Being a responsible investor/speculator means doing simple, sad, yet necessary things. MicroVision announced earnings today, typically underwhelmed the investment community, and had its stock (MVIS) drop over 8% – even though revenues were up 160%. Surprise!
Every year, this is going to be the year; but evidently, 2015 wasn’t the year and the suspicion is that 2016 won’t be either. 160% growth is made easy when you start from an uncomfortably small number. MicroVision, a $122M company made it all the way up to $9M in revenues – far below expenses.
The good news:
The bad news:
Well, there really wasn’t any ‘bad’ news, but there was a lack of the expected good news: additional customers, product launches, revenue streams, collaborations. Evidently, people expected more.
MicroVision’s pico-projector technology has the potential to disrupt the industry, and may yet. The competitors are making progress. It is hard to keep up with the new products using embedded projectors. Some are impressively innovative, few incorporate MicroVision components – or, at least if they are doing so neither company is mentioning it.
An extra order or two, a reveal of MicroVision Inside some of the announced products, a next generation variant of an existing product, all were reasonable expectations. None arrived. I’m surprised the stock didn’t slide further; especially because it traded at four times normal volume.
The company is succeeding. They had $9M in revenues and a backlog plus cash of $18.9M. I haven’t heard about any layoffs. This is all much better than two years ago.
If the company was providing guidance of another 160% for 2016, that would make news; though at this point, management’s credibility is apparently waning. Outsiders expect obfuscation. Measured from where they were, they’re in much better shape. Measured against the competition and the NASDAQ listing requirements, there are reasons to be concerned.
One measure of any business expense is Return On Investment (ROI). If you spend $10 do you get $11 back? Does the investment at least match the stock market average return? Revenues are up, but have yet to catch expenses, and management is not providing guidance that the company will be profitable soon enough to forestall delisting, reverse splits, or dilution.
One numbers game I haven’t played yet is to take one particular expense, management compensation, apply a nominal 5% or 7% against the career total compensation of each manager, and calculate how much revenues will have to grow to warrant the salaries and benefits of the managers. Sad to say, but that is a business reality that should be considered.
I am discouraged by the earnings report. Aside from the 164% number, there was not much news. There was data, which is appreciated, but little of it was new. If MicroVision is eventually going to be as disruptive as suggested, then eventually one of these earnings reports or press releases will pleasantly surprise investors. Until then, we are speculators, trusting to a dream, hoping for news, looking to outside sources rather than inside officials for positive announcements.
MicroVision announced 164% increase in revenues, but evidently the measure was something else. Maybe that something else would’ve simply been news of the lifting of a disclosure, in which case the revenues wouldn’t change and wouldn’t matter. Maybe that something would’ve been reaching cash flow positive or even profitability because the company’s and the technology’s potential is that great. What I do know is that it didn’t happen today, I’ll continue to happen it is tomorrow, and hope I’m not trapped on that treadmill of tomorrow never comes.