On Monday, November 1st, Microvision (NASDAQ: ) announced their Q3 2010 operating results. You can read the press release .
Revenues were a paltry $1.3 million, due to delays in the “high-end media player” launch timing. The still yet-to-be named OEM was blamed for the delay due to “a longer-than-expected product development cycle”. During the conference call, it was revealed that the OEM decided to abandon the Windows operating system in favor of Android. The current backlog stands at $18 million.
As we all know, Corning has completely abandoned the synthetic green laser business. Perhaps they will pursue a direct green laser program, but that isn’t useful to discuss here, as it wouldn’t be meaningful to Microvision’s business until at least 2012. Mr. Tokman commented that this decision wouldn’t affect the business in 2010 and that Osram can produce 150-200k lasers for Microvision in 2011. This is less than half of the volumes I had expected for 2011. So, this news is a big deal. Revenue growth for 2011 will be limited by the green laser, once again. We don’t expect the solid-state green laser to provide much additional volume for 2011 at this point.
Microvision emphasized the progress made on the direct-emitting green laser front, citing the development of demonstrator units using lasers from two suppliers. They re-affirmed their guidance for having direct-emitting green lasers available in production quantities in late-2011. Mr. Tokman specifically cited companies in the U.S., Germany, and Japan for targeting the introduction of production quantities of solid-state green lasers in the next 12-18 months. The front-runners (in my mind) are probably Osram, Nichia, and Kaai. But feel free to disagree with me using the comments section below.
To mitigate the impact (to some extent) of these latest negative events, Microvision plans to release a new accessory device that they describe as being “an extension of ShowWX™”. Basically, they detail a 15 lumen projector with “better connectivity” (HDMI, USB, etc.?). We’ll hear more about this in 2-4 weeks, apparently.
Some good news included follow-on military contracts for $1 million for advanced see-through eyewear and an enhanced laser projection display. In addition, Microvision provided heads-up display (HUD) demonstrators to two auto makers and the PicoP® engine to a third customer to incorporate into their own HUD system (is this the Pioneer collaboration?). In any event, it is good to see confirmation of the perceived traction in the auto sector that we detailed in articles .
On the financial front, they indicated they had $21.3 million of cash on hand; enough to last through April 2011, according to the company. So, we will likely see them go back to Azimuth for more money within 2 months, in my opinion. They indicated that this financing was their preferred method of raising cash, because Microvision dictates when and how much is raised. While that argument has some merit, I’d like to see them get some other source of funding until the stock price is higher (presumably in mid-2011), at which time they can go to Azimuth for funds at higher stock prices.
On a side note, I was disappointed to hear Mr. Tokman’s response to a question regarding Motorola. He indicated that Motorola’s business is changing in response to the re-alignment going on at Motorola and that Microvision is accommodating them. It pretty much sounds like Motorola isn’t making any progress and will likely not get involved in a PicoP-based product until direct-emitting lasers are in full swing (2012 products at the earliest).
So, all in all, this conference call was pretty awful. The potential of the company is still intact and they are making due with what they have. Again, I’d like to see them pursue some other type of funding for early-2011. I just don’t understand why a company wouldn’t want to buy, say, 20-25% of Microvision for $40 million or so. Technology companies have hoards of cash right now. An IP-savvy company like Qualcomm would be a great fit, in my opinion.
So, let’s see what this extension product is in 2-4 weeks. While I’m not ecstatic about it, at least it is *something* other than ShowWX™. Competing companies continue to innovate and release new products at lower prices. It is about time Microvision did as well.
Until next time,
Disclosure: as of this writing, the author was long shares of Microvision