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Resonant, eMagin and more ?4

09:09 19-May-17


As expected, eMagin has done another placement, diluting shareholders by over 15% and valuing shares at less than $2.  Until the company can start getting customers to more fully underwrite its development efforts, it's going to be very hard for shareholders to realize any lasting upside.

On 05/18/2017 04:26 PM, Esekla wrote:

Google IO hasn't turned up anything particular to eMagin yet.  Instead, partnerships with Qualcomm and HTC were announced.  However, it's just been documented that one of the customers that eMagin has been talking about is Facebook's Oculus, which is using eMagin microdisplays in its experimental prototypes.  The goal of these prototypes is to enable better 3D focus quality, as explained here.  To my mind, at least, that explanation also documents how far Virtual Reality still has to go.  I tend to agree with many others that Augmented Reality will make a bigger impact sooner.  In the meantime, I'm surprised that the Oculus connection isn't having a bigger impact on EMAN, even though many were probably already assuming it.  We'll see if that changes if and when it gets broader coverage.


On 05/17/2017 01:13 PM, Esekla wrote:

Resonant has poached the Director of Component Engineering from Skyworks, the presumed first customer that it was jilted by over 2 years ago.  I see this as another data point supporting my faith in Resonant's technology.  RESN will remain GRoDT for at least another quarter or two until we can start to deduce some actual figures for the royalty and market share components of its revenue equation, which looks like this:

$255M TAM x Royalty% x Market Share = Revenue

We got some vague clues two reports ago, but won't really be able to start to pin down the royalty until revenue shows up for the 1M pre-production parts.  Guessing at market share will take much longer.  As reminder, the risk is that Resonant will have to dilute again before it shows substantial revenue.  With $9.8M in capital on the books at the end of 2016, my guess would be that it will have to seek funds again, but with revenue other options besides dilution may open up.

The price movement of EMAN today is showing why I'm willing to take limited risks on stocks like this.  It is up 2% in a sea of red on conjecture that the VR portion of tonight's Google I/O presentation will include its 2K displays, with perhaps a contract announcement to follow.  That's plausible, but the real point here is lack of correlation to a dangerous market.  I see FIT and HIMX have this sort of potential as well.

That said, the majority of my long-invested capital remains in out-favor high yield stocks like CVA, CTL, NYLD.A, and BGCP, which has just gone ex-dividend.  We didn't have to wait long for more color on the US-Treasury product associated with the last of those, which should be launching in June.  Finally, I'll close by noting that IDTI has dropped more than 5% today.  It doesn't offer the dividend protection that the others do, and thus could drop further with the market.  However, the latest memory and communications products are further evidence of IDT's potential to outgrow even a long-term bear market and thus being worthy of consideration.