Resonant and Xebec new, BGC & UDC 3Q21 schedules, and BS everywhere ?3

09:30 06-Oct-21

The 8-K for Resonant's agreement is now available and it provides some more detail.  It is structured as an addendum to the original agreement and does not extend the exclusivity date, which expires at the end of March.  Murata has agreed to pay Resonant at least $4M in pre-paid royalty and other fees, and up to $36M with the amount determined by the complexity of the filter designs selected by Murata for development. The future payments will be made in two installments per band over a multi-year development period, with each installment conditional upon the Resonant’s achievement of certain milestones and deliverables at Murata's discretion.  The filing also explicitly affirms Murata's ability to terminate the agreement with 30 days written notice.

So basically nothing has been decided yet.  While Resonant has a framework for further payments, it doesn't sound like Murata exactly has new designs from Resonant as a top priority.  Although it's still possible that Murata could buy Resonant outright at the reduced share price, short of that, it seems more likely than ever that Resonant will have to dilute again.  RESN shares haven't reacted immediately, but I would expect investors to be underwhelmed by the terms of an event management has had them waiting on for many months now.

The one piece of news that could matter a little in terms of immediate market movement is Xebec's Biostream units entering actual production with task orders on the initial 18 units for Chevron under the July MSA.  Manufacturing readiness is good, though XEBEF hasn't traded pre-market.

By contrast, I could see Resonant simply announcing that it has expanded its Murata agreement without offering any detail other than that additional bands are targeted as just increasing volatility over the long term, even though RESN is up on the news.

The rest of this note is scheduling and reinforcement of the general market climate, which can be skipped my most investors.

BGC Partners has scheduled its third quarter report for the morning of November 3rd.  Both analyst estimates have fallen in line with my EPS projection from the last report at 15 cents from $490M, declining to $458M this quarter.  Maybe we'll finally get details on a corporate transition, depending on what passes for progress in Washington, below, but what the Fed has to say later that day may wind up being more important to BGC's business.  I'll cover both, of course.

Universal Display Corp. has scheduled its third quarter report for the next evening, November 4th.  The average of 9 analyst estimates comes to $1.09 of EPS from $146M of revenue, rising to $149M this quarter.  Good numbers are to be expected as foldable phones finally begin entering the mainstream.  Regardless, I am likely to prioritize Energy Recovery's simultaneous call instead, even though it looks like the more overvalued stock.

Push seems to be finally coming to shove in Congress, with the slimming of Biden's agenda, as expected.  If the Senate filibuster could also be permanently eliminated in the process of resolving the federal funding impasse, so much the better, but only an exception is being discussed and details of any sort on either matter are still lacking.  I warned at the beginning of the summer that this would be lengthy process, but it's still a shame.  Building stuff takes time, but decision making and diplomacy doesn't have to.  The latter could give MX investors slightly improved hope that they will get a deal for Xmas.

So why is the head of the DoJ only heading into confirmation today, and how much difference will it make?  There will probably be some negative impact to Google and other new-guard tech behemoths, as regulators get into gear.  However, after seeing Gensler's version of "protecting" investors take the form of an SEC ban on electronic trading in GMLPF as well as other OTC symbols.  I never imagined this would apply to something as sold as preferred shares backed by major Nasdaq-listed company, but further investigation confirms that as the cause of recent volatility.  Those who can may want to take advantage.  In the meantime, I remain skeptical of meaningfully broad reform and fear that the effects of regulation will once again wind up being the opposite of the promises.

That applies equally to the latest press release from the AES/Google collaboration, which looks like straight up greenwashing to me.  Sure, smart thermostats may save energy for those who don't adjust their home temps appropriately and don't mind having their movements tracked.  However, as far as I can tell, the new program is just a marketing push by both companies.  Expect more of that as the Fluence IPO approaches.