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Resonant 4Q20 results ?3

09:57 15-Mar-21

The Resonant conference call has just concluded but there was very little detail.  The company is still working on milestone 3 with Murata, which is confirmed to be about commercial manufacturing.  The potential for licensing beyond initial 4 bands this year was referenced, but not in any material way.  As a reminder the Murata agreement ends with March 2022, so new designs this year seem crucial whereas not seeing them would indicate Murata is no so concerned with exclusivity in the handset market.  WiFi designs also remain possible, with the prior projection for 1H21 contracts being vaguely affirmed. 

The vagueness is not necessarily damning due to potentially ongoing negotiations, but the other side of the coin is that shelf cited below has the potential to dilute existing shareholder by a third at $5 and RESN has already dropped almost 5% to $4.70 in the early going.  The slew of press releases this morning from Nokia in advance of its Capital Markets Day, indicates a market that is progressing more slowly than Resonant would like.  Most of them remain centered on designing edge to cloud network services with Google, Amazon, and Microsoft.  Only another deal to actually optimize the Orange network seems to have any near-term potential impact for Nokia, and scheduling is still not provided.  The only actual network deployment being announced is for LNG carriers, and that uses 4G/LTE.  For Resonant, this highlights the challenges that need to be overcome before focus shifts to the bands it is addressing.  Thus the question remains to what extent it can penetrate the WiFi market and whether or not Murata will want to validate the potential that Resonant keeps jawboning by actually cutting an upgraded deal.

Resonant has reported its fourth quarter results:

• a loss of 13 cents per share misses by 3 cents
• from $607K of revenue, which beats by $7K

Although the company had already previewed the lackluster results, a fresh $100M mixed shelf is a new reason for caution.  The company has also added yet another member to its advisory board.  The conference call is beginning.  More after that.

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