Vodafone & Himax partnerships plus CWEN & EMAN crazy talk +3

08:06 23-Jan-20

Himax has indicated that it is supplying a new HM0360 sensor to Google for use in developing new intelligent vision solutions.  This hasn't moved HIMX so far in the pre-market, and I would not be inclined to chase the stock back above $4 for a move so early in the development cycle like this.

Similarly, Vodafone just let us know that it started the year by adding Sunrise as a global business services partner.  Sunrise seems to focus on such services, but has TTM revenue just under 2b Swiss Francs.  So, this is hardly a game changer for Vodafone, but it's more clearly positive than the news that follows.  VOD had validated my caution by retreating back below $20, but is being boosted slightly above that level.  I'm inclined to continue waiting for a better price point as the extradition trail of Huawei's CFO begins unfolding this week, and the world starts taking more serious notice of the virus I mentioned yesterday.  I'll also be watching the ECB, of course, but will only update if a real change in its course is signaled, rather than mere verbal fiddling. 

In the wake of yesterday's Clearway schedule, the PG&E settlement with bondholders is now confirmed though government resistance remains, ostensibly over safety and financing.  This seems like a potentially serious continued complication, though I have to wonder if the governor's court filing is simply PR.  Despite recent attention, burying power lines to prevent them from sparking wildfires has been considered for years (note the 2017 publication date), but the process was generally too expensive for the whole of PG&E's network.  Changes have been made in Paradise, now that damage was done, but all the bankruptcy action to date has been about finances, and from a systemic point of view there are now even less of those to go around as damage claims mount.  California's reverse indemnity laws, which should be the heart of this matter, haven't really been addressed.  A reasonable compromise might be to only apply them in areas where municipalities have paid up and buried the risk.  Sadly, I'm almost certain that cents will overrule sense once again.  It is possible that carving PG&E up would allow richer areas to take preventative action on a piecemeal basis, without addressing what happens when wildfires spread.  The fate of Clearway's PPAs under such a scenario is an unwanted and un-priced risk, in my opinion.  Although I'm sure Clearway management will continue to say that it expects the PPAs to be assumed without modification, don't hold your breath for clarity in the up-coming report.

In another case of irrationality, EMAN shares spiked 40% (a whole 20 cents), before retreating some last night when eMagin preannounced its revenue.  Although progress is being made, the weak YoY comparison makes me disagree with the company's characterization of revenue and backlog gaining by a third and 10%, respectively, as "positive".  Instead, I note that the company carefully avoided any net operating or earnings figures, and I am fairly certain that we are in for another unaffordable loss.  Changing that will require continued improvement in manufacturing yields, and it is possible that the elevation of Dr. Ghosh from CTO to COO, will accomplish that.  However, he's already been with the company for almost 22 years, and the resignation of the CFO "to pursue another opportunity" doesn't exactly signal an imminent turnaround.  In light of private sector progress from Vuzix and its competition, I continue to see the military, and thus this year's American election, as the event to watch for eMagin, if one cares to watch it at all.