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my MVIS ASM notes - very long MicroVision Annual Shareholder Meeting June 6, 2013 notes CAVEAT I am human. Mistakes will be made. The SEC and Investor Relations are the bastions of truth. So, feel free to correct me, ask them, or better yet, do all of that and then ask the other attendees what they think. Multiple points of view, a diversity of opinion. Good stuff. (Yada. Yada. I've done this often enough that the CAVEAT has become mostly a copy & paste, partly because I am lazy, mostly because I hope it's good enough.) INTRODUCTION I checked my records. I think this is the twelfth or thirteenth MVIS ASM for me. It has become a habit, so has the habit of being optimistic, and knowing that last year's optimism wasn't reinforced in the intervening year. But this time will be different, right? With that history, please pardon any tempering of my enthusiasm. The enthusiasm of some is heightened. The enthusiasm of others can be measured by how many couldn't attend because they sold their stock. The mix made for an interesting emotional environment. PRE-MEETING The meeting was held in the same place as the last few ASMs, Meydenbauer Center in Bellevue, WA. Last year they scaled back by not having demos and therefore not needing a room for them. This year they scaled back by using a smaller room and having fewer seats. Despite that, they had more effective demos because three of the demos were handheld and in the hands of the CEO, the CFO, and the Communications Director (I believe) - no strings attached. The fourth demo was on a table. Evidently it was supposed to demonstrate the "Interactive Touch" display, but no one I talked to figured out how to initiate the demo. The two demos I handled were a projector attached to a Samsung smartphone via a glove sleeve, and a Kindle Fire which had been cut into so a projector module could be glued and integrated. Effectively those two devices were examples of an accessory projector and an embedded projector. Each had the next Gen engines, so the pictures were clearer, sharper, and brighter. I also noticed that the units weren't as hot as the earliest models (like the one I have at home that must be kept cool to run through a whole movie.) There were only about sixty seats, and there were about sixty people. There are about 67 people in the company. As usual, the crowd was mostly dressed in business formal or investor casual. Most of the folks in business formal have more shares of stock, but they also have official ties to the company; as compared to the individual investors who usually don't have a job with the company and got their shares on the open market. Ah, but I am making generalizations and shouldn't do that. OFFICIAL MEETING - heavily paraphrased in content and time The official meeting is largely the vote, which is announced at the start with results declared at the end. It's easier to just say that everything passed by a more than 90% majority. The joke was made afterwards that when we hear about 90% majorities in national elections we assume something improper is going on, but within the corporate world the 90% is of the shares, not the shareholders, which changes things a bit. Sounds odd when it is announced though. BUSINESS PRESENTATION I suspect this is one of the two main events for most individual investors (the other being the Q&A below), the opportunity to hear from management what is being emphasized in presentations. We may see the charts online, but the verbal presentation helps highlight management's public focus. As usual, it was presented by the CEO. There was a short, succinct video that summarized much of what we were about to hear. It is the same video sent to interested parties. Much was familiar: always in focus, mobile, high resolution, low power, strong patent portfolio, etc. There was also a mention of the Interactive Touch technology, industrial applications, and 3-D applications. The business model is Licensing, not Production. The business pitch is that projectors play into Solving the Tiny Display Dilemma, particularly anticipating a need within growing social networking, when relationships move from facebook to real life. The near term markets are personal use and automobile Head Up Displays (HUD) because they are high volume markets that can be addressed now. This was the first time I heard the phrase "Projection In Motion". It was mentioned in the same portion of the talk as other near-term, but not immediate, applications like gaming, 3-D, and Interactive Touch. (For those unfamiliar, Interactive Touch provides the capability to interact with the image without having to touch the display surface. A hand wave in the air is enough to manipulate controls. There are significant gaming and presentation implications. The CEO was good enough to address the fact that MicroVision's success hadn't arrived yet. Three main reasons were: 1) the lack of video out on consumer devices, which is now more common; 2) commercial availability of Direct Green Lasers (DGL), which were only available in the tens of thousands, not - well - much higher numbers; and 3) market immaturity (ed: my words). The market immaturity was measured by MicroVision's competitors, particularly Samsung and Texas Instruments. Their Samsung Galaxy only sold about 2,000 units per month. During the Q&A the Chairman of the Board pointed out that Samsung's failure was a bit unsettling because MicroVision could benefit from a successful product from anyone. The supposition is that MicroVision's technology will clear Samsung's hurdles of display size, battery life, and market timing. The Pico Projector market data from PMA (who?) was presented. 2013 ~ 2,000,000 units; 2014 ~ 4,000,000 units; 2015 ~ 6,000,000 units; 2016 ~ 10,000,000 units; 2017 ~ 12,000,000 units. The CEO added the caveat that PMA had overpredicted the market earlier, so he suspects their estimate is now overly-conservative. Of the various devices discussed: phones, tablets, media players, cameras, handheld games, (no eyewear or game boxes?) the handheld gaming enthusiasts may account for market penetrations of: 2014 ~ 0.5%-1.0% ; 2015 1%-2%; 2016 2%-5%. In units that would be 12,000,000 - 15,000,000 units in 2014, (ed: which is much higher than the PMA estimates so it may be the distinction between standalone and embedded projectors.) "Why MicroVision?" the CEO asked rhetorically. MicroVision's technology is capable of display and capture (a feature touted earlier but ignored for a while), HD resolutions, 3 hour battery life, 200% color range (?), 25 lumens now with 50 lumens soon and at a lower power usage, uniformity across the image, and always in focus - the only laser projection (ed: so when we hear of an OEM using laser projection does that mean it is MVIS? or a patent battle?). The competitors and MicroVision all share the fact that none are perfect. MicroVision remains high in the Intellectual Property profile: Top 20 Global Electronics Companies, #1 Adjusted Pipeline Impact, Top 300 Ocean TOMO most valuable IP, and (applications "we" haven't described yet.) Since 2010, DGL and Pioneer have proven the technology. Within the hundreds (?) of pico projectors on amazon MicroVision's ShowWX was #3. And the market and the technology are making the environment healthier for MicroVision. Either the CEO or the COB made the statement that they felt they were finally going into a heavyweight fight with their hands untied. 2H12 is tied to Engine Licensing and high value products (ed: as compared to lower margin in-house production I guess.) Recap of 2012 was predominantly the shipping of 50 Gen2 projector engines with a very high acceptance rate from the possible OEMs, from which five OEMs were selected because MicroVision has too few people to handle more than that. Revenues were up 49%. Cash burn was down 26%. (Something else) was down 37%. Pioneer's $5,800,000 payment was a major influence. In 2013, losses were down 63%. Cash burn was down 43%. An unnamed Fortune 100 major electronics firm's payment of $4,600,000 was a major influence. That concluded the business presentation. QUESTIONS & ANSWERS (heavily paraphrased because I spent more time listening than writing) The COB joined the CEO, and promptly told the CEO where to stand. ? Given the typical product development cycle should we expect news of OEM commitments at the rate of about one per quarter? The COB response was that was an unrealistic expectation. The CEO response was the cycle MicroVision is seeing is: 1) Evaluation, which is 1-6 months; 2) Negotiation, 6-12 months; 3) Development and Introduction, 6-24 months. Pioneer was a four month flow. The goal is to do 1-2 more OEM announcements this year. (ed: which would suggest maybe one OEM announcement per quarter or two.) ? What will success for management look like a year from now? "We need(ed) a company to bring a product to market" (ed: I believe to prove a success is possible.) The COB wished the Samsung/TI phone had succeeded for that reason. ? When did customer #1 get the product? I think the CEO said second quarter, but I missed which year. ? Are you looking forward to the X-BOX considering that it looks like MicroVision and Microsoft are joined at the hip? The CEO mentioned that game boxes aren't as important as smartphones and Surface tablets. ? How were Pioneer HUD sales? MicroVision will fulfill the orders from last year and is in discussion for future opportunities. The embedded versions are probably more appealing than the after market products. ? How will the company raise more equity? The COB pointed out that they will always be looking for the best solution. ? What's the availability of the DGLs? There are two manufacturers and the cost is down 80%. ? If the company is successful would it be resource limited? They've decreased their cash flow, and look to increase their core business. MY SUMMARY & CONCLUSIONS (opinion, not fact) Many people there came away much impressed, even folks that had been there many previous years. I can't say the same. I feel a bit like Charlie Brown getting ready to kick a ball held by Lucy yet again. (See the Peanuts comic strip for those outside the influence of American culture. There must be at least two of you out there.) Having said that, and honestly feeling that, my optimism remains. It looks like they've cleared all the hurdles, and are now in a race between the need for equity and anticipated revenues. I arrived by bus, a packed commuter bus, where people were studiously retreating into their personal spaces, frequently by occupying their ears or eyes or both via smartphones and tablets. As much as I think projected displays are more than enough of a market for MicroVision, I couldn't imagine them all pointing their devices at the back of the seat. There's a lack of privacy, and the surfaces are dark and sometimes covered in graffiti. Then I noticed how many were wearing glasses. MicroVision's original eyewear concept, now co-opted by Google, came to mind. I wonder, despite no great mention of eyewear, if the 5 top OEMs are considering applications outside MicroVision's presentation, such as eyewear. I hope so. The potential remains enormous, yet this also remains a company that skirts the edge of fiscal cliffs so commonly that I wonder if they'll go through shock when they find they have a buffer. By the way, major congratulations to the CEO for a unique event in what I can recall of the company's history. They actually reported financial data! One step closer to a more business type meeting. I was surprised and pleased. Maybe our little company is growing up after all. I continue to HOLD, would timidly BUY if I had discretionary cash, but may have to SELL within the next few months unless my business improves dramatically, my house sells, or - hey, I could win the lottery jackpot. I also do not recommend stock tips to anyone, and even if a friend gets enthused with the story of MVIS, I dissuade them. Too many have lost too much. Maybe this is the perfect time to buy. But I've felt that each time I bought. So did they. But. Maybe. DISCLOSURE: LTBH since 2000, hesitant to mention the company to friends, but too drawn to the potential and the drama to keep from telling the story - even after yet another year. PS: Like last year, I've included a bit more commentary on my blog for the fun of it. http://trimbathcreative.wordpress.com/2013/06/06/corporations-meet-owners-mvis-2013/ |
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Msg # | Subject | Author | Recs | Date Posted |
17098 | tetrimbath-DGL Question | co3aii | 0 | 6/7/2013 2:18:08 PM |
17102 | Re: my MVIS ASM notes - very long | moissanite | 1 | 6/7/2013 3:01:05 PM |