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Resonant opens Korean office +2

09:00 08-Aug-17


A subscriber was asking just yesterday:

how likely you think it is that RESN discloses Samsung as OEM if in fact it is true? Also, if it is true doesn’t it seem odd that virtually no one has picked up on it, i.e pps and volume are unchanged?  In terms of the tear down being definitive, is it just because of the source having poor credibility?

Here is my (edited) response:

Although I don't regard the source as very credible, the part identification is not definitive mainly because we have no history on how Resonant marks its components.  Often they are not marked in any way that identifies the designer at all.
Management won't explicitly confirm a Samsung win by name; they'd already said that we would have to find out on our own via tear-downs. Thus, the best we can hope for oblique confirmation by reference, but that will be good enough.  They may eventually have to disclose 10%+ customers, but not necessarily by name and probably only after there have been earlier, better indications.

As for nobody picking up on this, I wouldn't assume that from the market data you cite, but it's not really a binary situation.  Instead, I see three factors at work:
  1. The part identification isn't definitive.
  2. Retail investors who know little may not have picked up on the Seeking Alpha article because the Editors there were too stupid/overworked to properly tag it to Resonant. 
  3. Firms who pay a lot of money for research could have already had this insight, but Resonant is still too small cap and low volume for most such entities to engage in, especially without options on the stock being available.
Consequently, some oblique confirmation from management could have an effect, but I won't be surprised if it takes revenue and/or a partnership to really change the dynamic.  It would also be par for the course if someone like Qorvo or Skyworks scoops the company up before the market wakes up to the possibilities.
We didn't have to wait long for at least a bit of that oblique confirmation.  Resonant is opening an office in South Korea and appointing a Sales Manager for the country.  The press release also states that

Resonant's current partners in Korea are developing products for the already established large Korean market, as well as the growing Chinese market.
It also confirms that the company's first two customers were in South Korea.  Previously we had only known that they were Asian OEMs.  Management sees "enormous potential" for expansion in Korea and China.  For better or worse, that's where all the innovation in mobile occurs these days.   I'll be listening for any projection on how much this will increase costs in the conference call.  RESN doesn't have a pre-market book yet, but I wouldn't be surprised if it trades up today.