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Post-Nuclear Valuation

Minus our LMRA stake, Microvision is worth $76M.

This would make sense if we'd just had a global thermonuclear war. This valuation has to reflect the most pessimistic view imaginable of the company's prospects.

Having seen the Nomad, the Canon EVF, and the MicroHUD in person, I am simply unable to reconcile this disconnect.

If the products sucked, then maybe I could understand this. But, they don't. They are in fact, quite amazing.

If there wasn't a 'critical mass' of recognition from the largest consumer electronics companies in the world that what is needed for the next generation of portable Internet devices is a laptop-sized display in an Ipod form factor, then maybe this would make some kind of sense. But, there is.

If there weren't late-stage development contracts with Canon for high-resolution microdisplays -- or advanced prototypes of the MicroHUD going into multiple vehicles from BMW and VW/Audi over the next few months -- then maybe I could fathom this.

If the company was not under contracts to develop scanned beam image capture applications like bar code scanning and laser microcameras, then there could be some way to understand the way we're perceived by the market -- but here we are, developing image capture applications for large customers.

If the Nomad was not meeting acceptance for military maintenance, the Stryker Brigade wasn't ordering additional units for battlefield awareness, and large automotive systems integrators like Reynolds & Reynolds weren't signing up to sell Nomads... -- but they are. It's all happening.

Look, there's no way this makes any sense. Period.

I work in the biotech industry. And it's no secret that there are dozens of public biotechs with nothing but a database of genomic information and some pre-clinical drug candidates that may never get out of the laboratory. For some reason, people feel OK about bidding up their valuations in spite of the need for additional capital to be accessed, the likelihood of the issuance of additional shares, and the basic understanding that it takes several years (and lots and lots of money) to get a drug from the computer to the laboratory through clinical trials, through FDA approval and then to market.

So, why is this? Biotech companies only make products for the very small portion of the population with serious illnesses. They face a long and expensive road to commercialize their technology, and ultimately the FDA is the only arbiter of any drug's commercial potential in the US.

Microvision has already spent the money to develop the scanned beam display and image capture platform. They've shrunk it down from a table-sized lab experiment to the size a dime in just 10 years. There's no FDA here, for the company's consumer applications, anyway. Just whether the company's products can beat the competition on performance and price. The unique capabilities of the company's technology, and the inherent limitations of competing microdisplays ensures this will be the case. The target market is every single human being in the civilized world.

All this being said, despite the irrational pessimism that has MVIS shares in the $5s, I still have a sense of calmness and serenity. Apart from the market valuation, it's all playing out pretty much as the company has planned it. Attract deep pocketed partners to invest in the technology and gain an intimate knowledge of the partners' target markets and performance requirements. Consistently meet or exceed those requirements, advance the contracts to late-stage pre-commercial development and then sign a licensing agreement allowing the partner to use our proprietary scanned beam displays or image capture technology inside their products. Then cash the ridiculously large checks that come every month while working on scanned beam contact lenses and every other imaginable embodiment of light-scanning technology.

The readers of this blog know what's coming. But apparently, we're among the only ones.


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