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eMagin 4Q16 results +4

09:46 28-Mar-17


The eMagin conference call has just concluded.  Obviously, it was short but there was quite a bit of good color provided:

The 2k displays that are being sampled now are the product of the initial IP agreement and development agreement for headset design that was signed over a year ago. eMagin is also being funded by the two other latest partners to develop new displays.  As such, it expects
no dramatic OpEx increase this year.  Furthermore, the $1.5M of development revenue expected this quarter should recur but could be lumpy.  All of that is very encouraging, and in combination with military activity trending me back up, leads me to hope that any further dilution can be avoided.

Analysts also pushed to make a connection with AMD's keynote at the Virtual Reality World Congress on April 12.  Virtual reality is garnering interest beyond the bleeding edge, with new agreements being announced by distributors rather than tech companies.  The relatively light analyst interest makes this the sort of GRoDT opportunity that I'm willing to take a chance on below the $2.60 level mentioned below.

On 03/28/2017 08:25 AM, Esekla wrote:

eMagin has announced results for its fourth quarter:

  • a loss of 11 cents per share misses by 4 cents
  • on revenue of $4.56M, which misses by $0.7M
  • signed an additional multi-million dollar agreement with a Tier 1 consumer electronics company.

The last bullet point is the most important, as military sales were expected to tail off this quarter.  The company reports higher yields and is sampling HMD displays now.  It expects to recognize $1.5M from these efforts in the current quarter, with more to come over the course of the year.  See the press release for a more detailed recap of 2016 and current plans.

What should really matter for EMAN going forward is how much management can get partners to subsidize volume production.  The company had $5.2M of capital at year end, down from $6.9M last quarter, but that includes $4.5M raised from the early exercise of warrants last summer.  It's conceivable that eMagin could avoid having to raise funds, but not likely without a partnership.  Even so, at current prices for each, I like EMAN better than HIMX, which has bounced even more quickly and strongly than I anticipated.  Warrants for almost 3M EMAN shares were issued in the transaction cited above with a strike price of $2.60.  My initial take is to not chase shares above that level, but I'll be looking for any color on financing and partnerships during the call, which starts at 9.