ParkerVision Special Investor
Relations Call
June 28, 2005
Jeff L. Parker, Chief
Executive Officer
Cliff Calista with
Emerging Growth Equities
Mark Gaskill with MKG
Financial Group
Joe Graves with Lehman
Brothers
Sedra Feta (sp?) of Fire
(Sire?) Capital
Phil Anderson
George Sheil (sp?), with
George Sheil, Inc.
Kent Williams with
Moderator: Good day ladies and
gentlemen and welcome to the ParkerVision Inc. Special Events conference call.
My name is Cara and I will be your coordinator for today. At this time, all
participants are in a listen only mode. However we will be facilitating a
question and answer session towards the end of today’s conference.
Before we get started, I want to remind listeners that this
conference call will contain forwardlooking statements which involve known and
unknown risks, uncertainties about our business in the economy and other
factors that may cause actual results to be materially different from our
expected achievements and anticipated results. Included in these risks are
factors such as the ability to maintain technological advantage in the
marketplace, ability to sufficiently increase manufacturing capacity to meet
demand, achieving timely market introduction and acceptance of our products,
maintaining our patent protection and the availability of capital, among
others. Given these uncertainties and other various factors about our business,
listeners are cautioned not to place undue reliance on any forward looking
statements contained in this conference call.
Additional information concerning these and other risks can be
found in our filings with the SEC. I would now like to turn the presentation
over to your host for today’s call, Mr. Jeff Parker, Chief Executive
Officer. Please proceed sir.
Jeff Parker: Thank you and good
afternoon to all of you and thank you for joining us for this conference call.
So this morning we announced that we will be exiting our retail activities and
moving forward as a pure play fabless semiconductor company. Let me start by
saying that exiting retail was a difficult decision given the hardworking and
dedicated retail team that we’ve assembled at ParkerVision, and the support
that we’ve received from our retail channel partners. However, by so doing, we
have enhanced by no small margin our probability for success with our OEM
centered business model.
I would like to take a few minutes to explain the decision in
greater detail. We entered retail a little over a year and a half ago with
three main goals: number one, to showcase our technology, and to continue to
build awareness in the technology marketplace for what we had and will continue
to develop. Number two, to validate that our technology in practice met the
performance and reliability claims that we had predicted it would deliver. And
number three, to generate initial revenue for the company from our technology,
and ultimately cash flow to further fund growth opportunities. We clearly met
the first two of these objectives. As far as showcasing our technology, we are
no longer hearing skepticism from potential OEM partners about the validity of
our technology. In the course of our retail efforts, we manufactured tens of
thousands of units. Our product reviews and customer testimonials have been
exemplary, senior executives at some of the leading retailers around the
country have replaced market leading brands of WiFi products to use our
products in their homes and offices and the reliability of our products has
been excellent. In addition, many of our prospective OEM customers have
purchased and evaluated our consumer products, which has helped establish our
credibility with regard to our technology and our performance claims.
We were successful in showcasing our technology and proving that
our WiFi product based on our technology worked as well or better than we
predicted. It has been gratifying to
hear from so many end users commenting that our product is one of the few
wireless products they’ve used that performs according to the claims. Regarding
our third goal, over the course of this year, we find that the ability to
achieve significant retail revenue growth is clearly at odds with other
investments in growth opportunities that we strongly believe are in the best
interests of building value at ParkerVision and that we are pursuing
aggressively.
Ever since we announced the latest advancements of our digital
wireless technology earlier this year, specifically with the introduction of
our Direct to RF Power, or D2P technology and products there has been a growing
and significant interest on the part of OEMs to engage us in active discussion
about the incorporation of our technology into their next generation of
products. While we believe it would have been possible to expand our retail
channel of distribution, and our wireless networking offering to include
802.11G as well as cordless phone products, it became evident that the
resources and capital required to expand our retail campaign is in contention
with properly supporting the rapidly growing OEM business prospects. Thus we
concluded it is in the best interests of ParkerVision’s shareholders that we
ensure the fastest success in securing OEM design wins by narrowing our
investment of both human and financial resources to that of a pure-play fabless
semiconductor provider and curtail our retail campaign efforts.
From a financial standpoint, although the company will record a
one time restructuring charge in its second quarter statement of operations of
approximately 4.5 to 5.5 million dollars, 85 percent of which represents
non-cash charges for impairment of inventory, and other retail assets, the
benefit going forward will be a reduction by 25 to 35 percent in recent cash
utilization rates. This reduction in cash usage allows us greater financial
flexibility as we move through the OEM sales cycle.
I’d like to spend a few minutes discussing the history of our
company as it relates to our OEM efforts in an attempt to help you understand
why we are so bullish about our opportunities in this market. When we first
announced the availability of our initial D2D transceiver ICs a few years ago,
we did not find the level of acceptance from the OEMs that we had hoped for or
expected. There were a number of factors that played into that OEM reaction.
Some was skepticism that our digital receiver technology was not based on the
tradition analog architectures and therefore would perform as we claimed it
would. The complex nature of transceiver designs, and the commitment required
by an OEM to do extensive system analysis combined with significant design
changes to an OEM’s product interfaced to our transceivers added up to a risk
that early adopters were unwilling to take. As a response to the skepticism, we
decided to showcase our technology by incorporating it into a complete and mass
production worthy WiFi product. We believe this has answered a lot of important
questions for OEMs and has also enabled us to guide them with confidence based
on real world experience.
It was not coincidental that while our retail efforts were getting
under way our core engineering research team remained hard at work assessing
what the company could do differently with regard to its ultimate OEM goals.
Our new ultra efficient Direct to RF Power amplifiers which we call D2P, and
whose launch we announced this past January, have been extremely well received
by the OEM community. And frankly, the feedback we are getting from OEM
prospects regarding this initiative has provided much of the impetus for the
timing of this decision. This leads to the obvious question of what is our OEM
sales strategy, and what is the cycle time for this market.
The sales strategy that we are utilizing is one in which we have
targeted a number of tier one and tier two OEMs including cellphone handset
manufacturers and WiFi companies. These markets are forecast to consume over 4
billion dollars in RF power amplifiers and transceivers next year alone for
these two markets, and this is growing. They will require over 1.8 billion
units for their products. Successful visits to OEM prospects earlier this year
have yielded active dialogues that are markedly different from past chip sales
efforts. These visits, both here and
overseas, have resulted in significant ongoing discussions with
various tier one and tier two prospects that have included technology reviews,
demonstrations, exploration of their product and business needs and we are
currently scheduling additional visits to these prospects in the next weeks for
further prototype demonstrations and business discussions. While timing can be
difficult to predict, our progress with OEM prospects to date is on target with
our best schedule expectations. Though we aren’t in control of all factors in
the cycle, we certainly intend to be aggressive in our product development and
sales efforts and forging business relationships to occur sooner rather than
later. We are very confident in our ability to turn some of this OEM interest
into tangible business relationships that will generate substantial future
revenue for the company, particularly now that we have narrowed our focus to
succeed at securing OEM and design wins.
As we exit the retail space, I think it’s important to acknowledge
the relationships afforded to us in the retail community. We’ve established
relationships with CEOs and other senior management at some of the largest
retailers in
Moderator: Ladies and gentlemen,
if you wish to ask a question at this time, please key star followed by one on
your telephone. If your question has been answered or you wish to withdraw your
question, key star followed by two. Please stand by for your first question.
Moderator: And your first question
comes from the line of Devon Waits, with Gravitas. Please proceed.
Devon Waits: Yes hi, I wondered if
you could help me identify where you sort of sit in achieving your targets with
your current cash position and what you feel you are going to need to
ultimately get this to an OEM, as far as what your cash needs would be.
Jeff Parker: Well ok, that is a good
question, thank you. Right now when I say that I feel like we are trekking
right along our best expectations it’s been our view that what OEMs want to see
is enough proof of the technology that they know that it will fit into their
product in a way that is acceptable to them and so these demonstrations we’ve
been doing have been very important, they’ve also been very well received.
There will be quite a few of those in the ongoing weeks. We expect that a
number of OEMs will probably be asking for a certain chip level integration
even beyond what our prototypes currently show and we are trekking right along
the path that we had hoped to be able to deliver those to them in the not too
distant future. A lot of the OEMs we are talking to are now beginning to get
deeper into the dialogue about the business discussions and how our technology
and chips can be formed for their needs.
How that all relates to our cash needs and where we are today at
the rate it’s currently moving along and appears to be poised to continue to
clip along, is that we should have enough capital to bring our initial OEM
design wins in long before we have additional capital needs. So I am very
comfortable that we are very well positioned especially with today’s narrowing
of focus to be able to bring in those first design wins and still have plenty
of cash runway in front of us,
and my further view is that once we have those design wins, there
is a plethora of ways that the company can continue to fund its needs going
forward, hopefully not the least of which could include some of the OEM funding
opportunities themselves, whether it’s prepayments with milestones,
non-recurring engineering fees, there’s a whole variety of possibilities.
Devon Waits: Ok, and then one
additional thing, how do you foresee keeping the investment community informed
of, kind of as you go by these hurdles with these OEMs, and with your progress?
Jeff Parker: I believe we’ll do that
in two ways, some which are kind of at our discretion, and some that are more
mandatory of course by material events. Obviously the material event one is
more easy to answer, when we have our first OEM design win it will be our
pleasure to rejoin you on another conference call and say here’s who our first
OEM is, here’s the application and share with you what those are about. And as
I said earlier, the sooner the better. The more discretionary ones will be
things that we will share that deal with specifications for certain kinds of
applications that we are showcasing, prototype demonstrations, perhaps at our
annual meeting this year we will demonstrate the technology, we’re taking that
technology around the world and showing it, we have also had people who’ve come
to our Florida facilities to see it.
So we will likely do that, we will keep the community updated as
we have notable things to talk about as we advance the technology towards
tangible products, but I also will share with you that the lion’s share, the
vast majority of our efforts will be heads down on securing these OEM design
wins. It will be a balance between the two, but certainly weighted toward let’s
bring these OEM design wins in because frankly I think those will speak for
themselves the loudest and they will have the most meaningful evidence that we
are executing the way that the company needs to, to become a cash flow positive
shareholder value generating machine.
Moderator: Your next question
comes from the line of Cliff Calista with Emerging Growth Equities. Please
proceed.
Cliff Calista: Hi Jeff. You mentioned
these prototype units, can you give us some color on that? Are these CDMA, are
they performing up to specs, and what some of those specs might be? And how
many people might have seen them already?
Jeff Parker: Ok yeah, great
question. The prototypes are somewhat flexible, and I think that this is one of
the reasons that this it is creating a nice growing pace with these OEMs in the
dialogues we are having. We can set them up to showcase CDMA, wide band CDMA,
GSM. We have had in some of the OEM visits requests for us to, hey can you show
us this other standard or this other thing we want to do with it and in many
cases, not all, we have been able to reconfigure the demonstrator literally
within sometimes a few hours, sometimes a half a day, but certainly in a
timeframe that the traditional technology approaches that they have been used
to putting in their products, you couldn’t do these kinds of things in that
short a time frame frankly, and you couldn’t do the kinds of multi mode things
that we showcase on the fly.
We will show someone the prototype where we are putting CDMA
through the prototype, it then goes to various pieces of equipment which these
OEMs all have in their own laboratories, generally speaking HP or Agilent
equipment, and it shows them the quality of the output of the RF signal, it
shows whether we pass or fail the standard under a variety of conditions, and
it allows them to change various parameters of the prototype, i.e. what happens under various voltage
operating conditions or various power output conditions, there’s a lot of
different things they want to see, and then how do those testers then report
the results and are we still passing the results, and thus far what they have
seen is that we not only pass but we pass with no small margin, which tells
them that they have manufacturing margin, that we are not pushing the
technology to its limits.
And then they’ve been asking can we show some of the newer things
down the road that they are very interested in, you know you’ll be hearing
about applications such as HFDPA which is a an extension of the wide band CDMA
standards, where service providers want to deliver higher bandwith, wide area
networking for both cellphones and smartphones and even into portable
computers, PC laptops, and do it at data rates of 2, 3, 5, 10 megabits per second. OEMs want to
see how does this work for WiMax, how does this work for WiFi, and so we are
showing them all these different variations, some of it on the fly some of it
has to be slightly re set-up but we’re able to do all of that today. Some of
the standards that they’re asking for, some of the newer standards have just
been passed and we’re evolving our prototypes rather rapidly to show that yes
we can do those as well. It’s a pretty complex matrix, but I think I’ve
mentioned in previous dialogues that assessing the transmit and the power
amplifier chain against what we did earlier of complete transceivers a few years
ago is a much more simplified affair and that is true. People come in and for a
few hours for a particular standard they can get through this and really know a
lot about the technology that if they were looking at a whole transceiver and
how it fits into their system, would have taken weeks and in some cases even
months. So it is helping move the dialogues along at a much accelerated clip
over our previous experience.
Cliff Calista: So they are coming into
your place in
Jeff Parker: We’ve had them come to
our place in
Cliff Calista: Are these tier one,
tier two guys, or what kind of people?
Both?
Jeff Parker: Yes.
Cliff Calista: Ok so you’ve had a few.
Jeff Parker: And we’ve been asked to
expand our dialogues to additional groups within these OEMs. We’ve had with
some OEMs dialogues now that are as active as daily, some of it’s by email,
some of it’s by phone call, some of it’s both, but I can tell you there are a
lot of meetings that are already set up and many more in the works that are a
result of these conversations, and it keeps expanding and growing. And what I
am personally very excited about is that there are a number of OEMs that are
leading us into a dialogue about product families they want to apply this to,
not just a product and they want to be participatory in our product road map,
and how does this roll out over the next six months, twelve months, eighteen
months, two years. These are exactly the kinds of dialogues when we announced
this in late January that I said this is why we are making the announcement. We
don’t want to build chips that don’t have product homes, we want to build chips
that are exactly what OEMs want to put in their products, and that before we
finish them, they commit to doing so. And this is the track we are on right
now.
Cliff Calista: Ok, great then.
Jeff Parker: Thank you.
Moderator: Again ladies and
gentlemen, to ask a question you may key star followed by one on your
telephone. Your next question comes from the line of Mark Gaskill with MKG
Financial Group. Please proceed.
Mark Gaskill: Hey Jeff, how are you
doing?
Jeff Parker: I’m fine Mark, how are
you?
Mark Gaskill: Real good. Quick
question, obviously wireless is and everything that you are doing is really
important but one of the areas that you also bring to the table has to do with
the battery life, and the question I have because we’re hearing so much, so
many of the OEMs out there are designing out products that are just going to do
more and more and more, how much of the
decrease in battery pull or increase in battery life is also part of what you
are hearing from these guys?
Jeff Parker: Well we are hearing
that, but we are really hearing everything. This is why I am encouraged,
because this is the impetus behind why we are talking about various product
families and we are working with in certain OEMs many different divisions who
are kind of focused on different objectives. Some of them are focused on
handsets that are more, less feature rich let’s say, lower cost, so we can
really help them in reducing component count and taking cost out of their
product but yet not sacrificing quality and in some cases either reducing the
battery which is an additional cost savings but doesn’t reduce battery life or
flipping the products, where yeah they are trying to do more: putting more
standards, adding in higher speed data networking, big displays that consume a
lot of power, all sorts of features, cameras, et cetera, and there they are
looking for every ounce of power savings they can so that they don’t reduce
battery life. I’ve seen some phones recently that were pretty stunning, where
you are not in the too distant future going to be able to get multiple channels
of television through these networks right on your cellphone. I saw a
demonstration of a 40 channel handset that was just amazing and you might
imagine that that television feature takes a lot of power. So they’re looking
for every place they can save power, so in that case we are focused there.
What’s happening with the technology in these dialogues is we are
showing OEMs how they can push and pull and influence it by being involved
early at this point with what these chips end up looking like. We have, and I
am not at liberty to share with you the application, but we had a very
interesting, exciting visit where an OEM came in and said look, this is an OEM
we had visited, team came over to visit us from over seas as the result of a visit,
and frankly this was a group that didn’t want to wait for our return, and they
have a very interesting application for the cellular phone space, that our
technology can really enable them to make certain product features that, I mean
they didn’t say that they couldn’t get there without our technology, but my
impression is we certainly make it a lot easier. Maybe we in fact are the
enabling piece.
So, there’s kind of three things that we walked through, from we
are enabling things that I think people want to do, that they don’t have a
clear road map to today but they want to do as quickly as possible, to lower
end things that are more cost conscious but they don’t want to give up quality
because you are selling these products to network providers that aren’t going
to stand for reducing their network quality, and then you’ve got the products
that are trying to combine more obvious combinations of things that take up a
lot of power that we can give them significant energy savings that will help
them a lot.
It really truly is at this point all of the above. I could not
point to a single, overwhelming, they want to do “x,” it truly is a combination
and blend of all of the above and I think that is one of the reasons why we are
finding such bullish and rapid acceleration of these dialogues. We are truly
solving problems that they haven’t found any place else that they can get
solved.
Mark Gaskill: Yes, quick follow up
question. If you do see some orders come in or begin to come in from the OEMs,
do you feel confident that your fab relationships are such that you’ll be able
to step up to the plate and fulfill orders without too many glitches?
Jeff Parker: We do feel confident,
but I can tell you that we are not stopping there, we have a whole program in
place where we are going to be very specifically setting up our fab operations,
and if you look at a fabless semiconductor company, there is a whole
operational side as you throw in design wins that you have to make sure you can
deliver, and you can satisfy the OEM that you are not going to be but for the
bolt that could build the bridge, so we are very aware of that and we are
actively working on that now because frankly the dialogues with these OEMs are
taking us into these kinds of discussions where they are drilling down into
those areas and we need to be able to answer their questions to their
satisfaction that they know that we can be a reliable supplier. The answer is
yes I feel comfortable with our fab relationship today, but it doesn’t stop
there. There is a lot more that needs to be done, and we’re doing it.
Mark Gaskill: Thanks Jeff.
Jeff Parker: Thank you.
Moderator: And your next question
comes from the line of Joe Graves with Lehman Brothers. Please proceed.
Joe Graves: Hey Jeff, how are you
doing?
Jeff Parker: Hey Joe, I’m well.
*Note: the following section of the recording was unclear. Some
words may be missing.
Joe Graves: My question relates
specifically to your efforts in 802.11G and the future potential of a complete
system on chip site technology. You kind of gave us a view into the future. My
feeling was when the PO was first announced, this was going to enable you to
have(?) somewhat of a Trojan horse in that it would be able to bring the
advantages of digital radio into the shops of a lot of different potential OEMs
and then further penetrate with the potential full system on a chip type
technology. Is there any kind of view of when that could happen?
Jeff Parker: Joe there is, there is
no question that we have all the enabling building blocks to do WiFi system on
chip, and do it in a way that enables certain performance or energy advantages
that are significant compared to what other people are trying to do or have
already done using traditional techniques. We are definitely though letting the
OEMs tell us what they want us to build. And right now at this moment I can
tell you that the overwhelming dialogues that we are into, truly is around this
D2P architecture and chips and technology, not all of it specifically cellphone
focused, but a lot of it cellphone focused, and some of it WiFi focused for
various applications that they have. One of the things before I think we can
give you an accurate prediction that says well we think we can do a single chip
WiFi thing based on our technology by date “x” is that’s going to all be dated
by what the OEMs ask us to do, and if we end up developing and delivering as
many flavors of the D2P chips that I believe is in the works now, that will
probably make that offering a little later. If it turns out that there are not
as many of those as we thought, then that could make that offering a little
earlier. But the one thing that we don’t want to do is we don’t want to have
our eyes too big for our stomach. We want to make sure that what we commit to
do for OEMs that our execution is without fail, it has got to be right on. We
must. The opportunity here is very very large.
I know years ago when we talked about the technology conceptually
and what it could do, everybody was very excited for us to be going after the
cellphone market. And for a variety of reasons we weren’t ready and we couldn’t
get there at that time so we did what was appropriate for us to accomplish
which was the WiFi space at the time. And a lot of people were like, ok, that’s
fine if that’s what we need to do let’s go do that, but gee, we sure hope you
get back to the cellphone space. Well that’s exactly now what’s happened, and
the activity and the increase in that activity really is mostly around the cellphone
space, with some WiFi activity, but again I’m going to let the OEMs drive what
our product line development looks like. The guys who’ve
got the purchase orders, the guys who hand us the dollars, or
various currencies, are the guys that we are going to respond to and that’s
going to strongly influence what our product line is going to look like over
the next 6, 12, 18 and 24 months.
It’s time for us to turn the technology into cash flow.
Joe Graves: I would agree.
Jeff Parker: Next question, please.
Moderator: Your next question
comes from the line of Sedra Feta (sp?) of Fire (Sire?) Capital.
Phil Anderson: Actually it’s Phil
Anderson, Jeff, how are you?
Jeff Parker: Hi Phil, good thanks.
Phil Anderson: Could you summarize for
us, because it sounds to me that you have a number of potential OEM customers
who are asking you to do a variety of things, several of them are asking you to
do one thing, several another, could you summarize for us where your technology
is in its state of development as it relates to being a commercializable
technology and provide the functionality that these OEMs are interested in?
Jeff Parker: Yeah, I can definitely
give you a sense of that. So, our first highly integrated chips that we will
deliver to OEMs will be single band, multi-mode chips, and the reason for that
is that is the quickest thing for us to get to them. It is not uncommon today
that when they deploy products today they use multiple PAs, so a number of the
OEMs we are talking to I think very well will embrace in various models of
their products that architecture sooner than later. But that is the roadmap for
us to not that long thereafter then deliver multi-mode, multiband chips. And
one of the things that we are driving toward, and I think that if you look at
our OEM presentation, is what we call a cellphone platform chip, where we have
a chip that can do multiple modes, multiple bands, and that really is a very
powerful consolidation over what they currently have to do today to get
anything near this kind of flexibility into a product.
So, nearer term, I see the single band, multi-mode chip, but we’ll
also have that available in various bands, because there are different bands of
operation in Europe versus in Asia versus in the United States, and those are
hundreds of megahertz offset from each other, not many gigahertz, so those are
variations, those are not complete redesigns of each other and that’s very
viable for us to be able to deliver those relatively rapidly one after the
other. And my best expectation right now Phil is that we’ll be somewhere
between a quarter and possibly two quarters beyond that that we would have more
of a platform chip that consolidates, i.e. they would use multiple chips from
us, which even our multiple chips will still replace a lot of components and is
still a big step of high integration.
One of the lessons I think we’ve learned as a company from our
past few years is that when you have the right solutions, OEMs who get excited
about your product and technology offerings, don’t wait, they don’t need to
wait for the ultimate-ultimate level of integration. There are all sorts of
revenue opportunities that you get to have with them as you show them enough
integration over what they are currently doing today.
Phil Anderson: In addition to the functionality
enhancements that your technology represents to the OEMs, is it clear to you,
or hopefully to they as well, that there is also a dollar value proposition
that your technology would offer up if they become customers of the company?
Jeff Parker: Yes, I mean, let me try
to understand your question. Ask that again, I want to make sure I am answering
the right question.
Phil Anderson: Let me just simplify so
that I can understand my own question, which is in essence I can understand
what you are telling me regarding the functionality improvements that your
technology offers to handset OEMs. Is there also a cost of goods value
proposition that the OEM can enjoy in addition to the performance enhancements?
Jeff Parker: Absolutely. And that is
simply because we completely eliminate the transmitter section that they need
to use today, we integrate much more highly the rest of the puzzle for them in
terms of the way to get to amplified RF-power output, and our mission as a
company will be to, and who knows, maybe some of my OEM prospective customers
are listening to this, our goal will be to offer them very nice cost savings
and yet to make sure that ParkerVision, that has made a very significant
investment here to get to this point, can realize a fair margin, and I by the
way see those two goals as not being mutually exclusive at all.
I believe ParkerVision can receive a very nice margin and we will
enable our OEM customers to have significant cost savings to the tune of, some
of the examples we show in the OEM presentation which I haven’t had any OEM
argue with me about, is fifty percent savings, beyond fifty percent savings.
These are experienced OEMs, they’re going to see the chips, they’re going to
see the size of the silicon and know what the production costs are. So the
balance we’ll find is here’s the value we bring, here’s the savings, and by the
way we also deserve and are due an attractive margin so that we can continue to
invest and research and bring you even more exciting products to our OEM
customers, and I believe that is very achievable.
Phil Anderson: Can the OEM enjoy both
the performance enhancement and the cost of goods savings or is it an either/or
proposition?
Jeff Parker: They can enjoy both,
but I can tell you there is already as an example a particular application I am
thinking of where an OEM said you’ve shown me four things I can get advantages
over, could you enhance these other three things if I didn’t care about the
fourth? And we said absolutely. So again this is where we are letting the OEMs
influence us and the only thing we are trying to balance on that is making sure
that as much of the work that we are doing today can be applied across very large
product lines, that we’re not doing kinds of specials, that’s a one off kind of
a deal that really wouldn’t have interest in broad product lines and perhaps
among multiple OEMs.
At that, if an OEM said I understand it is going to cost you guys
time and money to do that, I’m willing to make it worth your financial while,
we are always open to talking about that. But we haven’t had to cross that
bridge at this point. Yes we can offer OEMs hey you can push and pull the
product in a direction to gain more in “x” if you want to give up a little bit
in “y.” I’ll give you a specific example: someone said, hey, I love the
performance. You guys exceed all the metrics of goodness of the output wave
form but I want to exceed it even further, and I don’t care if you use a little
bit more power. Can you use a little more power and get me even more
performance? The answer would be yes.
So we are not going to balance all of the objectives the way we
see fit, we’ll start at a starting point, which we already have, and then let
them influence us from there, and that’s actively happening.
Phil Anderson: I see. And again, so
I’m clear, this functionality, is this functionality something which the
company is now in a position to demonstrate as people visit you and you go and
visit other people?
Jeff Parker: It is. And the only
caveat I want to put is we are not magicians in the sense that people can ask
for just anything and we can magically make it happen. But I can tell you that
most of what people have asked us to show them that we weren’t prepared to
demonstrate, we’ve been able to respond to very quickly and at this point even
things they’ve asked that we weren’t prepared is in the works to be able to
demonstrate in the very near future. So at this point we are very, the
technology is advanced to do pretty much anything anyone would ask for.
Phil Anderson: That’s terrific. From
the perspective of resources, Jeff, again you are being asked by a number of
very serious and very large potential customers to do a variety of things, do
you have the resources from an employee and engineering and intellectual
capital perspective to service these requests and so on?
Jeff Parker: I think we have the resources
to service our first design wins. I think as that occurs, and as any emerging
technology growth company must do we need to take stock at how we grow that and
we are in dialogue frankly with people who have grown companies from where we
think we are starting from to where we believe we are going to be going over
the next few years and starting to think about how we line up resources to do
that.
Phil Anderson: I see, so you may then,
you are inquiring regarding how you could augment your internal intellectual
resources if you will to help guide the company through its next stages of
evolution.
Jeff Parker: Absolutely. Fabless
semiconductor science and growing companies like this has been practiced by a
number of very talented people and organizations and we are definitely drawing
upon them.
Phil Anderson: Now just one last
question, I appreciate all the answers, Jeff. From a capital perspective now
that you’ve taken out some of your fixed costs here, it would seem to me as an
outsider that the company would have adequate capital to perhaps more than
adequate capital to continue to finance itself as you go through this process
of demonstrating what you have developed, and seek an initial commitment, or an
initial customer or customers, which I do make this more of an observation than
a question, do you regard the company as adequately capitalized now to finance
itself during what I’ll call the demonstration and negotiation period?
Jeff Parker: I think we are
adequately capitalized all the way through the first design wins. And beyond, frankly. Significantly beyond. So yes, I am very comfortable with our
capital position to be able to do that and I fully expect that once we secure
those first OEM design wins that we will take stock at that point and say this
is wonderful, we’ll have more visibility in terms of what kind of growth
opportunities are in front of us, and I expect that there will be a lot of
different options open to the company at that point and I’d really rather not
speculate on what those may look like, I’m sure you might imagine what those
could be.
Phil Anderson: Ok. Thank you very much
and congratulations. Jeff Parker: Thank you.
Moderator: Your next question
comes from the line of George Sheil (sp?), with George Sheil, Inc. Please
proceed.
George Sheil: Hi Jeff.
Jeff Parker: Hi George.
George Sheil: I unfortunately had a
conflict and did not hear the beginning of this call and you may have already
answered the question and I apologize to other participants if I am making you
be redundant, but I spoke earlier today with one of your people who was trying
to explain to me that your PA does not require a transmitter but it isn’t a
transmitter.
Jeff Parker: Yeah, ok.
George Sheil: I’m trying to make sure
how a two-way cellphone or anything like it works without a transmitter and a
PA that isn’t a transmitter.
Jeff Parker: Sure. Let me see if I
can very briefly get you up to speed on that. Today a cellphone or any wireless
device that uses a transmitter would take a data signal and inject it into a
set of circuits that would convert that data signal to an RF carrier, where
that data now is modulated to represent the data, and then that would typically
go into a separate power amplifier and then that goes out through the antenna.
There can be various filters along the way, this can be done in multiple stages
versus typically it’s not done in one, it can be done in one of the
transmitters, it can be done in two, but it’s a chain of events that occur.
What our technology has done and what has gotten the attention of
these OEMs is we have figured out a way to unify into a single operation taking
the data signal and converting it directly to an RF carrier at the power level
for a mobile portable product that you desire. And so it embodies the function
of a transmitter and the function of a power amplifier in a single unified
operation and the benefit of that is that it gives us extremely reliable
waveform quality, it is very small, it eliminates tons of circuits and
supporting components. Unlike a transmitter, when you’re coming out of a
transmitter on the output side, it’s a radio signal, it may not be a real high
powered one but it’s a radio signal, so there’s a lot of matching components
and art to that to match it to go into
the power amplifier, we don’t have that, that’s completely gone now.
One of the problems that these chains that I described to you that
are traditionally used have is you’ve got to take the power output from the
transmitter and the power input to the power amplifier and they have to work
within a certain range or you end up distorting the radio signal in ways that
is unacceptable to the OEM. And so they typically can’t get all of the benefit
of the power amplifier, they have to do what’s called backoff of its total
capacity and that by the way doesn’t necessarily mean that it uses less power
consumption, it still uses the same power consumption, they’re just not putting
out as much power.
So this is one of the reasons that the efficiency level of these
chains is not particularly impressive. We don’t have that. So there’s just a
whole laundry list of things we’ve been able to remove, eliminate, don’t have
to deal with, and as we’re getting into these dialogues with OEMs, they’re asking
us can you help me improve this, change that, eliminate something else, they’re
also giving us extremely good information to understand how to continue to
evolve the technology some of which we can evolve for them very rapidly and
give them even in our early chips some feature benefits that frankly we didn’t
even contemplate but that are very achievable because of our architecture. So I
hope I answered your question without getting too much detail. It’s not a
transmitter plus a PA, it’s just data in, single operation, takes it right to
RF, at power, on the channel you desire. So it’s multiple operations in one
step.
Moderator: And sir your next
question comes from the line of Kent Williams with Vista Asset Management.
Please proceed.
Kent Williams: Hi Jeff,
congratulations on this decision. Just wondering if you could better explain as
this business model has changed over the years and execution has always been a
question here, and as you are seeing the evolving technology and I assume you
are trying to show proof of the technology, that people are looking at the
breadth and depth of your intellectual property estate and are realizing that
there are multiple ways to license out this technology. I assume that in this
next period of time where design wins will be coming, maybe this simpler
business model supports more flatter and more of a licensing company rather
than a manufacturing fabless company.
Jeff Parker: Well, you know, we’ll
see. Right now
We specifically learned from that and that’s why we’ve crafted
what we’ve done. So I think the initial design wins, and probably the
foreseeable ones thereafter are going to really be hey ParkerVision deliver to
me a solution, not an invitation to a solution, which we are fully prepared to
do and enthusiastic to do, and to your earlier point about execution, when I
look back on what it’s taken to get here it is not lost on me that although I
believe we had to do many maybe all of the things we’ve done to validate
ourselves as a company, as a new technology, it is very painful and slows you
down when you’re trying to work in different domains. Putting together a
complete finished end-user product, you’re dealing with a whole bunch of design
issues that don’t have anything to do with your core technology but you’ve got
to do them. So, narrowing our focus down is a huge step toward being able to
deliver on our commitment, and I believe that we must be prepared, whatever we
tell an OEM we are going to do, we deliver on our commitment. To the extent we become
known as a reliable, go to supplier, I think the world before us is just choc
full of huge opportunities.
Now, to your licensing question, one last comment, our technology
in my opinion, longer term, does enable certain integration opportunities with
other components in the system. Namely perhaps base band processors and things
like that. So, do we have longer term the opportunity to become a company that
licenses or participates in some business models, our technology being
integrated into even a higher, bigger system puzzle, I do believe that, but at
this moment, with people trying to get 3G cellphones out, and even 3.5G
cellphones out, when I mention to you things like HSDPA and wideband CDMA, and
WiMax, these are all things that companies are very focused and excited to get
out into the market, and they don’t have, their tradeoff right now isn’t high
level of integration versus getting it to market, it’s get it to market. They
know they’ve got to get to market. And we are a very significant advancement to
helping them do that without ending up with a kind of a Frankenstein’s monster
on their hands. So, those are all the reasons why I think your foreseeable
business model is fabless chips, give them solutions and longer term sure,
licensing may very well be in the offing.
Moderator: And sir, you have no
further questions, I’d like to turn the call back over to you for any closing
remarks.
Jeff Parker: Well, my only closing
remark is to those of you who continue to support us, I really truly appreciate
your support, we have always tried to be as transparent as possible so that you
understand where we are and where we are going, it has been certainly a lot of
work, and a lot of effort that’s been put to get us to this point, it has been
somewhat unpredictable, but I do believe we entering into a phase now where
with these first design wins we will become a lot more predictable, and I
appreciate your patience and I hope that you will continue to support us
because I think that without a doubt in my mind, a lot of other people around
here’s mind, the best for ParkerVision is yet to come and it’s not
insignificant growth opportunity.
Thank you very much and I look forward to many more conference
calls with I hope all of you on the phone. Thank you.
Moderator: Thank you for your
participation in today’s conference. This concludes your presentation, you may
now disconnect. Have a great day.