Pardon me as I pour a spiced martini in preparation for parsing a press release from MicroVision. Yes. Believe it or not, MicroVision had news today. The last time I pulled apart a MicroVision press release it was to prove to myself that, yes, the news was insufficient for enthusiasm. This time, however, I parsed the news and found that it was sufficient for more than enthusiasm. The market, however, didn’t agree to the same extent; so, tonight’s beverage is a home-concocted spiced martini instead of a popped bottle of champagne. The cork stays in for a little while longer.
I write this post, not to make proclamations, but to show how I pull apart the news. The same methods apply beyond MVIS and stocks.
If you want the entire text, here’s the full press release:
“MicroVision, Inc. (MVIS), … today announced it has signed a multi-year license agreement”
Finally, an agreement that is for more than a month, a quarter, a year, or a study. This is multi-year and for licensing. It was targeted to happen by the end of 2014, so hitting March 5th of 2015 is a bit of a slip in that arrow, but at least it hit.
“with its Fortune Global 100 partner”
The general consensus is that this is Sony, but evidently the hurdle of being able to speak their name has yet to be cleared.
“for MicroVision PicoP® display technology”
Branding is good. Branding pico-projectors would’ve been good, too. I think they came up with the term, but didn’t hold onto it. That may be like letting go of the phrase “personal computer”.
“The license agreement marks an important milestone in the ongoing relationship between the two companies that began in April 2013.”
It seems like forever, but that’s less than two years. I’d like to know the date of the first contact. Was it April 2013, or did the relationship building take longer?
“The license agreement grants the Fortune Global 100 company a non-exclusive license”
Non-exclusive, whew. MicroVision has had previous relationships that were exclusive (NCR as I recall), that provided no alternatives if the arrangement proved dysfunctional. This time the door is open.
Licensing is one of three revenue streams MicroVision has mentioned. Evidently, this is specific to one stream, which opens the door to other revenues.
“for use in display modules it manufactures and sells”
So, no image capture; and, it is for units made and sold without requiring actions or expenses from MicroVision. Risk is diminished, and MicroVision can receive effectively passive income.
“As part of the agreement”
So there’s more, rather than less, that we could hear about.
“MicroVision expects to receive an $8 million up-front license fee”
Amazing, a specific number for a specific service, though the “expects” is a little unsettling.
“later this month”
They aren’t reporting a deposit in the bank, but at least something within the next few weeks. Every entrepreneur knows that feeling.
“In addition to the initial up-front license fee”
What? There’s more? How uncommon for MicroVision.
“MicroVision will also receive royalties for display modules sold by the Fortune Global 100 company.”
Royalties in addition to licensing fees. Very nice. Fortune Global 100 companies tend to deal in millions of units, if they’re in consumer electronics. We are talking about Sony, right?
“Further terms of the license agreement are confidential for competitive reasons.”
Yeah. We’re used to that. It’s all the other more substantial and positive bits that are uncommon.
“This is a significant step forward for MicroVision and PicoP display technology.”
“By licensing our technology … we have the potential to significantly expand the reach … on a scale commensurate with a company known for technology innovation and its global reach,” said Alexander Tokman, president and CEO of MicroVision.
One of the good reasons why licensing with big firms leverages a small company’s intellectual properties. Minimize risk for maximize (or at least greater than otherwise possible) gain.
“This milestone is a credit to the hard work of both teams, and we look forward to making this endeavor successful and enduring for both companies.”
“joint development – April 2013 / development phase – completed in 2014”
Good turnaround, considering the complexities of business in consumer electronics.
“the Fortune Global 100 company contracted with MicroVision for commercialization support services which are ongoing”
In addition to licensing and royalties, there are support services, which are another revenue stream.
“The license agreement represents a milestone achievement in MicroVision’s execution of its ingredient brand licensing business model.”
Agreed, a milestone that felt like a millstone for years. They can finally get this off their shoulders and plant a flag beside it.
“The Fortune Global 100 company will also purchase proprietary components”
That’s a surprise. So, there are licensing revenues, royalty revenues, support revenues, and purchase revenues. Four revenue streams from one customer, and MicroVision (supposedly) has several customers that it is working with. Gulp. Good.
I woke at about 5 minutes to 6am, west coast time. The press release popped up while I lay there scrolling through news on my iPad. My first reading of the release was tinged with skepticism learned from over a decade of MicroVision press releases. My second reading was because I realized that the boy who cried wolf may have finally seen one. I had two quick responses: 1) check the message boards for other interpretations, because they frequently reveal the flaw I missed; and 2) check the pre-market trades to see what was happening to MVIS stock, was it moving or halted. No one was saying much. The stock was up about 20%, which was appreciated, but far below my expectations.
Hours later the stock closed for a 13.33% gain. Not bad; but not what I felt was representative of the news.
An $8,000,000 payment is much more than most of us will ever see, but small in corporate environments. And yet, an $8,000,000 payment with a price/sales ratio of 6 would suggest a market cap increase of $48,000,000. That would’ve been closer to a 50% gain, not 13.33%. The multi-year aspects, the multiple products, the multiple revenue streams, and the fact that this was just one of MicroVision’s customers suggests to me that the value of this announcement is far more than 13.33% over the previous day’s price.
Patience, Tom. Patience. Ignore the looming tax bill, for now.
As much effort and enthusiasm as were wrapped around MVIS today, it wasn’t the biggest influence on my portfolio. One stock, GERN was up 34.5% on no news, except that some pundit suggested the stock could double. Two other stocks, AST and RSGE, were up ~ 10% and ~ 8.1%. For the stock trades, AST was up on 6.8 times volume. GERN was up on 8.2 times volume. RGSE was up on 2.4 times volume. While MVIS was up on 6.6 times volume. And, only MVIS really had news. It’s almost as if the small cap companies were suddenly accepted by the big money institutions, regardless of news, and that MVIS wasn’t as well received because of its history of over-promising and under-delivering.
I don’t like to read between the lines when nothing has been written. GERN, AST, and RGSE didn’t write as much as MVIS. I’ll say thank you for the rise in their prices (thank you) but as I wrote in the previous post, stock prices and wealth are more than a bit ephemeral.
This good news comes quickly after Celluon’s launch of the PicoAir, which I’ve seen and which is receiving nice reviews. The PicoPro is due soon, too, right? See the hesitancy in what I just wrote? That may be what’s happening with MVIS. There may be a reluctance to buy in because of history, but it also may be because of the reverse split, a market cap that was close to but below $100,000,000 (though today changed that), or a stock that is priced below $5 (which is an arbitrary yet real limit for some.)
It is easy to skim press releases because we see so much information flow past us. It is easy to read what we want to think was written. In slower times, every word held more meaning. The words continue to hold meaning, and there’s a benefit to slowing ourselves down and paying them proper respect. I hope.
At the end of this day, the press release is impressive to me, and may eventually be impressive to others; but until it is sufficiently impressive, I’ll sip my home-concocted spiced martini instead of champagne and enjoy a homemade cheeseburger instead of a steak – and then relax and dream because I think something very real just happened.