(UPDATE - 6/9/2015)
There were many postings of notes that were more thorough than mine. They are now included at the bottom of this post with the CEO presentation materials.
Management had lots of smiles, and a lot of enthusiasm. Just recently done with the after meeting meeting, and will process what I've learned and post it.
The most notable thing about the entire meeting was the universally up-beat attitude of the board of directors. I've been to meetings for a number of years and I've seen them when they've been down -- when "getting this going is a significant challenge." Last year, "everything is aligned," and this year the over all message was that things are going great -- but don't get TOO optimistic, there may be a couple of bumps in the road. We'll have some problems, but they're GOOD problems to have.
The following is courtesy of Tom Trimbath at InvestorVillage. (Best notes I've seen, represents largely what I remember... I'm keeping myself busy, no need to do something over that's already been done well.)
ASM CEO Presentation (downloads)
Trimbath Blog posting on ASM
The following is from a post on InvestorVillage (please check it out at the source if it's available. It's in it's entirety below, however, and will stay there unless I get a complaint.)
Thanks to Tom Trimbath
My 2015 MVIS ASM meeting notes - very long as usual
MicroVision Annual Shareholder Meeting June 2, 2015 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 anticipated this edition of the annual shareholders’ meeting in an odd middle ground; the company is doing better, the stock is up 60% since last year, and the situation is far from where I expected the company and the stock to be. I had a long list of questions, and little expectation that they would be answered because of NDAs and competitive pressures. And yet, attending always reveals more than appears in the annual report because of nuance, editing for time - and it is the one time a year when many of us get to commiserate and consider.
PRE-MEETING
The meeting was held at the same place and in the same rooms as last year’s meeting. There were about the same number of people (~55), but it felt more alive because there was more energy in the room. There were fewer demos, but they were real, and effectively a sales opportunity for MicroVision’s most recent public customer, Celluon. Celluon had three PicoAir/PicoPro displays, and a virtual mouse. If there were any MicroVision prototypes, I didn’t see or hear about them. No Sony, Lenovo, or any other logos. I pointed out to one of the Celluon employees that MicroVision has similar technology to Celluon’s virtual mouse, which was news to her. I asked another of the Celluon employees about the statement at the end of PicoPros’ interview of a Celluon representative who suggested there’d be more Celluon/MicroVision products by the end of the year, which was news to him. I compared my ShowWX to the PicoPro image, and the PicoPro image definitely had whiter whites, an important thing for me because of my art photos.
The best part of the meeting, before, during, and after is the people. The CEO was nice enough to talk with various groups of shareholders. There was nothing substantive, because he can’t reveal anything unless it is public, but it was interesting to hear about his 60% travel, and it was encouraging to witness his enthusiasm.
OFFICIAL MEETING
Everything passed. Surprised?
BUSINESS PRESENTATION
Before the CEO's presentation, the COB made a statement.
It has been a good year, and he appreciates everyone’s patience.
The CEO’s presentation was purposely abbreviated to allow more time for questions and answers afterwards. (And also limits the effort required for the presentation and the opportunity for revealing too much. - TET)
He was glad to see a lot more smiling faces this year. 2014 had a lot more concerned faces, which they wanted to alleviate, but couldn’t because of disclosure rules. They’re feeling good, have momentum, the technical and market ecosystem is maturing, and laser supplies are no longer an issue.
The CEO asked one of the shareholders to share a story of how he used a PicoAir (or was it a PicoPro?). He was on a group outing with lots of kids. After dinner, instead of gathering around the campfire, the kids started looking at their screens. He got a sheet from a tent, set up his cell phone and projector, and pulled in all the kids for an impromptu showing of Kung Foo Panda. So, at least the kids were watching the same screen, having a shared experience, and not squinting.
Of course the two big news items were Celluon and Sony.
Celluon released the PicoPro and the PicoAir, and received positive reviews. Image size, quality, color, form factor, and focus-free are a strong suite of competitive advantages.
Sony is the company that can be mentioned but not typed, at least by MicroVision management. Evidently, their agreement is that, in print, MicroVision’s customer is a Fortune 100 company; but in conversation they can say Sony.
Sony looks to regain their technical and public prominence, and picoprojection is one of the enabling technologies for their corporate strategy. In addition to the revenue news we’ve heard before, they also mentioned a $18.3M backlog, the specifics of which were news to me.
In addition there were an additional 4-6 OEMs exhibiting works in progress at CES. News to follow, possibly.
The Fortune 500 innovative smartphone continues, but about the only additional information was that they are working on their own version of an engine.
The 2 HUDs and UPS are in consideration by the customers and are out of MicroVision’s control.
In addition to the backlog, MIcroVision has $16.7M in cash. The company has never been in such a strong financial position.
The goal is for significant growth for the company, the products, the supply chain, and the pipeline. The CEO feels the company is at an inflection point. (This was mentioned several times by the CEO and others.)
While we may know MicroVision and PicoP very well, the market doesn’t. One survey suggested 97% are unfamiliar with either. This is also an opportunity for growth.
The CEO highly recommended Mary Meeker’s recent market analysis.
Market growth by sectors:
personal projection ~ 32.4% CAGR
HUD ~ 27% CAGR
Image Sensing ~ 23% CAGR
Eyewear ~ 194%
They feel their intellectual property is strong and will be protected.
There are soon to be more committed partners.
They feel that they are out of the storm, that next year there will be greater smiles, and that they appreciate our patience and support.
That concluded the business presentation.
QUESTIONS & ANSWERS (heavily paraphrased because I spent more time listening than writing)
Before answering any questions, the COB made the point that they won’t say who is the Fortune 500 phone company.
? The laser-based projection products in the news are impossible for shareholders to distinguish between MicroVision technology and not, but they know and can’t say. The COB made some comment about “don’t be afraid of big companies buying small companies”. (Which made me wonder about mergers and acquisitions, with no expectation of getting a straight answer so I didn’t ask.)
? Are there patent protections against using MEMS in arrays or with x-rays? A long lawyer’s answer of no comment was followed by the COB? pointing out the shifted emphasis from component-centered business to systems-based business.
? They continue trying to recover the $1,7M from the previous CEO.
? There are features outside the engine that are also affected by MicroVision which can also lead to additional royalties.
? The company is focusing on high profit margin revenue streams, unless they are too small.
? The MVIS logo or Image by PicoP is only visible on products or splash screens after negotiations with the customer. Some ask too much.
? The current displays have 30-35 lumens, but work continues in “The Frankenstein Lab” (first mention) for much higher brightness.
? Lenovo? See above. Basically, no comment; but lots of words to play with.
? Component margins are aimed at greater than 40% with improvements every quarter, but services, royalties, and licensing have much higher margins.
? If companies like Google, Motorola, of Lenovo hold MVIS shares, they are doing so very quietly.
? MicroVision scanners, beyond Flic technology, allow interactivity and air touch - and they can’t discuss more.
? UPS and HUD are in customer evaluation.
? The company goal is to maintain a cash burn of $1M/month, which suggests no large hiring until there are significant revenues or margins.
? Knockoffs happen, especially in China.
? Management is visiting fundamental investors about once per month.
CLOSING STATEMENTS
The COB emphasized the very nice inflection point, that they intend to be good stewards of our investments, they will hire as appropriate, currently things feel very good though there are no guarantees, and that they are facing a tremendous opportunity.
The CEO echoed that and passed around the pride he had in the employees that were in the room.
MY SUMMARY & CONCLUSIONS (opinion, not fact)
I will tell you my summary and conclusions in a rambling, stream of consciousness style, because I am assimilating the information as I type; but, a good friend and shareholder framed it concisely; “Kinda like last year, but with more smiles.”
The potential upside remains incredibly high. The potential downside has dramatically improved. Last year I placed a higher probability on the company going bankrupt before the good news arrived. With a combined cash and backlog of about $35M, the downside risk has shrunk. My investing style is based on ‘Present Value of Future Revenue Discounted for Risk’. The future revenue projections haven’t changed. The risk has diminished. The present value is therefore higher - and is still far below what I estimate.
My hesitancy is based on the lack of quantitative information. There is an improvement over previous years (re: backlog+cash), but in the last twelve months there was only a pair of products, Sony refuses to be described in print, and the other customers are even more private. We have a lot more to talk about and speculate on, but very few quantifiable facts. Math is important to many investors, and they pay little or no attention to stories. That diminishes demand for the stock.
My enthusiasm is as great as ever, and occasionally I even find myself being slower to chastise myself for believing the company, the stock, and we shareholders may significantly benefit. But, I don’t share that around too much because most of my friends have already heard about it too much, not because I talk about it much, but because I’ve talked about it for so long. I think they equate MVIS with WOLF.
Other hesitancies are from little things: a lack of a financial report at the ASM, big competitors who could infringe on patents and delay rulings based on legal staff size, the possibility of a takeover or buyout (see GNET and PIXR), the randomness of the universe.
And then my enthusiasm kicks back in because I think MicroVision’s technology can disrupt teh technological world ala: PCs over mainframes, laptops over desktops, smartphones over laptops - with each disruption being larger and more abrupt. It would be too easy to be too late to participate.
DISCLOSURE: On balance, and within my meager means, I bought more after the meeting and just before I started typing this.
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 - just like last year, and the previous years going back over a decade.
No comments:
Post a Comment