The Back of the Envelope

From today's PR:

"There are approximately 25,000 new heavy truck and automobile franchises in the U.S., plus more than 160,000 after-market repair facilities, according to U.S. Government Census statistics."

That brings us to a total US market of 185,000 repair facilities -- and according to the US Department of Labor, there were 818,000 US automotive service technician jobs in 2002.



So that averages out to a little more than 4 service techs per repair facility.



If Nomad has an average selling price of $3500, then here's what the revenue breakdown looks like for different market penetrations -- figures do not include Nomad accessories:



1% penetration (8180 units):____$28.63M

5% penetration (40900 units):___$143.15M

10% penetration (81800 units):__$286.3M

25% penetration (204500 units):_$715.75M

50% penetration (409000 units):_$1.43B



So a total market penetration of 1 Nomad per service tech in the US gets us to 818,000 units and $2.86B in revenue.



Assuming Microvision succeeds at 25% market penetration, at a relatively conservative 4.5 price-to-sales ratio, for the moment considering no other revenue besides Nomad Expert, that brings us to a $3.2B captialization and about a $150 MVIS stock price. It will be interesting to see what happens considering the aircraft repair, military and non-repair tech uses of Nomad that the company has planned aren't factored in here. And, this doesn't count any consumer product (EVF/Microdisplay) revenue, Flic, or MicroHUD -- or any contracts. Also, these figures include only the US auto tech service market. But, the rest of the world drives cars too, and they have the same web protocols and 802.11b wireless protocol that the Nomad System leverages.



40% efficiency gains (and associated cost savings), 'Top 20 Tool' status, and active promotion by American Honda to its dealerships suggest that Nomad Expert Technician will be coming onto the scene in a real way in the near term. With a potential $2.86B market, component sourcing problems resolved, and the product currently shipping to customers, the outlook is bright indeed.



So, just to refresh our memories -- 'pre-revenue' Iridigm with its LCD-like, fixed-pixel display technology is worth $200M to Qualcomm -- even with years to go before their technology is ready to move out of the laboratory. While Microvision, minus its $31.2M Lumera stake is worth $111M on the open market.



This seems like a disconnect that will be resolved quickly. Microvision's opportunities for near term revenue growth, powered by the Nomad System, are compelling -- and, looking out just a little bit further the potential becomes staggering.



Microvision will have its day in the sun -- when large volume Nomad orders are rolling in, the CNBC Squawk Box guys are trying on Nomads and talking about how cool they are, and MVIS becomes the 'hot stock' du jour. For now, we can enjoy being the types of investors who can shake off the post-dot-com/9-11 fear factor and embrace the possibilities of American science and innovation, before the sea-change becomes obvious to the rest of the world.