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From the recent article on Microvision in BusinessWeek Online, Rick is quoted as saying that he "sees Microvision in the black in 2006 on sharply higher sales."

Rick has also stated a few times that what it would take $14-15M revenue in a quarter to reach breakeven. So for the sake of argument let's say that it's the fourth quarter of 2006 that we finally get in the black with that $14-15M quarter.

The BusinessWeek article also says that in 2004, 'analysts' see Microvision full year revenue of $11M. Based on the 3Q04 earnings report, consolidated revenue for the nine months ended September 30, 2004, was $8.1 million. So for the moment, let's give these analysts some credit and figure they're about right on the $11M full year revenue.

That would give us 4Q04 revenue of $2.9M. So according to our hypothetical scenario, we've got two years to get from a $2.9M quarter to a $14.5M quarter.

The difference between $14.5 and $2.9M is $11.6M. Now, bear with me as I bring MVIS from $2.9M revenue to the magic $14.5 revenue quarter in 4Q06. A hypothetical smooth trajectory to $14.5M would have MVIS pulling in an additional $1.45M a quarter, each quarter to 4Q06. This looks like this:

1Q05: $4.35M
2Q05: $5.8M
3Q05: $7.25M
4Q05: $8.7M
1Q06: $10.15M
2Q06: $11.6M
3Q06: $13.05M
4Q06: $14.5M

In my opinion, it's pretty unlikely we'll see a smooth sequential ramp up like this. It's a lot more likely to be kind of an exponential ramp, where 2005 is a little more even and then a big jump as we get in to 2006. So let's take a look at an alternative scenario:

1Q05: $4.35M
2Q05: $4.85M
3Q05: $5.35M
4Q05: $5.85M
1Q06: $7M
2Q06: $8.5M
3Q06: $10.5M
4Q06: $14.5M

Under either one of these scenarios, what does the MVIS chart look like? I'd bet it looks pretty damn good. And shares at $5.60 are looking real real good.

Now, for long time and long suffering MVIS longs, it can be a little hard to imagine these kinds of scenarios playing out in real life. And it's a risk to take articles like the one in BusinessWeek at face value when they talk about analyst forecasts and management's projections.

But let's flip the script on the idea of risk for a second. What if the real risk is knowing about MVIS and their massive opportunities, 'sharply higher sales growth' in 2006 and just sitting on the sidelines and watching?

The possibilities are all there. The JNJ licensing deal certainly improves the chances of Rick's prediction coming to reality -- assuming we have good success developing the product they've asked us for.

Somewhere along this timeline, BMW, VW/Audi, and the European Tier 1 Supplier could probably decide to move forward with a production order for the MicroHUD. I've seen it in person, several months ago, and it was flat out awesome. And it's only been improved since then.

It's possible that our Laser Printer Engine contracts could bear fruit in the form of an OEM design win. What kind of revenue this would mean for the company is anyone's guess.

Then there is the electronic viewfinder/microdisplay, Laser TV and all the rest of the potential applications of MVIS technology, just arriving in time to meet the nexus of massive mobile internet bandwidth and miniature mobile devices with ever advancing capabilities (and for the moment, buggy whip 2" LCD screens).

And, who knows what kind of sales success the company might have with Nomad and Flic during this time.

So, I dunno. Some folks might think that MVIS is risky because there isn't a consistent history of sales and earnings growth. Establishing (or maintaining) a large position in the company requires an intuitive leap beyond simply examining forensic details of past performance -- it requires an analysis of the probability that 2" LCDs can remain dominant for an indefinite period, given the demands of a world of full-featured mobile internet devices that are ever miniaturizing.

But, it hasn't happened yet. So in the meantime there's a lot of room for doubt and skepticism about Microvision's chances to become the display of choice in a wide variety of applications and market segments. Certainly the potential is there. Before the next two years are out, we'll know how the story goes.


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