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CR: This is Casey Rittenhouse for WallSt.net. Today we welcome Alex Tokman, CEO of Microvision, Inc.

AT: Thank you, Casey.

CR: Now can you give us a brief overview of your company, what you do, and the markets you serve?

AT: First of all, Microvision is located in Redmond, WA. We have about 140 employees. Today Microvision is engaged in an exciting new core growth strategy that we put together last year, that is centered around the development of an embedded architecture that we call Integrated Photonics Module, or IPM. Because of its small form factor, the IPM can be integrated into a variety of OEM products that require a large viewing or imaging experience that could be attained in a small and cost-effective package. The IPM will contain all the necessary features and functionality to become a tiny image generator for many high-definition consumer, automotive, medical and military display devices, developed and distributed by world leading OEMs.

We are targeting the IPM for high-volume consumer and automotive applications first. These will include a miniature projection display we call Picoprojector that would be embedded into mobile devices, such as cell phones, PDAs, or iPod. Also, we're targeting automotive heads-up displays and what we call personal color eyewear, and I'm going to give you a little color on each one shortly.

The IPM strategy leverages our past and present experience in micro-electromechanical systems technology called MEMS, and will include innovation in the MEMS area, as well as optical development, light sources development, and electronics that will be developed by Microvision and our partners.

Just a little overview on what this technology is all about and why it's so disruptive: We have developed a method of creating images using a single beam of light by modulating it in space and time simultaneously, which unlike most conventional technologies such as LCD, DLP and others, our technology uses small coherent light sources, specifically lasers, and a tiny silicon mirror called MEMS, to create a high-contrast, high-resolution and brightness image that can be attained and placed into a very, very small package.

The company's revenues to date derive from two primary sources: development contracts generated from engaging with commercial OEMs and government agencies, as well as product sales.

Let me talk about some of the more exciting applications we're targeting. Picoprojection, and personal color eyewear applications, these are purely consumer products, targeting hundreds of millions of portable consumer handsets sold each year. The MicroHUD, which we're designing for the automotive industry, is anticipated to be a high-performance embedded heads-up display for automobiles to basically provide all the navigational information on the windshield.

Our goal is to work with global OEMs and Tier 1 integrators to embed the Integrated Photonics Module into various portable devices, that would require high-resolution, high-contrast, high-brightness imagery.

On the commercial side, we sell products, one of the products we sell today is called Flic. Flic is a bar-code scanner, it's simple and affordable, and it's targeted for the rapidly emerging mobility segment. We're also targeting the conventional household and automated identification and data capture market, or AIDC. Flic typically provides a low-cost alternative to higher priced competitor products for light-duty applications. We recently launched three software products that enable a simple and affordable solution for capturing bar-code data for various developers of enterprise solutions. We expect this year to significantly increase Flic sales from last year and to continually grow this business in 2006 and beyond.

Finally, our business is supported by participation in a number of government contracts. The US Government has been a strong supporter of our technology over the years, and we expect this relationship to continue to pursue mutually rewarding opportunities that will allow us to deliver valuable products to the military, as well as translate all the development activities into our commercial product offerings.

CR: Is your company currently capitalized to achieve its strategic objectives through the next 12 months?

AT: We recently completed a $27M private placement of common stock and warrants and we strongly believe that this financing puts the company on a solid financial footing to meet its near-term and mid-term operating objectives.

CR: What would you say are some trends in the market that you say bolster Microvision's prospects for near-term growth, and has the company laid the groundwork for long-term growth?

AT: This is actually a great time to be at Microvision. There has been a convergence of key external and internal factors over the past year or so that position us on a path for long-term profitability and growth. Let me start with the external factors first. The key external factors include a very, very strong market pull from global OEMs for the embedded projection applications. We've demonstrated successfully several earlier prototypes at major tradeshows including Society of Information Display, and Consumer Electronics Show, which generated a very, very strong pull by most of the global OEMs and Tier 1 integrators for automotive industry.

The second factor is the availability of cost-effective red, green and blue lasers. Overall, the demand for connectivity to retain mobility continues to increase. Cell phones and other mobile devices are being filled with new image content and applications, including streaming video and internet access, while there has been little or no change made to improve the viewing experience for the user. Most viewing experience today is limited to a two-inch display, just look at the iPod, or vPod. This increasing content is driving the cell phone and handset manufacturers to provide the user with a better viewing experience, because the user pays monthly service fees to get instant downloads and streaming video, and there's not much experience you get out of looking at a two-inch display for long periods of time.

At the same time, the light source developers are coming to market with a cost-effective, small green laser, which has been missing in the past. This green laser has been pulled by the emerging rear-projection television industry, and these lasers happen to be very suitable for our miniature displays. To enable the IPM solution, we need red, blue and green light sources to create a full-color image. Red and blue have been available in the past, but the green wasn't. Now the RPTV industry ensured last year that the green laser manufacturers are accelerating the development of this specific product.

In terms of the internal factors, we have implemented a lot in the last six months, after I took over as the CEO in January. We implemented a new strategy, placed strong focus on the Integrated Photonics Module, we restructured, reorganized. By doing this, we basically reduced SG&A by about 25%. We put together a new leadership team, implemented core business processes that made GE successful, that I learned over the past 10 years before coming to Microvision.

So both the external and internal factors seem to be aligning properly, and the future looks pretty bright!

CR: I wanted to switch gears and ask you a little bit about your management team. Can you tell us about some of the key executives at the company?

AT: When I joined Microvision late last year, one of the first items was to re-evaluate the senior management team, and this evaluation has shown us that we needed to make some drastic changes at the top. As a result, we revamped the senior leadership team, reducing its size by about 30%, and bringing several executives from GE, experienced in growth, turnaround, and six-sigma to run Sales, Marketing and Engineering organizations. We have also instituted GE-style performance measurement and goal setting systems to provide all employees with direction, and tying everybody's G's and O's with the company's goals and objectives.

We've also added several new board members with extensive experience in the areas that are directly synergetic with our strategic roadmap. For example, we've added Marc Onetto, who has tremendous experience in supply chain and operations globally that he acquired at GE and Solectron. We've added Jeanette Horan, who is head of development at IBM who brings extensive experience in product development globally, and it's something we want to leverage heavily.

CR: And also, do you have any additional closing comments for potential investors.

AT: Absolutely! Our goal is ambitious, yet crystal clear. We want to have the same profound impact on the high-resolution display and imaging industry that Intel microprocessors had on the computing industry. The key to this strategy is partnering with world-leading OEMs to design, develop and commercialize modular configurations of Integrated Photonics Module that target different high-volume products and applications. We're turning the company around, and I'm very encouraged by what we have accomplished as a team over the first six months of this year. We've rolled out and implemented a new business strategy, reorganized the operations, revamped the leadership team, reconstituted the Board of Directors and completed the largest financing in the history of Microvision, while making solid progress on increasing the sales of our bar-code scanner product line, and making huge development improvements in proliferating the development of Integrated Photonics Module.

We will continue this positive momentum started in the first half, and hopefully translate all the internal improvements we've made over the past six months into tangible, externally visible results in the second half of the year. So the future looks good, and I think everybody's excited to be around Microvision.

CR: Does the company have a website where investors can get more information?

AT: Our website is www.microvision.com, and I would strongly encourage everyone to go to our website, to look at our corporate overview, and learn more about the company. I think the presentation provides a pretty good overview of the technology, applications, strategy and gives a good overview of the management team and what we're trying to do.

CR: Mr. Tokman, I wanted to thank you for joining us today, and we look forward to speaking with you in the near future.

AT: Thank you, Casey.

1 comments:

At September 6, 2006 at 10:07 PM Anonymous said...

Casey sure knows how to interview people. She is really good with those CEO's. A true professional, great people and conversational skills. A real pleasure to listen to.

 

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