I think it's a good moment in time for us to really push this. I think it is the best solution to what has been a really thorny problem. And we're going to take advantage of the current environment and push as hard as we can.

Charlie Anderson -- Dougherty & Company -- Analyst

Great. Thanks for all that color. And just to tack on to that, Bill, if nothing happens politically, are you also saying here that the industry can shoulder the load? And it sounds like you're feeling like there's more momentum in the industry. Just arbitrate no matter what the politicians decide or -- yes, so just if you could maybe elaborate on that.

William J. Merritt -- President and Chief Executive Officer

Right. Yes, I think there's a couple different angles to this, Charlie. I mean, obviously, there's the, call it, the regulatory angle through the government. That's a very -- would be a very efficient angle, but of course, it's difficult to get governments to agree. But we've given our best. I think on the, call it, the industry side, it can be used in connection with, for example, purchasing environment within operators, right? And so they can push toward licensed products. And as long as there's an arbitration process by which those products can get licensed, they feel more comfortable that fair amounts will be paid. So I think there's that channel.

I think there's also within the standards bodies themselves, the ability to sort of enhance the commitment on licensing and put it there. So we're pushing there as well. And then the other thing that happens is once you get enough people talking in favor of arbitration, the one-on-one discussions where we offer up arbitration gets more difficult for the party on the other side to say no because it becomes the standard way to resolve these things. And that's what we'd love to have. Ultimately, I'd love to be able to say we discharge our FRAND commitment in a very simple way.

We offer arbitration. And that takes away any opportunity for folks to come to us and say, well, we want to separate some business. Fine, we'll do it in arbitration. And intellectually, I can't think of anything that's fairer than skilled licensing professionals who would be on the arbitration panel coming up with the right rates to be paid. There's nothing that seems to be more fair to me.

Charlie Anderson -- Dougherty & Company -- Analyst

Great. And then, Rich, just real quick on the OpEx side. Could you maybe quantify how much OpEx was tied to R&I for that 1 month? And then maybe just update us on is there anything onetime expense-wise in the back half we need to be cognizant of that you maybe talked about in the past and maybe just remind us what's going on there.

Richard J. Brezski -- Chief Financial Officer

Yes. So from an R&I perspective, it was relatively small because it was just one quarter. So it was just over $1 million, I believe. From a recurring perspective -- I'm sorry, nonrecurring perspective, what drove the sequential decrease and where we came in a little bit below what we had anticipated was some of the integration costs.

Charlie Anderson -- Dougherty & Company -- Analyst

Okay. Thanks so much.

Operator

And we'll go next to Anja Soderstrom at Sidoti. Your line is open.

Anja Soderstrom -- Sidoti -- Analyst

Hi everyone. Thank you for taking my question and congratulations on a good quarter. So I just want to follow up on the previous question about the integration costs. You said it was a little bit lower in the second quarter. Does that mean we should expect more in the third quarter or...

Richard J. Brezski -- Chief Financial Officer

Yes. I think you can still expect some integration costs going forward. But actually, the land the transaction both included fewer employees, and there was more systems work to do, that was costly. And in the earlier parts of that transaction -- integration, there were costs associated with transferring the patents to jurisdictions, getting them assigned and so forth. So we have seen the integration costs go down, and that's really digesting a lot of the Land stuff -- excuse me, the initial transaction of the licensing team. And we expect costs going forward to continue the integration of the R&I team, but we see that at a lower level than what we've been running at.

Anja Soderstrom -- Sidoti -- Analyst

Okay. So it's more a matter of lower level, not that it spilled over to -- from 1 quarter to the other.

Richard J. Brezski -- Chief Financial Officer

Yes, that's correct.

Anja Soderstrom -- Sidoti -- Analyst

But we'll still see some.

Richard J. Brezski -- Chief Financial Officer

So our integration costs were down to $1.5 million this past quarter. So we would expect it to be in that range and maybe even going down over time.

Anja Soderstrom -- Sidoti -- Analyst

Okay. And also, I believe last quarter, you broke out how much Technicolor contributed to the revenue top line. Would you be able to break that out for this quarter as well?

Richard J. Brezski -- Chief Financial Officer

Yes. So Technicolor was -- approximately it was just under $5 million, maybe around $4 million for the quarter.

Anja Soderstrom -- Sidoti -- Analyst

Okay. Thank you.

Operator

And we'll go next to Eric Wold at B. Riley.

Eric Wold -- B Riley

Really thank you, Good morning. Just a couple of questions. Kind of, I guess, one, can you remind us what the next steps in the timetable is currently with the Huawei renewal discussions?

William J. Merritt -- President and Chief Executive Officer

So it will be laid out in the Q in terms of what the status of litigation is. So once service is affected, then the typical process in China is there'll be a set of hearings. There'll be, I'm sure, some jurisdictional fights on the front end, and then there will be a process for the rate setting. So otherwise, I'd refer you to the Q in terms of how that will play out over time.

Kai Olavi Oistamo -- Chief Operating Office

And we do continue to be engaged with them outside of that -- outside of the litigation as well.

Eric Wold -- B Riley

Okay. And then the 6 remaining China OEMs that you laid out initially, and obviously, that's kind of a sticking point and kind of have been out there for years to try to get something done there. I guess what do you think it takes to get something done? I mean theoretically, they're building out more and more make-good payments, which is making the discussions probably even more onerous for them and worrisome for them. And I know you don't want to bend and give up what is owed to you. So I'm trying to figure out kind of what eventually gets that done and can get those over the hurdle.

William J. Merritt -- President and Chief Executive Officer

I mean my observations, and then, Kai, you can give yours as well, I mean, one, I think what we've learned, and this is consistent with what I've learned with other folks that are licensing in China as well, I mean, a bunch of friends who do this, is other negotiations can be measured in terms of steps that are a yard long. In China, the steps are 2 inches and 3 inches. It is just a tremendously slow process. But I think the thing that we've seen is at least it's progressing, which is good. I think that some are progressing better than others, but I think that we do have a good level of engagement.

There's -- if I put the right measurement scale on progress, I think some key customers were moving along that line. . And in terms of your question, how you ultimately get it over the line, right, so I think it's a couple of things, right? I think persistence is one. One of the things we've talked about and Kai's been very -- pushing on his clocks, is when they get back to you, you get back to them very quickly. You force meetings as often as you can. You are creative with each customer. Each one comes with their different needs. We've talked about that a lot. We push arbitration. I think the arbitration discussion you heard before is to try to create pressure on them to become effectively an industry outlier if they wouldn't agree to it.

We've got a ways to go to get there, but we will do that. And look -- and ultimately, if it does -- if all of that fails, there is always the option to litigate. And we've got a very strong portfolio, and we would be very confident in any position -- litigation that we would bring. So I think we've got to make that clear to people as well. There is end, and our patience will run out. So to comment -- Kai can comment as well.

Kai Olavi Oistamo -- Chief Operating Office

The only additional color I would add is that from the licensee side, the incentive to take a license actually increases when they start to have a significant -- more and more significant part of their business outside of China. And many of the companies that Bill mentioned, I mean, they are growing and seeing their growth actually outside of China, not so much inside of China.

Eric Wold -- B Riley

Great. And then just final question from me, kind of going back on the IoT side. Obviously, you laid out some broader guidance a few years ago on IoT and a ramp in the coming years. Maybe kind of where we are in that trajectory to get to the number you kind of laid out or how realistic that number still may be, kind of what are the remaining steps you're seeing that flow through, I guess, as the price point gets set and kind of the priorities get set in the industry. Or when is this trigger going to kind of turn on and you start seeing that flow-through you expected?

Richard J. Brezski -- Chief Financial Officer

Yes, so total contributions from IoT, they're still much lower than where we'd like to get them to, and that's a little bit a function of the maturity of the market. But they're there. We get royalties associated with our Avanci platform as well as some implementations of the Chordant platform, the IoT platform that we license and provide a solution for. So they're in the -- call it in the $10 million annualized range at present. So a ways to go to reach the full opportunity.

William J. Merritt -- President and Chief Executive Officer

And I'll just add, I think Rich -- this is really a market issue more than anything else. And if you look at other companies that participate in the IoT space, I think they're all waiting for the -- to get to that point, hockey stick, where they only come off the blade and they go up the handle. The thing that we -- the benefit that we have is that our IoT licensing opportunity is essentially a reuse of the technology that we're using on the mobile device side, to a large extent. So the trick here is, if the revenue is slower coming, is controlling your cost to get to that revenue. And we've done a lot of things to do exactly that. So when we have reuse of the mobile technology, we substantially reduced our cost around Chordant. And so we're able to now kind of patiently wait for the opportunity to come. It will come. I think 5G will be a big enabler for it. But waiting is not costing us a whole lot, and that was a key shift we made this year as we saw that market kind of push out a little bit.

Operator

[Operator Instructions] And moving next to Scott Searle at Roth Capital.

Scott Searle -- Roth Capital -- Analyst

Good morning. Thanks for taking my question. Rich, just to follow up on the OpEx front, what was the normalized number looking at the June quarter? Just to calibrate us, so we can put in R&I going forward and how to think about that. There are a lot of, I think, onetime costs associated with that. Could you just normalize that from a patent administration standpoint and total OpEx standpoint? And then I have a couple of follow-ups.

Richard J. Brezski -- Chief Financial Officer

Yes. You know what, on that one, Scott, we'll be providing guidance pretty soon for the second quarter -- I'm sorry, for the third quarter. And that will include -- we're going to definitely include some operating expense guidance there that will give you a full quarter of R&I. And also, we'll have a little more advanced thoughts in terms of what the integration cost will be for Q3 as well.

Scott Searle -- Roth Capital -- Analyst

Okay great. Thank you. And Kai, maybe following up on Technicolor. It sounds like the level of engagement is increasing. You guys are progressing well, both from an integration standpoint but certainly from a customer engagement opportunity at $4 million or $5 million a quarter now. I'm wondering how you're thinking about it from a KPI or metrics standpoint in terms of milestones and otherwise, thinking about the next several quarters, what we should be paying attention to. And as we get into 2020, what's kind of the range of outcomes and metric for sales success that we should be thinking about?

Kai Olavi Oistamo -- Chief Operating Office

Well, I would reiterate what we said earlier that during this year, we want to really establish the level of what the licensing opportunity is by getting several deals done during this year, and some of them being smaller and some of them, hopefully, a little bigger, but really establishing what the benchmark is, what's really the right level so that we can be more accurate in forecasting and in guiding the market on what the level eventually will be. And kind of if I look at kind of rest of the year, what I would be looking at and what our internal metrics here is getting the deals done and getting kind of some of the discussions in a very advanced stage at the moment, kind of cross the finish line and getting -- get them over. And once we get them over, we can verify that our estimations on what the total opportunity is, is actually accurate.

Scott Searle -- Roth Capital -- Analyst

Okay. Great. And Bill, maybe to just come back to China and 5G licensing, could you remind us in terms of your existing non-Chinese licensees right now? Who has 5G as part of their license component currently in your relationships? And then also, I know you've been very clear that 5G does not necessarily represent an increase in the royalty rate, but you listen to Qualcomm talking about the opportunity. The complexity of 5G seems to represent more value and dollar content to them. Yes, they're a silicon baseband provider that they're able to capture some of that. But wondering just in terms of some of the negotiations and thoughts. Is that an opportunity beyond just units that the rate could, in effect, go up? And lastly, 5G in China becoming more internally focused now because of the current ongoing trade discussions. Does that elongate your ability to fully engage with them as 5G becomes more China-centric? Or are they still actively pushing in other markets that they have no choice to come back and continue to engage?

William J. Merritt -- President and Chief Executive Officer

Sure. So in terms of 5G being included or not in license agreements, I think generally, agreements that have been done over the last number of years generally would capture 5G only because it was a technology that was going to be deployed in a reasonable period of time. Though -- we do have agreements, though, that do not have 5G in it as well. I think there's some level of disclosure in the Qs and Ks around that. But I'd say there's a mix. And typically, the larger guys have got capture, and the smaller guys may not as often have capture of that technology. So in terms of the royalty rates, you know what, everything about -- there's not really a 5G rate per se in my mind. It's a layer cake, right? It's 2G, 3G, 4G, 5G that's inside the device. Or think about it like one of those sand things you build at the beach, right? The size of the layers change over time.

And so -- but I wonder about the level of price elasticity of the entire layer cake. I don't think that the entire layer cake [Technical Issues]. So now I -- it's totally a little problematic. This is a very complex technology. That said, its greatest value, I think its revolutionary value is in things like IoT, autonomous vehicles, all that stuff. At least within the handset, at least I think it will excite people. I think it's going to deliver some new capabilities. But I'd say it's more evolutionary in the handset than revolutionary. It's a great technology, so I don't want to undermine the technology. And I think we've done a great job of innovation there, and I think we can secure a great value from that layer cake there. But I think we kind of stick by our view that on the handset side, it sustains well. It's a really, really good business.

Kai Olavi Oistamo -- Chief Operating Office

Yes. And then -- and if you look at it as a market opportunity, as a total, it is -- you can argue it is bigger but not necessarily the individual rates to the wireless handsets. It's all about the IoT and the pervasive nature of the 5G. So there's much broader licensing opportunity. But the, as Bill said, the actual just kind of wireless mobile handsets, one wonders why would the rates go up on the handset -- purely on the handset side.

William J. Merritt -- President and Chief Executive Officer

And then your last question around the trade talks and all the discussion around security and does that fracture the standards process and we end up with regionalized standards, I think the worldwide community has benefited tremendously from this single standard. And I think that going back -- I mean I've lived through and Kai lived through the world of fractured standards and different standards in other countries. It's not a good place to go back to. Conversations that we're having with the GSMA and other people, no one wants to go back there. So notwithstanding the political battles, there's a pretty strong industrial weight behind maintaining this single standard out there.

How that all plays out and how the security issues are resolved over time and how that impacts that worldwide standard, I think we'll see. I think there's a lot of opportunities for solving some of these problems. There's been, for example, with Huawei, discussions of would they split the handset in the infrastructure. You kind of deal with the security issues on the network side but you free up the handset side and do what it wants to do. So yes, look, I think there's a lot of noise around that issue. Again, I come back to I think that the industry who will have a tremendous amount to say here does not want to fracture the standards process.

Scott Searle -- Roth Capital -- Analyst

Great. Good. We won't have another TD-SCDMA situation.

William J. Merritt -- President and Chief Executive Officer

Right, right. .

Scott Searle -- Roth Capital -- Analyst

Thank you.

Operator

And we'll move next to Matthew Galinko at National Securities.

Matthew Galinko -- national securities

Yeah. Thanks for squeezing in enough. Just curious if the Hillcrest IP is currently part of your CE license discussions as you're sort of working through the early stages of that market. Or is that something you think you'd come back and sort of upsell to early licensees?

Kai Olavi Oistamo -- Chief Operating Office

Well, when we talk to CE licensees, we -- depending on when we started, obviously, the discussions, but we tend to kind of take the benefit of a full portfolio that we have in our -- or all the technology that we have in our portfolio in those discussions. So it's -- but obviously, in the end, it's kind of a customer choice as well that -- where do you want to limit their actual deals. But we offer -- we tend to have -- when we go and meet the customers, we offer all the kind of technologies that we have, whether it's kind of -- wherever they came from.

Matthew Galinko -- national securities

Okay perfect thanks so much.

Operator

And we'll go back to Charlie Anderson at Dougherty.

Rich, can you remind us, is any revenue going out the door with Hillcrest? And then could you maybe frame up any potential cost savings through that divestiture?

Richard J. Brezski -- Chief Financial Officer

Yes. So in the current year, Charlie, it's running kind of -- the product business, that is running kind of breakeven. So call it in the neighborhood of $5 million to $10 million annualized of revenue and expense. So it helps meet our expense goals, but there is a little bit of offsetting revenue that goes out as well.

Charlie Anderson -- Dougherty & Company -- Analyst

Thanks so much.

Operator

It appears we have no additional questions at this time. I'll turn the program back over to our speakers for any additional or concluding remarks. Gentlemen?

Patrick Van de Wille -- Chief Communications Officer

Well, thank you very much, Lori, and thanks to all our investors for joining us this quarter. Looking forward to updating you again next quarter. Thanks very much.

Operator

Ladies and gentlemen, once again, that does conclude today's conference. And again, I'd like to thank everyone for joining us today.

Duration: 43 minutes

Call participants:

Patrick Van de Wille -- Chief Communications Officer

William J. Merritt -- President and Chief Executive Officer

Kai Olavi Oistamo -- Chief Operating Office

Richard J. Brezski -- Chief Financial Officer

Charlie Anderson -- Dougherty & Company -- Analyst

Anja Soderstrom -- Sidoti -- Analyst

Eric Wold -- B Riley

Scott Searle -- Roth Capital -- Analyst

Matthew Galinko -- national securities

More IDCC analysis

All earnings call transcripts

More From The Motley Fool

• 10 Best Stocks to Buy Today

• The $16,728 Social Security Bonus You Cannot Afford to Miss

• 20 of the Top Stocks to Buy (Including the Two Every Investor Should Own)

• What Is an ETF?

• 5 Recession-Proof Stocks

• How to Beat the Market

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

Motley Fool Transcribers has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

This article was originally published on Fool.com