Sigh. Let me pour a drink or light a pipe because I was about to sit through a corporation’s quarter conference call. There are reasons why these things aren’t massive spectator events. For people who invest in stocks, however, the cost of an hour of your time can buy a significant amount of worth. Of course, if you do everything you can to avoid any type of meeting, well, allow me to point out that even I, an advocate of listening to such things, find it necessary to modify my attitude to get through. Here’s what I got out of one company’s call, besides an empty glass.
People flee the corporate world, just to avoid meetings that waste their time, aren’t engaging, and where their voice won’t be heard. Why show up when nothing will change? If there’s anything really important, you’ll hear about it later.
Being a shareholder is different. Own a share, own a piece of the company, own a vote, own a right to hear and be heard. Publicly traded companies are required to regularly report their finances so the public can decide whether to buy, sell, or hold the stock. There are thousands of publicly traded companies, so it only makes sense to listen to the ones you have time for. In some cases, that means listening to none of them. If you own stocks, or mutual funds, or participate in a pension plan you can benefit from knowing about the companies behind those investments. You could spend lots of time diving into documents, querying customers, flipping through the finances – all valuable activities. An alternative or addition is to listen to their quarterly conference call (which the majority, but not all, conduct). In about an hour you get a lot of legalese, some strategic statements, hopefully a financial report, and a bit of detail into what really happened. The best is sometimes the last, when there’s a question and answer session that allows almost anyone to participate.
If you know corporations, you know corporate speak; so, fling up the filters and listen to what they have to say.
Today, March 10th, 2015, MicroVision announced their earnings, and then held a conference call to discuss them. I couldn’t listen to the real time broadcast, but like many companies, they post the replay. Welcome to the notes I took while sipping a martini and eating dinner.
The link: Oh why must I register when I am listening after it’s over? It isn’t like I’m going to call in to ask a question.
How long is this going to take? 39 minutes and 27 seconds. Get comfortable. Here we go.
- The first 2 minutes and 22 seconds were legally required statements; which, rather than add value, add disclaimers that devalue almost everything that’s about to be said. Another investor protection that went amiss.
- The CEO kicked off a 7 minute description of what happened, and what they hope will happen. This is all big picture stuff:
- an accidental or purposeful slip that the Fortune 100 customer is Sony,
- old but welcome news that Celluon launched the PicoAir and the PicoPro,
- a hint about the Fortune 500 company that is working on an innovative smartphone market introduction that is due in the second half of 2015 which is a possible slip from the previous mention of a summer launch,
- a reference to the package handler that we are certain is UPS,
- and a touch on the head up displays (HUDs) being continually developed by an OEM and a Tier 1 supplier.
- The nuance in the news for me was the possible slip and the possible hiatus while MicroVision waits for the car people to initiate the next step.
- The next 3 minutes or so were a concise and correct description of the company’s finances. The best way to get those numbers is to read the press release because my typing may make small mistakes that can create large misunderstandings. I did, however, notice that the revenues were down more than I liked but that the backlog is up, so there is more of a delay than a loss; and that the loss in 2014 was about $18 million, which is larger than the recently announced expected payment of $8 million, which is not enough for break even alone.
- The CEO spent another minute and 10 seconds summarizing the results. The main emphasis was on year-to-year growth, and that they will advance the technology to distance themselves from the competition.
- The last 14 minutes were the unscripted, and therefore sometimes juicier, part where anyone can call in and ask questions. Anyone can call in, but the crowd self-selects and it is usually the institutions that command the discussion. Of the dozen or so questions, most of which involved contractually obligated obfuscation, I pulled out a few items:
- the ~$8M payment in 2015 may slip to 2Q15, 90% of 2014 efforts supported Sony,
- financing may still be necessary,
- as R&D increases brightness the competitive advantage increases within the pico projector market,
- the component costs are more manageable,
- and a lot of nuances and suggestions that are similar to ones that I’ve misinterpreted before.
- The final minute was the closing remarks by the CEO where he called 2015 a transformational year, and emphasized that they see their growth tied to consumer mobile video consumption which rose 114% last year.
Put that in your spreadsheet and hit refresh.
And that’s what many analysts will do. The spreadsheets suck up the numbers. The analysts or the researchers flavor the answers with what they heard. Price targets pop out, and sometimes are made public. Such activities drive stock prices, and you can participate too.
MicroVision is a simple case. They are a relatively small company, with few people following them, with a singular technology, and a simple product line. That’s why I invest in small companies; they are easier to understand and track, and there are fewer competitors for the shares – until the company becomes successful, which is when I prefer to sell. As the company grows, complexity grows, and it becomes harder to absorb the situation and harder to compete with institutions that have far more resources for their analyses.
I don’t listen to every company’s every call. I tune in when I think something is about to shift. My time is precious and is secondary to my money, though lately it hasn’t felt that way and that’s another story.
Corporate conference calls are valuable, and they’re free as far as the money is concerned, and they can reveal profitable insights. Or, they can be as dull as any corporate meeting.
The publicly required communications like press releases, which I recently parsed; conference calls like this one; annual reports; and stockholders meetings are one advantage American shareholders can take advantage of. Just like voting in the general election though, most people miss their opportunity to participate. At the minimum, listen. At the minimum vote. And if enough of us did so, we might be heard, and we might benefit to a far greater extent than the cost required.