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Resonant M2 and ABB 3Q20 schedule +3

09:51 05-Oct-20


Resonant has achieved its second milestone with Murata by confirming the targeted performance, manufacturing and reliability of its 5G XBAR filter.  This unlocks a $2.25M royalty pre-payment for the company and management characterizes it as the most important step, since it enables Resonant to move forward with mass production plans.  However, that is not yet completely assured, as per the final statement from the CEO:
Although there are additional milestones required prior to commercial production of these designs, our partner’s commitment, time and resources have increased significantly to ensure the success of our XBAR technology reaching the market with dominant scale.
I note that we have not received confirmation of the first milestone, which was projected in the last earnings report, by year end.  So potentially, the company stands to gain $4.5M in the near term, though it will not necessarily recognize that all at once.  Presumably we'll hear about that by the next call in early November.  The money will help to avoid further dilution, but it amounts to less than a quarter of additional operations, at most, though Resonant already had a year's worth of capital on the balance sheet. 

This is expected, but an unmitigated positive.  RESN is up a few percent in early trading, around $2.40.  I remain willing to take a chance on it below the $2.53 that Murata paid for its stake.  Management has presentations scheduled for tomorrow and Thursday, which I will attend.  Thus, we could see a delayed reaction, potentially amplified by the 5% rebate rate, but the stock has historically shown signs of poor information control.  Thus the spike at the end of last month could have been more than just end of quarter window dressing.

I'll also take a moment to note that ABB has scheduled its third quarter report for the early morning of October 23rd.  The average of 4 analysts estimates is for 11 cents of EPS, and there are no revenue estimates.  I'll review the results, but with ABB above $26 and Europe bracing for another COVID surge, I may not write about them separately.