ParkerVision Q1 2006 Earnings Call
May
11, 2006
Paul Henning
Cindy Poehlman
Jeff Parker
Wilson Jaeggli, Southwell Partners
Scott Robertson, Halpern Capital
Daniel Lewis, Gem Asset Management
John Buker, Harris Nesbitt
Joe Graves, Lehman Brothers
Sherry: Good day, and welcome
everyone to the ParkerVision Incorporated First Quarter 2006 Earnings Results
Conference Call. This call is being recorded. At this time, for opening remarks
and introductions, I would like to turn the call over to Mr. Paul Henning,
Cameron Associates. Please go ahead, sir.
Paul Henning: Thank you, Sherry. Before we
get started, I want to remind listeners that this conference call will contain
forward‑looking statements which involve known and unknown risks and
uncertainties about our business and the economy and other factors that may
cause actual results to differ materially from our expected achievements and
anticipated results.
Included in these are factors, such as the ability to maintain technological
advantages in the marketplace, the ability to sufficiently increase
manufacturing capacity to meet demands, achieving timely market introduction
and acceptance of the products, maintaining our patent protection and the
availability of capital, among others. Given these uncertainties and other
factors for 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.
On today's call, we hear first from Cindy Poehlman, CFO of ParkerVision, and
then Jeff Parker will discuss the business of the company. Let me turn it over
to Cindy. Cindy?
Cindy Poehlman: Thank you, Paul, and thank
you all for joining us this afternoon for our First Quarter update. As usual, I
will briefly review the key financial highlights for the quarter and then turn
the call over to Jeff Parker for an update on other business activities. First
of all, I'd like to apologize for the error in our Earnings Release that was
put out this morning, and you have likely seen by the correction that followed,
that we are locked for the quarter with 4.3 million, not billion, and thank you
to those of you who pointed out the error in our financial caption.
From a financial standpoint, the snowball this quarter saw solid cash position
at the end of the quarter with 23.6 million. As you know, we completed a
private placement of common stock in February, which increased our cash
position by a little over 16 million. In addition, our use of cash for the
First Quarter of 2006 was approximately three million. This compares to cash
usage of approximately four million in the prior quarter, and cash usage of
approximately five million in the comparable period over the first quarter of
2005. Our reduction in cash usage is largely due to reduced operating expenses
in all categories, resulting primarily from our retail exit last June.
As you can see from our First Quarter financial results, our quarterly
operating expenses decreased by nearly $1 million from 5.4 million in the First
Quarter of 2005 to 4.5 million for the same period in 2006. This decrease is
despite a $400,000 non‑cash increase in stock‑based compensation
during the first quarter of 2006, which resulted from the adoption of FAS
statement 123(R) that requires the recognition of compensation expense for
employee stock options.
I'd like to spend just a moment on the new stock‑based compensation
standard. ParkerVision was required to adopt the standard effective January 1st
of this year; we adopted it on a modified perspective basis, which means there
is no re‑statement of prior periods to reflect stock compensation
expense. The way the standard applies going forward is that we will recognize
the estimated share value of any new option grant, as well as the estimated
share value of any options that were previously granted that remained unvested
at January 1st of this year.
As of the end of the first quarter, the company had just over 600, 000 share
options that are unvested. This correlates to just over two million in
unrecognized compensation cost that will be recognized over the next three
years of these option sets. The amount of future compensation cost will be
adjusted up or down going forward based on the value of any new grants and the
true value of actual forfeitures to those that were estimated.
One other item I'd like to call your attention to in the first quarter balance
sheet is the appearance of a long‑term liability, called deferred grant,
of nearly $450, 000. It's important to note that this is a non‑cash item.
As we reported in our 10‑Q yesterday, the company has entered into a
lease agreement for a new headquarters facility at
With the termination of our manufacturing operations last year, we began
looking for a smaller facility to house our
Generally accepted accounting principles require that this allowance be
recorded as an increase in fixed assets of the company with a corresponding
entry to deferred rent. Over the life of the lease this deferred rent will be
amortized against lease expense, thereby reducing the deferred rent liability.
The corresponding asset that was recorded will be depreciated over the life of
the lease as well. These transactions will offset one another from an operating
expense standpoint and none of these transactions will have any impact on cash.
I'm happy to address any questions you might have regarding the financial
results at the end of the call today, and in the meantime I'd like to turn
things over to our CEO Jeff Parker for an update on sales and other business
activity.
Jeff Parker: OK, thank you Cindy. Good
afternoon everyone and thank you for joining us on this call this afternoon.
It's been a short eight weeks since our last conference call and there's been a
non‑stop flurry of productive activities for both business development
and the design engineering teams alike.
When last I reported on ParkerVision, during our Q4 2005 conference call, I
reviewed our milestones from 2005 and gave an overview of the specific progress
we had made with our ongoing OEM discussions and negotiations, subsequent to
receiving our first integrated chip and our attendance at our
As I noted in our news release we issued this morning, number one, the pace of
our meetings with OEM has accelerated. The scope of the discussions have both
progressed, and in many cases, expanded. And both the matter and the manner of
these meetings are focused on specific details that are critical to the
culmination of the proposals that are now pending with more than a half a dozen
OEM's in the cellular handset space, each and every one of these firms being
considered a tier one supplier.
In addition, the product development activities are progressing in concert with
our business development activities. So let me share with you some more
details. I, along with many of our senior team at ParkerVision, have been
spending the last eight weeks traveling, presenting, reviewing proposals and
generally in constant dialog with our potential business partners. These
activities are taking place around the globe, in North America, in Asia and in
First of all, virtually all of our discussions have now progressed to potential
business relationships and ParkerVision has been asked to provide business
proposals, which we have, to literally every OEM we've engaged with. In my last
update to you, we had progressed to that point with several, but not all, of
our OEM prospects.
Several of the business discussions have progressed far enough that we have
also now provided a significant amount of detail on the theories and
implementations behind our D2P RF power transmitter technology and how this
translates into the kind of product results the OEM's are looking for.
This is a big step for both us and OEM's. As you might imagine, many of these
firms have their own R&D groups, which they don't want to unnecessarily
contaminate. However, many of the OEM's saw enough significant advantages in
our technology to want to take that next step. We consider this to be a key
milestone. In literally every one of these theory and architecture discussions
we receive feedback that both the underlying theory, as well as the apparatus
that enables this, is novel and something that they had never seen before.
As a new technology supplier, you might imagine that there is a little
apprehension when exposing this level of detail, especially to firms with very
large R&D centers and who are steeped in wireless heritage. So it was very
gratifying to hear multiple times that this is a very unique and novel
approach.
Frankly, it is quite counterintuitive in terms of the technology and how it
works, and as such, enables one to build quite an intellectual property
position, which of course is a key element to our business strategy. OEM's have
started to understand now at a deeper level the extensibility of our technology
and that it's relevant to virtually all of their products going forward, which
is good news.
But let me share with you how this also impacts deal making. Several OEM's have
started to see that this is the kind of technology that they would standardize
on. Meaning that they are looking at adopting this as a platform from which
many products will be built. Our vision has been that our RF technology can
become the next generation RF de facto standard. So, this is very encouraging
for us to hear that d2p is being viewed in this context. The reality is that
this also expands the technical and business due diligence and impacts the
scope of agreement and time to get them in place accordingly.
The result of our progress is that we are more confident today than ever that
our technology has a big role to play in next generation wireless products. The
due diligence activity that this has created continues to accelerate, and
frankly, at a whirl wind pace. A number of proposals have reached the level of
detail specificity in both financial terms and technology deliverables.
We have received and expect an ongoing stream of feedback on the proposed
terms. The feedback we've received thus far has been very encouraging in the
sense that it appears that there is a good range of common ground that is a win‑win
for what the OEM needs to move forward in embracing our technology and what the
financial models for ParkerVision will be accordingly.
I can certainly appreciate that many of you are eagerly awaiting the completion
of our first design win. Let me reassure you that the pace and scope of our
negotiations and the measurable and accelerating progress we are making far
outweighs the time it's taking to get our first win. It is also very
encouraging that virtually all of the feedback we have received in terms of the
first use of our technology is exactly along the lines of what our engineering
team has been developing and whose engineering activities and progress have
gone unabated during these OEM discussions.
The availability of our technology for mobile phones incorporating GSM, EDGE,
wide‑band CDMA and HSUPA across the bands that OEMs want is right on
target and our product design engineering activities continue to progress at a
pace where we should have engineering samples of a complete d2p with those
standards incorporated in the second half of this year.
Only six short months ago, we introduced our campaign of we are breaking the
rules RF technology. Today, we are on the cusp of having that change introduced
into a strong and vibrant marketplace. Eight weeks ago, I said I was encouraged
by our progress. Today I'm even more encouraged. We are no longer an unknown
entity within a good number of the largest tier one handsets in semiconductor
OEM. We have a growing number of enthusiastic supporters who are actively
engaged in helping us sort through how best to serve their needs and enable
adoption into a wide range of their next products.
The business model and its relevance to building a financially healthy
ParkerVision is coming more clearly into focus as we get feedback from our
proposals. We are highly confident, we are enthusiastic, and we are more
certain than ever before that our employees, our customers, and our
shareholders will benefit in large measure from the efforts, the resources, and
the time that ParkerVision has invested in this effort.
We thank you for your continued support and now, Sherry, I would like to open
the call for questions.
Sherry: OK, thank you. The question
and answer session will be conducted electronically today. If you would like to
ask a question, please do so by pressing the star key followed by the digit one
on your touchtone telephone. If you are using a speakerphone, please make sure
your mute function is turned off so your signals will reach our equipment. Once
again, please press *1 on your touchtone telephone to ask a question. We'll
pause for a moment to give everyone an opportunity to signal.
Our first question comes from Wilson Jaeggli with Southwell Partners.
Wilson Jaeggli: Good afternoon.
Jeff Parker: Hello,
Wilson Jaeggli: Gee, whiz, a lot of good
points here, Jeff. First of all, let me ask you this. What kind of due
diligence had been done by the OEMs on our IP and have you had any pushback
whatsoever?
Jeff Parker: Well, now that we are at a
point where we've exposed them to the fundamental theory and some of the
fundamental implementation, as I mentioned in my discussion, you are always a
little apprehensive because you don't know exactly what the reaction is going
to be. Every reaction we've gotten, without exception, has been, "Wow! I
never saw anything like this before. That is quite unique."
Wilson Jaeggli: That's on the technology?
Jeff Parker: That's right. So, you're
saying on the IP?
Wilson Jaeggli: Yes, on the intellectual
property, on those quality based patents. What kind of due diligence has been
done? If it has been done, has there been any pushback by the OEMs?
Jeff Parker: There hasn't been any
pushback. I can tell you that I don't think we know all of the due diligence
that may or may not have been done on that topic. I have received some feedback
from one very large OEM, that they've done a lot of research into the firm we
use to give us the guidance and to put this portfolio together, and that came
back glowing.
Wilson Jaeggli: OK.
Jeff Parker: So they were happy with that.
Of course, now I probably just caused an increase in my rate from that firm but
that's all right.
[laughter]
Wilson Jaeggli: You mentioned in here that
these OEMs have asked you for proposals and you have responded. Can you talk
about those in broad terms in here? What kind of proposals have you made?
Jeff Parker: I am really not at liberty to
go into the details of the terms of the proposals, but they are in general how
these OEMs would access the technology and implementations of the technology
for their product, pricing around that, and where they would be able to use the
technology.
Wilson Jaeggli: If you've got so many‑‑you
said a handful of tier ones looking here‑‑it seems like the first
to sign up would have some benefit for that OEM. Do you sense competition
between these OEMs yet or is that yet to develop?
Jeff Parker: I think it's developing. It's
a small industry and I don't know that everybody knows what everybody else is
doing, but it is a small industry. Everybody goes to the same conferences and
such. I get a sense that we are rapidly becoming a well known name with a
number of these. I would not be surprised if there is a growing awareness
that...the competitors are aware that they are all looking at this at this
point.
Wilson Jaeggli: OK. You mentioned that there
is a broadening of the potential use of the technology, standardizing on a mini
platforms. I guess we're talking outside just the pure cell phone arena?
Jeff Parker: Well, right now, it really is
mostly focused within the cell phone arena. But you have to realize that these
firms that we're working with are very big and have enormous product lines of
cell phones and a lot of different kinds of cell phones. So the conversations
have turned from earlier where they were trying to figure out where would you
use this to where wouldn't I use this. That is what led to the deepening of the
due diligence because they asked us to run more tests over more conditions of
which we've done many of those and will continue to do so.
Some of the OEMs have engaged other groups in their firm beyond just the mobile
handset groups to look at the technology. We're very encouraged to hear that
they continue to hear that there is a lot of relevance to this technology no
matter where they look within their company.
Wilson Jaeggli: OK. You mentioned that you
will be incorporating the other four technologies in the second half. Is that
going to hold up this process for someone that comes forth with a contract
here?
Jeff Parker: I'm sorry. I didn't mean to
come across that way. What I'm saying is we started out with a core piece of
the technology which we proved in the first quarter of this year. We are taping
out generations where we keep expanding that core to become more of a complete
product. We tape out about every eight weeks. We are actually barreling down
here to our fourth tape out now.
Wilson Jaeggli: When you say tape out, what
do you mean?
Jeff Parker: That means we've taken the
design and we've taken it to the next steps of adding whatever features,
interfaces, etc. are required.
Wilson Jaeggli: On the chip.
Jeff Parker: On the chip. Then we send it
off to the FAB, IBM.
Wilson Jaeggli: Right.
Jeff Parker: We call it our tape out. Then
they build the chip for us.
Wilson Jaeggli: OK. So they keep building a
more expansive...
Jeff Parker: That is correct.
Wilson Jaeggli: ...in relation to your chip.
Jeff Parker: Correct.
Wilson Jaeggli: OK. And you said you would
have all four other technologies incorporated.
Jeff Parker: Meaning the standard that
this particular product that we are developing is to work with GSM, which also
includes GPRS, the data scanners for GSM by the fall, hedge, wide band CDMA and
HS UPA. HS UPA is emerging high speed uplink for three and a half G network
that are UMCS, the European standard base.
Wilson Jaeggli: Right. But, putting these
standards, if you have all this done in the second half I guess the question
is, do you need to get this done before you can get a contract signed with the
OEMs.
Jeff Parker: We have always contemplated
from when we announced that we were going to have an engineering sample the
second half of this year. Those standards were already contemplated. That's
what I was trying to explain in my update was just what we launch in our
product development activity has been right on the bulls eye of what the OEMs
say they want. So that's a good thing.
Wilson Jaeggli: OK.
Jeff Parker: What I hope people will
understand is that our product development activities and our business
activities are moving down parallel paths and are very synergistic in our
getting things done.
Wilson Jaeggli: I like the term you used,
"contaminated R&D".
Jeff Parker: Yes.
Wilson Jaeggli: Tell me do you have the sense
that it takes a new mindset? Are you getting an initial push back from these
R&D departments at the OEMs, or what?
Jeff Parker: No, not at all. In fact, what
was highly encouraging is the number of meetings we had. We actually start to
see members of these teams beginning to answer questions of their colleagues
before we can answer them. They'll say, how do you think this technology, now
that we understand it better, will work under this condition? So before we can
give an answer one of the colleagues would go, well, they explain that it does
this, so therefore it's going to be very good in this situation and here's the
reason why. So, we're actually very encouraged. I think I see a lot of
collegial team building coming out of these dialogs. I have not seen any push
back at all.
Wilson Jaeggli: OK. Keep up the good work.
Jeff Parker: Thanks for your support.
Wilson Jaeggli: Thanks,
Jeff Parker: Sherry?
Sherry: Yes, once again. If you have
a question, it's *1 on your touchtone telephone. We'll take our next question
from Scott Robertson of Halpern Capital.
Scott Robertson: Good afternoon Jeff.
Jeff Parker: Hi, Scott.
Scott Robertson: I was curious if you could
give us an update on the network operator front, more in terms of, are you
starting to see inquiries from people in that side of the business as one of
what your products do on the component side and the infrastructure side seeps
out in they realize, wow, this will really help our network. Or have you just
been focused so much on seeing OEMs that you have pushed that off?
Jeff Parker: No, we have really kept our
focus on the OEM and you might imagine what I have described in terms of our
activities. We are 100 +% time committed. We have had the good fortune of
having an initial first presentation and dialog with one of the network
carriers. We were convenient, one of our trips to one of them and had a friend
of the company willing to reach out and get us into some of the people at the
carrier who looks at radio access and where radio access components and
technology is going.
It was a very interesting meeting and it gave us some good feedback that
without going into all the details, largely told us we're on the right track.
Frankly, in our longer term marketing plans, we will be spending more time with
the network carriers because we can certainly bring them solutions to existing
problems they are trying to hurtle as well as open their eyes to considering
things that are networks that we can help them with that they may not realize.
So it was very encouraging for a first visit. I'm sure this particular first
visit won't be the last visit. We were invited to come back and continue the
dialog. But right now our focus really is 99% on those OEMs.
Scott Robertson: In terms of the OEMs, right
now how much, in the discussion, are you getting from them? Look ahead are
saying, what's good today is great. We really want a single ship wholly
integrated solution... or are they initially looking at this is a great stop
gap to help us today. Obviously we want to go to that place someday, but how's
the balance there against...we want it all versus we like what you have right
now as long as it's going to that all solution.
Jeff Parker: Yeah, well OEM, there's kind
of two tracks; one track is, they are going to ask in theory what you could do,
but then there's the pragmatic side that says, "What do we want to do
that's a balance between what you can do and what can we get done in a reasonable
period of time and all take advantage of."
So, today they look at how we can use the same device for many different
standards, and that we have a very nice bandwidth on our output of our device
to cover many different bands. You could look at that and think about dreaming
about how could re‑architect the whole front end ‑ that could take
a long time to think through all that, or you could say, "Gee, I can
reduce many components down to many fewer components right now and let's go get
that out first and we'll get it right from there." And that's what they
are thinking of; you can't swallow the sandwich in one bite; let's take it
bites at a time.
But to my earlier comment about their understanding the extensibility of the
technology, that does bring some due diligence where they ask us, "Hey,
can you run this kind of waveform, or that kind of waveform; what happens when
you do this, what happens when you do that?" And yet, it does get us into
running more tests and examples and ‑‑ but that's fine, I mean,
that's what we are here for.
Scott Robertson: OK, and then final question,
are you getting more leaning towards the licensing model or the 'Build the
actual component' model?
Jeff Parker: Yeah; although there are
conversations for both, I would suggest to you that the licensing outweighs
significantly the Chip model.
Scott Robertson: OK. Thank you.
Jeff Parker: Thank you.
Sherry: Again *1 if you have a
question ‑ that's "*" if one of you would like to ask a
question. We'll move to Daniel Lewis, Gem Asset Management.
Daniel Lewis: Hi Jeff.
Jeff Parker: Hi Dan.
Daniel Lewis: OK, couple of questions. You
mentioned earlier in your comments that there's a natural apprehension that
comes along with sharing details about the technology.
Jeff Parker: Sure.
Daniel Lewis: So, in exchange for you
overcoming that apprehension, what have the OEM's provided you...
Jeff Parker: Well let me clarify when I
say apprehension; the apprehension is, you hope when you disclose something
like this; so you take a step forward, not a step back, right? You would hate
to say, "Great, it's kind of the 'No act of kindness goes unpunished
concern'". You don't want to say, "I am going to give you guys more
detailed information, so you understand what's inside the black box and can get
more comfortable with it", and have the actual result be: Oh. That's what
you are doing? Well, we don't think that that really can work; well, we don't
think that that's going to work under all the operating conditions, or we don't
think this or we don't think that ‑ or we don't think that's unique.
We didn't get any of that. We got, "Wow, this is really novel, never saw
anybody do anything like that before; Gee, that's very clever" and it
really has helped move the dialogues forward quite a bit.
Daniel Lewis: And to the extent that, you
know, we all hear stories about technology companies, specifically large ones,
taking advantage of small innovators in terms of not honoring terms or taking
technology and not paying for it. Now, is it possible for them to do that or is
it impossible?
Jeff Parker: Let me say it this way; we
work very closely with our patent council to determine how much we can share
and not devalue our IP position. We are very comfortable with what we
disclosed, but recognize that just because we have disclosed some theory and
some of the workings doesn't necessarily mean that we have enabled someone to
go off and build it.
Daniel Lewis: So you have been very careful
about what you have disclosed relative to someone's ability...
Jeff Parker: Yeah, we have struck what I
consider to be a very good balance there.
Daniel Lewis: OK, so you have disclosed
enough for them to believe that it's possible, but not so much as they could go
and do it themselves.
Jeff Parker: That's correct.
Daniel Lewis: So there's a lot in your IP,
but there's also know‑how, not just...
Jeff Parker: There's a lot in the theory,
but there's a lot in the implementation of the theory.
Daniel Lewis: OK; now, you talked earlier
about common ground that you are finding between you and some of the
prospective customers. Could you discuss what things that tends to be, on more
than one occasion, is taking place? What the things are and where that's
difficult to get around at this point?
Jeff Parker: Well, what I meant by common
ground ‑ I can't go into specific details, but there are different key
features of an agreement that deal with financial terms as an example. And what
we're finding is that the financial terms, in terms of our proposal, the
reflections back we're giving, seem to be within a reasonable range of what
they can get adoption and feel like they're giving good value, and that what we
can get, and feel that we can build a healthy financial company. That's what I
meant by common ground. I see a lot of common ground there.
Daniel Lewis: OK.
Jeff Parker: We've given them some terms,
and they came back and went, "Oh, my God, we're in a whole different
universe" then I don't think we have common ground; I haven't seen that.
Daniel Lewis: Do the financial terms, and I
know you don't want to get into specifics, but do they relate to the value that
you are providing them? I remember at one point there was some talk about some
percentage of...
Jeff Parker: We base it off of our value
proposition. We basically arrived at our terms by looking at what we're doing
to help them, and then seeing if that is at the intersection of what also makes
sense for their goals to get... they have certain goals of product cost
reduction, etc. And those do intersect and we're... that's why I think we're
finding common ground.
Daniel Lewis: So they're not saying,
"Oh well, you're just an IP licensing company, you don't deserve that
much." They're content to look at it like, the value that they are
receiving, rather than what you are getting?
Jeff Parker: Well, actually the response
that we've gotten so far, actually, gives us examples of other technologies
that they've licensed, and suggest that we're bringing certain values in
relationship to other technologies that they've licensed. And when we go off
and look at those other technologies, we're, again, in the ballpark of where we
want to be. So, no, I think there's precedents that have been set that are
actually favorable for us there.
Daniel Lewis: OK. And in terms of the sticking
point, historically there was the sticking point about exclusivity. Are there
any other sticking points? And does the exclusivity point still remain as a
significant one?
Jeff Parker: Well, let me just say look,
every OEM dialogue is unique, every customer has their own desires. I'd really
rather not get into the details of that, because it starts to sound a little
bit more like I'm almost naming customers without naming them. I don't think
that'd be healthy for us in this kind of a call.
Daniel Lewis: OK. Well, good luck, Jeff.
Jeff Parker: Thanks, thanks for your
support.
Sherry: And John Fisher from Harris
Nesbitt has our next question.
John Buker: John Buker here, but thank
you. Jeff, I'm sure that the companies that you're talking with are doing due
diligence as I think it was alluded to in the call on the intellectual property
portfolio, as well as the solution. I'm just wondering as anybody that does
anything more than a cursory review of your intellectual property can see that
there's more than the direct power RF‑centric solution. I'm just
wondering whether the discussions with the OEMs have moved over to some of the
other areas of intellectual property that you've got and some of the potential
applications...
Jeff Parker: Yes...
John Buker: ...for mobile devices.
Thanks.
Jeff Parker: Yes, John, that's actually a
good question. That actually stimulates two thoughts. A question I was asked
earlier about have they reflected back any comments on our portfolio, and how
far they have looked at it. I know a comment that we got back about a firm that
we use and the quality of that firm. I also think was a function of them having
looked at the extensive D2D portfolio that is issued now around the world. I
think that was influenced by that.
And yes, there has been dialogue about our receiver technology. We're frankly
trying to keep that dialogue as a secondary step, and to try to get agreements
done, and use those agreements as kind of a template to then do follow on with
the D2D. But there are numerous conversations going on about the receiver
technology.
And, frankly, we've gotten far enough in discussions about how they would
incorporate our D2P technology for us to give them a high level, kind of a
cursory suggestion at where the D2D will bring a lot of value to them in either
integration or... well, there's a variety of places that D2D brings value, but
we clearly now see where D2D in a handset application, specifically, can bring
them some value.
And yeah, that's definitely something they want to talk about. We're right now
being successful in keeping that as hopefully a second step because we'd like
to keep... get these design ones done as quickly as we can.
John Buker: Thank you very much.
Jeff Parker: Thank you.
Sherry: Once again, ladies and
gentlemen, if any one of you would like to ask a question, "*1" to
ask a question. We'll move to Joe Graves, Lehman Brothers.
Joe Graves: Hey Jeff.
Jeff Parker: Hi Joe.
Joe Graves: My question, and you don't
need to be too specific, but I would like you to refresh the minds of everyone
on the call the value‑added proposition, as it relates to the cost
savings perform, and/or the performance and what that addressable market really
is.
Jeff Parker: OK. Well at a quick, high
level the... First of all, the product that we're working toward having
engineering samples for in the second half is a quad‑band GSM edge tri‑band
wide band CDMA with HSUPA. There are no products in the market today that can
do all that. And it's just not practical when you see all of the chains of
transmitters and supporting power amplifiers and supporting filters you've got
to have to do that.
But if you look at what is in the market today that is as close to that as you
can get, which is more of a tri or quad‑band GSM with maybe one band of
wide band CDMA. Those are the kind of ten dollar bill of materials range. And
you can make an argument, some people will say, "Well, it's closer to
12", and some people say it's closer to nine or 8.50. But that's kind of
the range, depending on how you implement them.
They also take up about 10 to 12 centimeters squared in circuit area, circuit‑board
area on your phone. So where people see the value of what they're looking at with
us right now is, we take that down five dollars, sub‑five dollars, which
is where they're hoping to get to in the next couple of years. So they see a
clear road map now of doing that. And the size of the implementation is three
centimeters squared or better.
So they now see that there's room in their product to put other features that
they'd like to put in their phone, without making the phone bigger. So that's
kind of the value proposition. From size, from cost and from features.
Obviously they just want to be able to offer the carriers all these bands and
standards without making a phone that's too unwieldy.
Joe Graves: And then from a unit volume
standpoint? Do you have any kind of feel what you're thinking of? I mean...
Jeff Parker: Well, everybody we're talking
to is building phones in the tens and tens of millions. Some of them are
building phones in the hundreds of millions. Our initial focus, and where I
believe we will find initial adoption, is in the 3G, 3.5G, and now it's being
called 3.9G, handset space.
And Joe, I honestly don't have those numbers in front of me right now, but...
Joe Graves: What I'm driving here at,
right?
Jeff Parker: Yeah.
Joe Graves: What I'm trying to get to is
understanding that coming to a common ground with a large company with such
robust technology. I mean, there's a ton of value for everyone here.
Jeff Parker: There's a lot of value, and
their due diligence is around the fact that they're not going to use us in
small quantities. So they've got to make sure that it's going to hold up under
all the operating conditions that it needs to, and that it's mass‑producible.
And that's, frankly, what led us to a discussion about the theory of the
technology. To show them that it's very robust, and that we're not pushing
anything to the edge. That in fact there's an enormous amount of cushion in how
our technology works that gives them a very large operating envelope, and it's
very robust within that envelope.
Joe Graves: Terrific, thank you.
Jeff Parker: Thanks, Joe.
Sherry: Have a final reminder, it is
"*1" if you would like to ask a question. That's "*1" on
your touch‑tone telephone to ask a question.
Jeff Parker: Well, Sherry, I'm going to
thank our audience, our participants, to thank them for their time. And, again,
thank you guys for your continuous support. And we see busy weeks ahead of
Parker Vision and I look forward to our next conference call update. Have a
good evening. Thanks. Bye bye.
Sherry: And this does conclude
today's conference. We thank you for your participation. You may disconnect at
this time.