Thanks to Brexit and Trump, I think it is easy to believe that unlikely things can happen. I intend to write about the systemic instabilities I’ve witnessed, but not tonight. It is too soon. In other news, another unlikely thing happened. It was on a smaller, and almost personal scale; and by dealing with it I will remind myself that life is made of details that I can act upon more than abstractions that can become endless debates. (Though, if you want a discussion about personal actions, check out Liza Loop’s recent post; Engine or Victim of Government) MicroVision had good news today. It came as a surprise, at least to many, and gave me good reason to pay attention to some positive news that can directly affect my life within the next few months.
Oh, I want to talk politics; but this week is noise. Soon we’ll have more substantial announcements to consider and scenarios (and maps) to ponder.
MicroVision, the company for the story stock (MVIS) that I continue to hold and ponder, made an announcement today that wasn’t about a customer or revenues; but was about a partner, a significant partner. Ta Da!
MicroVision and STMicroelectronics to Co-Market MEMS Mirror-based Laser Beam Scanning Solutions
Okay. I understand. If you aren’t a shareholder you’ve probably already quit reading. That’s how dull business headlines can be.
If you are an MVIS shareholder, or want to be, you may have already done your research. If not, you’re welcome to start in this post where I work through the implications as I type. (You can check previous posts by following the MVIS tag.) Make sure you check with others, though. I’m not perfect and can never capture the entire story. That’s why community is valuable.
A few years ago, MicroVision had a significant accomplishment by completing a deal with Sony. A tiny company barely worth more than some houses in the US, made a deal with one of the largest corporations on the planet. MicroVision’s technology is unique, disruptive, and competitively powerful. Making embedded projectors as ubiquitous as embedded cameras is a nice business opportunity, and not the only application of the technology. Sony legitimized MicroVision’s product, became a key customer and partner at a critical time, and is now part of a partnership that can create years of additional accomplishments. Sony alone could lead MicroVision to profitability, but is operating at a pace that’s too slow for MicroVision’s cash burn and many MVIS shareholders.
STMicroelectronics is not as well known as Sony, at least outside the industry. Inside the industry, they are easily recognizable. Investors are aware of the industry and quickly saw the advantage of the news. By partnering with STM, MicroVision is no longer constrained by Sony’s strategic positioning, internal logistics, and corporate motivations. From what I heard at the recent conference call regarding the earnings report, MicroVision wanted to find a way to work with the customers that Sony turned away. The STM news means MicroVision can progress with products in Augmented Reality (AR), Virtual Reality (VR), 3D sensing (LIDAR), and autonomous vehicle systems (Advanced Driver Assistance Systems, ADAS). STM has agreed to co-market solutions to those potential OEM customers. Include the work on an much smaller profile component and MicroVision has a basis for their claim that they anticipate revenues of $30M-$60M within the 12-18 months after first availability, possibly starting as early as the first half of 2017. Even with low profit margins for new products, that gets closer to the range of positive cash flow and profitability.
The stock rose 19% on the news. Get it to triple and put delisting issues away. Get it to quintuple and reach a valuation based on roughly six times revenues. Unfortunately, the stock has to rise about 25-fold to get back to where it was supposed to be the first time it was threatened with delisting. And yet, it could do that. The $30M-$60M could be conservative (very arguable). I don’t know how many successful products are assumed in that estimate. The market values growth, and they may add a premium based on multiple products. The $30M-$60M doesn’t include revenue from Sony products. Add that in. Because the PR didn’t mention the product with a smaller profile, there was either an oversight, or there’s yet another potential revenue stream (unless it was accounted for in the $30M-$60M.)
Earlier, shareholders were told to expect several OEMs announcing products by the end of the year. The lack of news from Sony or any major OEM has diminished those expectations. The stock has languished. Shareholder morale has been so low that even my name came up as a potential board member.
Surely that was in jest, but hey, look who else just got a job that comes with a White House and a plane.
I take MicroVision’s news as good news for the company, the stock, and the beleaguered shareholders; but I also take it as a reminder that unexpected things can happen. Low odds are not zero. Finite probabilities can become possibilities. The long wait for MVIS may be – may be – over. It is too soon to tell, but not too soon to dream.
In the meantime, in the spirit of anything can happen, thanks to inspiration from the weirdness of the world, I bought enough lottery tickets to cover the four main games in Washington State. Hit 5 has a $170K jackpot, enough to ease a lot of anxieties. LOTTO has a $4.2M jackpot, more than enough to re-retire. Mega Millions has a $65M jackpot, almost enough to buy all of MicroVision, or at least become the major shareholder. PowerBall has a $258M jackpot, enough to all of MicroVision even after taking the hit from the cash option. If the world is acting weird, I guess I’ll just have to learn to act weird with it. (By the way, if I won the MegaMillions or PowerBall jackpots, I wouldn’t use the money to buy MVIS stock. Investing is about making enough money to live a dream; not just making money to make more money. Life’s too short for that.)