Friday, June 14, 2013

Microvision Number Crunching


Disclaimer

This is ALL hypothetical... it is all speculative. I don't know how much Microvision expects to make from each projector, I don't know that Microvision could possibly be in the X-Box. We do know, for a variety of reasons that Microsoft and Microvision aren't strangers however. In some places I've included the reasons for my choice of numbers, in other places I've chosen numbers that simply "seem reasonable."

 Peter
Funny, I mentioned this to one of the other investors at the meeting yesterday... he had brought his son... and as I was going through this he elbowed his son saying "see?! I'm not alone or crazy!"

Could there be an XBox with PicoP inside?


Did a little number crunching this morning....

If you haven't seen the introductory video for the Xbox one, you should watch it. There are strong Hints that Illumiroom will be part of it, there's news that if Illumiroom will be part of the Xbox world it will be in ALL of them. (they had trouble with adoption of the kinect, because it was an add-on. ALL Xbox Ones will be shipped with the Kinect... so it's likely that if illumiroon is going to be part of the XBox one, they will include it with all of the boxes they ship.)

Illumiroom

There's a good reason to think that an MVIS projector (or more than one)  MAY be in the Xbox one... and that is that the image is always in focus, even with things that are a different distance from the lense. This isn't something that a projector that needs an optical focus can do well (or at all... I suppose it's possible that they could do this with a computer -- I admit I don't know this.. but I don't think that if it's possible it would be easy.)

The X-Box 360 began production 69 days before it was launched. (That's short time) --- so there's no guarantee you'll get any warning!!   [ http://en.wikipedia.org/wiki/Xbox_360#Reception_and_sales, http://money.cnn.com/2006/07/05/commentary/column_gaming/index.htm?section=money_latest, ]
So I commence crunching... 
The original x-box 360 sold 10,000,000 units in its first year, to crunch numbers, we'll assume the same number as the original x-box.
Let's guess that MVIS can earn $7/each. (I think it will be more, but let's keep it low. I do admit that this number is simply selected as reasonable. When their product becomes a commodity, it will be less than this, but it could be more than this at first.... at under $100/unit to OEMS, they will be looking at using it.)
that's 70,000,000 income to MVIS (in a year.) divide that by 25,000,000 shares. That's $2.80/share in earnings.
Put a PE ratio of 40 on those earnings... MVIS = $112/Share.
Put a PE ratio of 60 on those earnings.... MVIS = $168/Share.
I don't think MVIS will earn so little per box...(multiple projectors) I suspect it will be more like $21/box or $210,000,000 in earnings or $8.4/share
Put a PE ratio of 40 on those earnings.... MVIS = 336/share
Put a PE ratio of 60 on those earnings.... MVIS = 504/share
They mentioned field of view a lot... trying to focus in a room that has stuff in it means lasers....
Oh, and with numbers like that.... a PE ratio of 60 is low...
These numbers do NOT include cellphones, portable games, tablets or cars.... 
This is ALL speculation.... although I do know that there's a fantastic product out there, that manufacturers are looking into it, and that it's been successfully implemented as an embedded product.
Enjoy the ride.
Peter

A Previous Number Crunching Exercise:
 The company doesn't need to be the only player in the market of small projectors or even the predominant one to reward holders significantly.

For the exercise I've only looked at the smartphone market, but I know that it will be a significant part of the potential market, but certainly not the only market, portable gaming, automotive and other things that we haven't even thought of may be significant parts of the market.

Assumed Microvision can reach 10% of the smartphone market... assume $7.00/phone of Microvision profit. I can imagine it being higher, or lower, but $7 seems reasonable.)

The PE ratio selected is 40. Yes it's arbitrary. Growth companies... Microvision will be considered one under this scenario, often get PE ratios that are huge. ( At the original time of writing -- LNKD is currently over 800, FB is over 1,500, many blue chip companies trade in the 20's, dividend plays in the tens. 40 is very conservative for a growth company with new technology.



Microvision Shares Float 25,240,000

Smartphone sales 2011  717,000,000

Projector sales for phones 71,700,000 units

Profit/phone                       $7

Company profit              $501,900,000

Earnings per share              $19.89

PE Ratio                              40

Stock price target             795.40 (Based on above numbers.)

Market Cap                             20,076,000,000

The company could miss all these numbers significantly, and still make stockholders a lot of money. For example, if we're way off on the profit/phone number and it's $1, this scenario (all other numbers staying the same) still gets us a stock price of 113.  If the numbers are right, with the exception of the PE ratio, and the PE ratio reaches a still reasonable number of 80, the stock price/share will be over $1500.

We are at the place where the stock should start to move, the biggest impediment to implementation.. the lack of direct green lasers is all but solved. The technology doesn't have to be perfect to be popular.. this technology can help make computers cheaper to acquire, since for many people a smart phone sized unit would be all they need or want, and Asia is a huge marketplace crammed with people that fit that description.

I'm interested in respectful criticism or comments....

Peter

Here's where I got the information about smart phone sales in 2012: I'm sure conflicting statistics can be found. 


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