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Charlie Burger Commentary on MVIS

Microvision
22 March 2007

Would you pay an extra hundred dollars for a cell phone with an embedded projector? Alexander Tokman is betting that about 3%–5% percent of those who purchase "feature rich" phones will jump at the chance, meaning unit sales of mobile phones containing his PicoP microprojector could reach 24m–40m annually based on last year's figures. The feisty CEO of Microvision also hopes to see PicoP in other handset devices such MP3 and DVD players and to sell it as a standalone accessory the size of an iPod. Imagine carrying in your pocket a projector that can expand your cell phone's 2" screen into a 30" or 100" screen of bright, crisp images (even when projected onto distorted surfaces) to watch mobile television and video or to browse the internet.

Tokman imagines millions of consumers doing just that before the end of next year. But first he has to overcome the manufacturing hurdles still blocking his tiny display engine. (We described these in detail in the January GTR along with Microvision's world-beating display technology.) Tokman exudes Lombardi-like confidence that he’s about to execute a game-winning touchdown. His offense includes the likes of Corning, Novalux, and Osram working feverishly on green lasers specifically for PicoP, two major high-volume manufacturing partners gearing up for the big ramp, and 75 in-house engineers (over half of his total staff).

During the consumer electronics show in January, Tokman met privately with 31 manufacturers and expects to reach developments agreements with several this year. These same manufacturers tell Tokman that he has virtually no competition based on size, cost, power, and image brightness and contrast. As the PicoP ascends rapidly into handsets throughout 2009, Tokman expects his technology to begin appearing in luxury cars as reprogrammable, instrument-cluster displays with the added benefit for manufacturers of automobile modules that he eliminates the expensive manual process required to install the inferior display systems offered by his competitors.

Over the past year Tokman cut Microvision's headcount by almost a quarter while increasing its engineering force by a third. Thanks to this aggressive streamlining and refocusing on the most promising consumer applications, he has enough cash to keep his company running for about 10 months. But that's still over half a year before Tokman expects to begin reaping his first serious revenue, and thus he will be forced back to the capital markets this year. [Editor's Note: This is not necessarily accurate. Should MVIS stock price exceed $5.30 for 20 trading days, MVIS can force exercise of the MVISW warrants which would result in $35.7M cash delivered to the company, without being 'forced back to the capital markets'.]

However, even if he offers his entire $35m shelf (at the recent stock price of $3.36 that would dilute shares outstanding by 24% to 54m), Microvision’s resulting market cap of $181m is still dirt cheap if Tokman wins his Super Bowl of tens of millions of unit sales.

-Charlie Burger, GTR

Comments

  1. Ben, These guys are catching up to PicoP really fast. This also validates that piezoeletric driven mirrors work as well as magnets. These mirrors will become commodity in a year or so. MVIS does not have order of magnitude of lead time, not even single digit of lead time. Does MVIS have a lock on their technology?

    http://www.ipms.fraunhofer.de/en/y2007/pr_070209ssi.shtml

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  2. Microvision website is down for a while; not giving a good impression to investors (and is in discussions on Yahoo Msgboard already :-)

    Can you page someone to bring it up?

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  3. to the first comment:

    Microvision owns exclusive rights to Fraunhofer IPMS MEMS mirrors for all display applications. See MVIS/Fraunhofer PR from Oct 2006.

    to the second comment:

    mvis.com is up -- we're working on microvision.com right now. thanks for the heads up!

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  4. Hi Ben,
    Is there a difference with microvision.com and mvis.com? I just figured one directed the other to the main site? Any further thoughts on the latest from TI? They give the impression that they can compete, but it sounds like it may just be a smoke screen?

    Thanks!

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  5. Ben,

    A competitive analysis between MVIS, TI, Light Blue Optics and Explay would be useful.

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  6. anonymous...
    Ben's got better things to do than to provide you with "competitive" data that is already out there on the web. If you want the scoop in a nutshell, this is it: MICROVISION HAS NO REAL COMPETITION IN THE CELL PHONE EMBEDDED SPACE (and MVIS is dominant in the other areas too!)

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  7. Hey Ben,

    As I was watching my over-priced Cable last night, a commercial for Cable Telephone service came on. Remembering an article on how cable was taking business away from the Telecom providers with VoIP services, I started thinking with the PicoP enabled phone and better streaming TV and Movie services, the Phone Companies have an opportunitiy to start taking some business from the Cable providers. A stand-alone Pico projector with cellular modem and I am not a slave to my local cable provider anymore!

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  8. So what's the likelihood that I could wake up some morning in the next 10 months and find out that some company with deep pockets (Sony, Apple, etc.) has bought out Microvision to put the displays in their products? I'm sure there would be many companies wanting to own the technology. I know that I want a wearable iPhone with retinal scanning display. I've predicted 2011 as the year it goes mainstream. Am I close?

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