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MicroVision 3Q16 results ?3

09:29 02-Nov-16

The MicroVision conference call has just concluded and it contains both pros and cons: 

Pros:

• Management will be showcasing the new products at CES in January.
• The new development agreements address the ADAS (Advanced Driver Assistance System) and AR (Augmented Reality) markets.
  

Cons:

• fewer display engines sold by Sony, and no further revenue from them for at least 2 quarters.
• Lincoln Park agreement allows 150K shares every other day, at a discount to market price.  MVIS needs to be above $1 for this to happen.
  

The last of these is the most important for the next year, in my opinion. It solidifies my belief that we are near a bottom for the stock price, at least as a consequence of the LP agreement.   However, if management needs to raise funds in other ways, that would a deal breaker for me.

The commentary surrounding Sony is clearly making investors question whether or not that relationship is essentially dead.  Competing products in the market are contributing to that line of thought, and Sony's product has dropped off the top seller list at Amazon completely.  The overall impression is that management will go it alone for smaller embedded projectors and it has switched to a new high volume manufacturing partner to support this endeavor, as well as future products.

As I've said all along, future products are where it's at for this company.  How they finance those products will be make or break.  Lincoln Park was NOT a good start, but I think the damage from that is now done.  I don't expect much from the stock before year end, but a 12% rebate rate could make me wrong.

MicroVision has reported results for its third quarter:

• a loss of 8 cents per share, misses by a penny
• on revenue of $4M, which beats by $800K

The press release instead tries to focus on management's plans for 2017, when it intends to begin selling laser scanning engines, with the following development schedule:

• Small form factor display engine: samples in December 2016 and production units in early Q2 2017;
• Interactive touch engine: samples in Q2 2017 and production units in Q3 2017;
• LiDAR 3D sensing engine: samples in second half 2017 and production units in first half 2018.

Management believes this should result in $30-60M in sales in 2018 and 2019, based on development agreements with two world leading technology companies.  I think the company still has potential.  I never thought projection was likely to be the mainstay business; though further development means further time and risk, I think that risk is priced in now.  More after the conference call.

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