PRKR 2008 Q1 Conference Call
May 7, 2008
Paul Henning
Cindy Poehlman
Jeff Parker
Philip Anderson with Pinnacle Fund
Daniel Lewis with GEM Partners
Jim Whitton, with Laidlaw
Joe Graves
Bob Berlacher, Northwood Capital
Operator: Please stand by we are about
to begin.
Good day
everyone. Welcome to the Parker Vision First Quarter Conference Call. Today's
conference is being recorded. At this time for opening remarks and
introductions, I would like to turn the call over to your host, Mr. Paul
Henning. Please go ahead, sir.
Paul Henning: Before we get started I want
to remind listeners that this conference call will have certain forward looking
statements, which involve known and unknown risks and uncertainties of our
business or our businesses and the economy, and other factors that may cause
the actual results to differ materially from our expected achievements and
anticipated results. Included in these risk factors are the visibility to
maintain technology advantages of the marketplace, to achieve timely marketing
introduction and acceptance of our products, maintain product copy protection
and the availability of capital, among others. Given these uncertainties and
the factors about our business, listeners are cautioned not to place undue
reliance on any forward‑looking statements contained within this
conference call. Further information concerning these and other risks, can be
found in our filings with the SEC, the Securities and Exchange Commission.
We'll begin
today's call with Cindy Pullman CFO, who'll review the quarterly results of the
first quarter. She'll be followed by Jeff Parker, CEO of Parker Vision, who
will report on the company's business activities. Cynthia, would like to go
ahead?
Cindy Poehlman: Sure. Thank you, Paul. Thank
you to those joining us on the quarterly update call this afternoon. I realize
that what you are all eager to hear about is not necessarily the dollars and
cents on the financial statement, but rather the progress that we have made
with current and prospective customers and how we feel about the business
environment in general. So I promise to only spend a couple of brief minutes on
the financial for this quarter and then I'll turn the call over the Jeff Parker
for a business update.
We reported
today a 19‑cent per share net loss for the quarter ended March 31, 2008,
which is consistent with the preceding quarter as well as the corresponding
quarter in 2007. Comparatively, from the first quarter of 2007 to the first
quarter of 2008, we saw a 7.9% or $370,000 increase in operating expenses. These
increases are largely the results of additions to our research and development
resources throughout 2007, as well as increases in stock‑based
compensation expense resulting from prior years equity grant.
We ended
the quarter with 18.8 million in cash, which represents an increase of about
5.4 million over the year‑end, 2007 cash balance. This increase is due to
the sale of equity securities during the first quarter of 2008. Partially offset
by our cash usage for operations, capital purchases and patent assets during
the same period. We are currently using approximately four million in cash per
quarter for operating and investing activities. This number obviously excludes
any offset from equity transactions, including the exercise of options and
more.
We
currently have approximately 26.5 million shares outstanding and another 6.2
million in outstanding options and warrants. These outstanding options and
warrants have a weighted average of just over $23 per share.
I'm happy
to address any questions you have on the financial results at the end of
today's call, but for now I'm going to turn the call over to Jeff Parker for an
update on business development. Jeff?
Jeff Parker: So thanks, Cindy, and, hello.
I've really been looking forward to this conference call update with you today.
Although our last call was only seven weeks ago, we've really made a great deal
of progress during that time period. Progress that will translate into
shareholder value here at Parker Vision and so, I am pleased to provide you
with an update.
I hope that
after listening to today's call you will leave with updates on the following
three categories. First I want to talk about the growing enthusiasm and
confidence for our technology that we have as we're moving towards volume
product and a better understanding and why we believe that we'll be widely
adopted; in fact, in our view, adopted as a de facto for large segments of the
mobile handset industry.
Secondly, I want to update you on our current progress with customers, both the
existing and prospects. The strengths and the benefits of our technology are
definitely becoming highly tangible and our ability to create strong customer
relationships as a result of this.
And then the third category, I want to discuss the progress we are making on
those previous topics. I'll end today with an update on our business models and
my view of how this will translate into building shareholder value at the
Parker Vision.
So, let's start with an update regarding progress on our technology. When I
think about our technology and our progress in that technology, my enthusiasm
continues to grow and I bring it into two areas of progress that I see; one
area deals with the typical reality of our technology, meaning that the actual
hardware itself and our advancement towards getting our technology into volume
production.
The other area of advancement deals with the intangible area of our technology
ownership, meaning the intellectual property or the patents. So let's start
with the intellectual property. We're definitely seeing indicators that our
patent portfolio itself continues to strengthen and become more valuable.
We were recently ranked by the organization known as the Patent Board as one of
the top ten innovators in the telecommunications industry, based on the
strength of our patent portfolio. The Patent Board is a patent advisory firm,
they have track record of over 40 year in analyzing innovation and the business
impact that patent assets represent on a global basis. The "Wall Street
Journal" publishes their scorecard for 17 different industry checkers
including Telecomm and Parker Vision was ranked as number ten right along with
companies that include Cisco, AT&T, Nokia, Motorola, Qualcomm, Samsung,
Nortel, and Erickson, so we're certainly pleased to be in good company with
these other nine firms, who have brought significant innovation and the
resulting value of their innovations to the telecomm industry.
Our inclusion in this listing with these influential firms is also our
willingness to maintain a crisp focus on developing true breakthrough
technology. While the sheer number of patents that we have compared to these
other ranked‑firms is notably smaller, the other measurement metrics of
our patents was significant enough to get us included in this top ten listing.
We scored particularly high in the categories of science and technology
strength and research intensity. All of which are measures of how a patent
portfolio is based on new core science and the linkage of that to above average
science quality. We also scored high on the metric of industry impact, which is
defined by the Patent Board as how influential a company's portfolio is on the
development of technologies at other companies. We don't have access to their
algorithms to calculate these metrics but we did speak with our representatives
at the Patent Board to better understand the meaning of their metrics and the
significance of our ranking. Their business expertise includes tracking the
patterns that links certain aspects of patent to the probability for business
success. Overall, they indicated to us that inclusion of the scorecard is a
very favorable indicator of future business success.
One question that I've received is with regard to the category of industry
impact. It's our understanding that this is measured based on the number of
times our patents are cited both by others and from self citations. So what
does that mean? Well, the Patent Board told us that Parker Vision appears to
have the classic pattern of a disruptive technology, which is a very favorable
indicator in their view. This is a pattern associated with many other
successful companies. In such circumstances it's very common for both types of
citations, especially when it's connected to science that is considered
breakthrough technology. In essence who better to build upon core science than
the original innovators? As the other companies decide our patents, this
generally means that they are bumping into our innovations.
In our opinion, the more companies that bump up against our technology, the
more the likelihood that companies will ultimately want to enter the business
relationships with us in order to enable their own innovation goals. We view this
very positive as an indicator for Parker Vision and our future.
Inclusion in the scorecard is obviously from an aggregate of a number of
measures. Although we don't have the largest portfolio by sheer numbers our
patent portfolio is becoming quite significant in our area of focus. We have 64
So that's the intellectual property part of our technology, so now lets' talk
about the physical property and an update on how we are doing in advancing the
volume production.
In my career I've had the good fortune of being involved in other innovations
that went from the laboratory to volume production. It certainly is in this
phase when a company is rewarded for having developed truly solid technology
that isn't built on a shaky foundation. This is one of the many important areas
that I believe our technology is going to excel at.
Fundamentally, what's unique about our V2P architecture and it's foundation to
be robust and stable is the way in which we create the aural signals. We're
able to combine the energy efficiency of non‑linear processing with the
waveform quality achieved with linear architectures.
You know, if you were only concerned about energy efficiency and you didn't
care about waveform quality, you would build non‑linear devises. If you
were only concerned about waveform quality and you didn't care about power
consumption, you would build linear devices.
However, our approach uniquely combines these two seemingly mutually exclusive
domains in a way where both help each other for a very powerful result. I can
certainly appreciate that engineering tradition causes people to want to live
in one domain or the other.
However, this unique approach enables us to simultaneously achieve three
important core values for wireless products; one... multi mode RF transmission
through a single‑transmit chain... two... higher energy efficiency across
a very large dynamic range of RF transmitted power... three... increased levels
of integration and unparalleled system partitioning and packing options.
We added to our website recently a very nice grouping of screen captures from
AVLIN Test Equipment for 2G, two 1/2G, three and 4G transmit signals. In a
nutshell, what those screen captures show is just what I said earlier. The
waveform quality for every standard shown is excellent or in other terms highly
linear. For this quality you would expect to draw more not less power
consumption than traditional devices.
Yet, for this quality, the power we used is far less than what traditional
transmitters and power amplifiers that we replaced consume. All this test data
came a single V2P RF chip, working in concert with our small digital phase
machine. This technology can be applied and bring value to virtually any
application for creating an RF transmitted signal.
Our focus in mobile handsets... These core values translate into lower build
materials costs, smaller size, less internal heat, longer talk time, all simultaneously
achieved. You've heard us talk about these values and benefits before, but I
think it's important to impress upon you that as this mobile handset industry
continues to grow and mature, that our core benefits also continue to grow in
importance and value within this industry as well.
Along with it, our belief that our technology will become widely adopted and
set a new standard for accessibility in the mobile RF product sales.
To end this section of our update, I want to mention two fundamental trends
that I see in this industry. And how those trends are re‑shaping the
landscape for who delivers the solutions and how this relates specifically to
Parker Vision.
For the first trend... in the next few years over half of all the handsets
built will incorporate many different modes of mobile phone standards. Some in
the industry feel that the best way to address those modes is with lots of
redundant circuits that are more cleverly packaged. Others in the industry,
including Parker Vision, believe that new architectures, where the same
circuits can accommodate many different modes will win the day. We see this
trend throughout the systems that create a handset. From those who are
investing in based‑end profits or architectures, it can essentially re‑configure
standards without having redundant circuits to our ability to process any RF
signal through a single chain and do so at a top side energy efficiency that is
significantly better in traditional architectural approaches.
The second trend that we see... the next few years we see the continued move to
common, high volume silicon semiconductors throughout the handset and away from
exotic semiconductor materials. Our V2P technology enables the creation of RF,
using common silicon semiconductors and accommodates the required horsepower
output, the specs and the reliability for virtually every cell phone standard
past, present or in the planned future. Now this is an important trend because
many chipset companies both large industry incumbents and even the new entrants
alike have the goal of creating single chip cell phones in the future, even for
complex multi mode handsets.
Parker Vision technology enables the highest level of integration for multimode
handsets that is currently possible and will continue to advance in ways that
enable even greater levels of integration and highly simplified interfaces to
the antenna. So these two macro trends of increasing mobile handset
functionality and yet the drive to simplify the manufacture of these devises
through the use of very high levels of silicon semiconductor integration are
fundamentally in Parker Vision's statement.
One of the results of these trends is that companies are shifting towards
higher degrees of specialization. They are increasing their focus. Handset
firms are now largely focusing on the manufacture, the delivery, the form
factors, and they have abdicated the development of chipsets to those firms
that can focus solely on circuit and chipset development.
The handset industry is moving towards a more classic horizontal business
model... towards specialization and away from the vertically integrated one‑company‑can‑do‑it‑all
model. This trend is also greatly in Parker Vision's favor. As firms are
looking to embrace the best‑in‑class solutions and away from the
concept that they can do it all and do everything best. This is absolutely one
of Parker Vision's competitive advantages.
So, now let's move on to the important topic of customer progress. We're very
pleased to give you the status of both our customer relationship and with the
progress that we have made towards designing V2P into their products. First,
I'm pleased to tell you that ITT has identified the funded programs which it
intends to incorporate the V2P technology. ITT has been able to use V2P in
their own labs and generate RF transmitted waveforms that meet the customer
requirements of what they are targeting as their first application.
They have shared with us that they are impressed with the performance and the
efficiency of the technology. They, along with us, are a big fan of the ability
to build these kinds of RF systems using highly integrated silicon semi
conductors. So, the platform technology V2P continues to demonstrate all the
flexibility and all the robustness that we have expected. It enables ITT to use
the technology across a number of product lines. We are extraordinarily pleased
with our progress at ITT. We certainly thank them for their continued
enthusiasm and support. With programs being identified, we are bullish on both
shorter term as well as the long‑term prospects for our business
relationship with them.
With regard to our first commercial customer, developments are going right on
schedule. One of the milestones that I was really looking forward updating you
on today is a product development milestone that was established for completion
in the first quarter. This milestone was to interface our V2P development platform
with the rest of the complete mobile phone chipset with the purpose of
completing what's considered a very important milestone in this type of product
development program. And that's namely the ability to use V2P to make actual 3G
phone calls. The development platform I referred to uses a fully integrated V2P
RF chip, a volume ready version of this chip is what will actually be used in
it. There is a small digital state machine that bridges between the cell phone
face scan processor and the V2P RF chip. And our state machine today is what is
called an FPGA or a field programmable gate array. Remember, we're an IT vendor
and this part of our technology is perfect for small geometry CMOS. So, this
allows us to develop and test our interfaces, verify the real time phone calls
and then using that FPGA verified code, a wide range of digital CMOS processes
can be used to quickly incorporate our digital section.
Working closely with our customer we've been able to use V2P to verify its
performance in actual 3G phone calls. Together we achieved this milestone and
we did it right on schedule, literally without any meaningful issues. In fact,
our customer commented at the ease in which this occurred. They commented that
based on prior experiences that it wouldn't be unreasonable to expect a week or
more to iron out unforeseen issues when an actual 3G call was made. In reality,
it took us one day. That's exactly one day, from the time that the V2P was
delivered, until successful 3G phone calls were being made; certainly a
positive indicator about the foundation of our technology.
A few other important items that I've been looking forward to sharing with
you... in addition to achieving successful 3G calls, the performance figures of
merit of our transmitted signal exceeded both our own and our customer's high
expectations. You know, it's not unreasonable to wonder when you are thinking
about the new technology: how well will it work when it is applied in real
application? Well, we'd expected good performance. However, we were all very
pleased that the figures of merit achieved exceed even both our expectations
and our customer's high expectations.
One specific performance example that I'll mention is efficiency. Using
traditional transmitter and PA approaches, you would expect to consume a lot of
power to achieve better than expected specs. The customer commented to us on
how cool to the touch the V2P chip operates, especially when they're used to
dealing with the heat that is common with the traditional gallium arsenide
power amplifiers that they currently use.
The efficiency for 3G that we put up on our website was right in line with
what's being consumed. Simultaneously, was providing excellent quality 3G
transmitted waveforms. One of the positive indicators of this achievement is
related to volume production. Since we aren't working with a technology where
we are just squeaking by on the specs, it's a very positive indicator when one
thinks about moving this technology into volume production. So, we were and we
are ecstatic. The customer made it clear that we have exceeded their
expectations thus far in the relationship, which is certainly one of our
primary objectives. So, what are the next milestones?
Well, we are focused and moving post haste to take out what will be volume
producible silicon. Our target is delivering that in the fourth quarter, which
we mentioned to you in the last call, has not changed. We're right on track for
that and I'll keep you updated on the progress of that milestone in future
calls.
So, we believe there's tremendous growth potential of this first commercial
customer. Together, we can bring valuable improvement to the handset market
that I believe enhances the prospects for both of our companies.
We talked about our first two customers and I'm sure that anything you want to
know: so how are we coming on next prospects? Well, one of the reasons I went
into this detail today regarding the currents customers is that we are certain
that the progress and success we are having with these first customers, in
terms of meeting and exceeding timelines and expectations, is a big influence
on driving additional business. The more tangible our progress is towards
delivering volume production silicon and delivering on the promise, the lower
the risk becomes in adopting our technology. We're in the middle of a very
promising dialog with a number of companies in the local handset space.
I am very confident that some of these will convert into our next design wins
and business agreements. How confident are we? As I said in the past, we
believe these next wins are a "when" not an "if"
proposition. We continue to largely focus our efforts on companies who are
shipping in volume... typically measured in the millions, in fact, tens of millions
of shipments per month. As one would expect, there is a great attention to
detail by those types of firms. As we all know, the barest entry in this very
large marketplace can be permitable. The improvement in progress from and our
growing momentum is certainly helping us overcome those barriers.
We've really overcome what is, in my opinion, the single most difficult first
barrier to entry. We've got our first commercial customer. And we're now able
to actively discuss the benefits of our technology in real application. When
companies believe that your technology can really do like a bat in volume,
deliver the benefits of longer talk time, smaller batteries, less internal heat
generation, and all what those benefits do, they help enable the next form
factors that OEMs want to develop which are small and sexy and do more things;
it's clear to people this is a very important and desirable technology.
For OEMs they enjoy what we bring in benefits in the form of lower build
materials cost, more control over their entire chipsets. Those are real
tangible competitive advantages. For their business, we'll translate the market
share. We'll translate in the margins and give them an opportunity to be even
more positive influencers in this industry.
So, I believe the various entries are starting to reduce, because we can see
the move towards volume. We will secure agreements with our new customers in
the near future.
The last topic I want to discuss with you regards our business model. So the
technology is very strong, it is ultimately the widespread adoption of our
technology that will be the measure of how much value we can create.
In our last update, we shared with you that we believed we could gain adoption
that would put us at a market share run‑rate late next year that's in the
high single‑digits, perhaps the low double‑digits, as measured
against the 3G handset market. That market next year is forecast to be in the
500 million unit range and growing the following two years by another 50% to
about 750 million units annually. Based on the progress that we have been
making all that's going on, I continue to stand by that belief.
Today, I want to provide additional visibility to our goals. Given the strength
of our technology, the needs of our targeted market, I believe it is reasonable
to expect Parker Vision to target and achieve shared market penetration that
will incorporate our technology into a third or greater of the 3G and emerging
4G handset market, and to achieve that goal in the next few years, two or three
with continued growth, which will put us well on our way to achieving our
vision of becoming a de facto standard in that important space.
By the way, that marketing option translates to around 15% of the overall total
handset market. Given a reasonable range of royalty expectation and assuming
that Parker Vision has 30 million shares of stock outstanding, I believe this
will translate into an annual result of $2 to $3 dollars a share in pre‑taxed
earnings for the company. You should apply your own multiples of that to determine
what you think that can translate to in terms of value. I believe if we
continue to run a tight ship, maintain focus, build the kind of customer
relationships that we're building now and will adding to it in the near future,
this is the kind of value that we will achieve.
I also believe that there will be some helpful upside to our results that will
come from our first customer, ITT, who is not in the mobile handset space. And
sure, while their volumes will be lower, their per‑unit royalties will be
significantly higher than handsets. Incorporating royalties from ITT will
provide extra momentum to our revenue growth. There are other possible adoption
scenarios, where different adoption metrics can lead to the same or even
greater shareholder value. But if you want to know what my best estimate is
right now, based on what is going on, where we're at, what I see, that's where
I believe Parker Vision is headed over the next few years and how we'll get
there.
So, although our near term focus is in the handset market, I would be remiss if
I didn't mention I can envision further growth prospects, due to the robustness
of our technology that I think will come from other areas where our technology
is equally attractive... down the road. So I hope that you found this update
today to be helpful and informative. I believe that Parker Vision is very well
positioned to take advantage of the trends we see emerging in our market.
The key for Parker Vision is to stay on course, capitalize on the opportunities
we have in front of us. I know I can speak for CFO in saying that she is really
looking forward to the day that she gets a lot more airtimes on these calls to
discuss financial results with you. I second that.
So now I want to thank you for your attention and I would like to open this
call up for your questions.
Woman 1:
Thank you Mr. Parker. The Question and Answer session will be connected
electronically. If you would like to ask a question please do so by pressing
the star key followed by the digit one on your touch‑tone telephone. If
you are using a speakerphone today, please make sure that your mute function is
turned off to allow your signal to reach our equipment. Once again, that is
Star‑1 to ask a question. We will pause for just a moment to assemble the
queue.
[waiting to resume]
Our first question will come from Phillip Anderson with Pinnacle Fund.
[28:10]
Phillip Anderson: Jeff, how are you?
Jeff Parker: Hello, Phillip.
Phillip Anderson: I wanted to... not much as a
question but to summarize I heard your final comments clearly. Which is, you
mentioned that with your current customer and the prospects that you are
confident you are going to sign in part because the progress you have made with
your current customer, in effect, you made a phone call; it worked. It was much
better than anybody had thought it was in terms of the performance of the phone
has brought down the adoption risks of people that you have been working on, to
bring in the customers. But you mentioned that the prospective... I think what
you said... the prospective customers are selling tens of millions of chips per
month. I just want to ask you to clarify that. Would that be the prospective
customers who you are talking to, or would that be the OEMs which purchased the
products from your prospective customers?
Jeff Parker: Phil, you got that all
correct in the prospective customers that we're talking to are shipping tens of
millions of products per month to their customers, which are either ODMs who
are building the handsets or OEMs who buy them directly and have them built.
Phillip Anderson: If in fact the market is
going to be 500 million units in 3G phones in 2009, is that between your
current customer and the prospects that they would aggregate to the middle of
your range would be about 10% of the market? Would I also get that correctly?
Jeff Parker: Say that one more time, Phil.
Phillip Anderson: OK. So, I think that you said
that the market for 3G phones in terms of units next year is expected to be
about 500 million units.
Jeff Parker: That's right.
Phillip Anderson: And that you gave a range of
high single‑digits to low double‑digit market participation or
market share...
Jeff Parker: That's right.
Phillip Anderson: I just picked the middle of
the range 10%. So the prospects that the customer you have and the prospects
you are talking to, would aggregate in the middle of the range to about 10% of
that market last year.
Jeff Parker: Yes. Their share of market is
even larger than that. Yes. That's what I think. There's legacy products that
they'll have to work through. People won't just go out and take old phones and
redesign them. They will be designing the new phones but, yes, that's correct.
Phillip Anderson: So their share of the market
is much larger but your participation in their business...
Jeff Parker: Exactly.
Phillip Anderson: Equates to about 10% of the
market next year, which is the middle point of the effect the market share
guidance, which you just gave.
Jeff Parker: You got it.
Phillip Anderson: And that in 2010, that their
participation in whatever the 3G market is in 2010, would rise and pulling you
with them to about a third of that market.
Jeff Parker: That's exactly correct.
Phillip Anderson: Which, in effect, would give
you the $2 to $3 a share in untaxed earnings that you commented about.
Jeff Parker: That's right.
Phillip Anderson: Given the large NOL here, we
are not going to be a tax payer for quite a while.
Jeff Parker: That's the benefit of that.
We've seen that at cost, now we'll enjoy the benefits.
Phillip Anderson: I think those are all the
numbers that the shareholders have been waiting to emerge. If you, in fact, are
on target to having your customers begin shipping phones in the fourth quarter,
the emergence, the long awaited emergence, would seem to be at hand finally,
Jeff.
I just want to make sure I got it, because those were big numbers and I was
typing quickly, but zero sounds encouraging.
Jeff Parker: Well, Phil, you got it. And
finally we have enough visibility to be able to be able to communicate that.
So, I appreciate your patience in staying with us.
[laughs]
Phillip Anderson: You've got no idea.
Jeff Parker: Oh, trust me, I do. Anyway,
let's take the next question. Thanks, Phil.
Woman 1:
Thank you. Once again, as a reminder to our audience that is Star‑1
if you have a question or comment today.
[waiting on call]
Our next question will come from Daniel Lewis with GE and Partners.
[32:14]
Daniel Lewis: Good afternoon, Jeff and
Cindy.
Jeff and Cindy: Hi, Dan.
Daniel Lewis: How you guys doing?
Jeff Parker: We're doing very well. How
about yourself?
Daniel Lewis: OK. Couple questions here.
Again to go over the numbers that you provided and thank you for doing so. You
said that penetrating one third of the 3G market would net you something
between $2 to $3 a share?
Jeff Parker: That's right.
Daniel Lewis: So, is it fair to assume that
that... so one third of the market would be around 250 million units?
Jeff Parker: That's right. Yeah.
Daniel Lewis: And so is it fair to say that
your average royalty per phone would be around 50 cents a unit; given that
presumably you're operating expenses wouldn't go up much. So if you got 220
million of revenue with 30 million of expenses, 99 are pre‑taxed, would
get you $3 per share pre‑taxed?
Jeff Parker: You know, you're good at the
math and you're right in the right category. As far as what the per‑unit
royalty will be, Dan, it's going to definitely range with the feature set of
the phones. But your blended average you are thinking of is in the ballpark.
Daniel Lewis: OK, all right. I just wanted
to go over that. Does that assume low‑end phones, single mode phones or
does that assume...
Jeff Parker: It assumes what we think will
be a pretty broad range of those types of phones. Yeah, let's just leave it at
that. It's a range of phones that we think we'll end up in.
Daniel Lewis: OK. In terms of competitive
offerings that OEMs or chip companies are considering...
Jeff Parker: Yes.
Daniel Lewis: ...can you... and I know in
the past you've spoken about that there really hasn't been any solution that
has been terrible or is as good. I know one example of a company that is trying
to offer better solutions in the space of the company called Sequoia
Communications. When you talk about the attempts within the space to making
things better and what kind of receptivity the industry has had with these
prospects and the degrees to which these alternative technologies have been or
have not been embraced?
Jeff Parker: Sure. I'll try to do that.
So, specifically, on Sequoia... I don't know much about their product beyond
I've seen it at trade shows from time to time. I've read a little bit about it,
what you can pick up off the Internet.
And it's a transceiver product, so unlike what we do, which is taking signals
from the base stand right to the RF at tower, their approach from a block
diagram standpoint is more of a traditional, "Here's a transceiver and
then here's a linear power amplifier that is bolted up to that." And you
would end up with the various numbers of power amplifiers that you would see in
any typical phone fielded today. So from that perspective it doesn't really
have much difference from what we see a lot of other offering look like from
that level.
Again, I'm not into their circuit development level. I don't know what maybe
some of their tricks of the trade are. But, again, we have chosen not to go
with the transceiver, separate PA route, but to unify that function for all the
benefits that we can rank.
In terms of what we've seen in the market, I still don't see anything, Dan,
that is an advancement in the transmitter technology that does anything close
to what we do. The trend that you see today has, as I mentioned before is
toward moving things to volume silicone, trying to make tightly coupled
integration of the whole chip set, people thinking about moving the single
chip. When you think about all those trends, where our technology... you can
check every important box on that.
I've seen some attempts at some CMOS silicon power amplifiers for like GSM.
They tend to be large. We really haven't seen any wide spread adoption of
something like that. People who are looking at... at least the customers we're
talking to when they look to adopt something different, new, novel... it's got
to give something that they can't do on their own. You can't give something
with the left and take two things away with the right.
It's got to be that you're really making advances towards securing important
features that they are looking to achieve. We have been in this market long
enough to know what those are and be able to hit on those important metrics.
That's what's influenced this whole technology development program here.
So, that's pretty much it. Unless you have something specific, other than
that...
Daniel Lewis: OK, I'll go back. Thank you.
Jeff Parker: Thanks, Dan.
Woman 1:
Thank you. Once again as a reminder to our audience, that it's Star‑1
if you would like to ask a question.
Moving on, our next question will come from Jim Whitton, with Laidlaw.
[37:50]
Jim Whitton: Hi, Jeff, very good
presentation.
Jeff Parker: Thank you, Jim.
Jim Whitton: One question, which I see all
the time from my critics. When are we going to start seeing some technical
publications on the technology? Thank you.
Jeff Parker: Thanks, Jim. No, that's a
good question. You know, beyond the information we currently put on our
website, I really think the next thing that shareholders can put their arms
around and will make a big difference, is going to be products. Things that you
don't have to be an RF circuit designer to have an appreciation for.
We do have
in motion opportunities we think that will get out and help promote the
technology from its benefits standpoint, from its business standpoint. But down
at a level that would be really a circuit designer's level or an RF engineer's
level, that kind of information we really don't intend to put in public domain.
It's not probably in our best interest, competitively. You certainly don't see
our competitors do that. And frankly, I think a lot of the information we put
up on our website already is frankly much more than you can get with
competitor's websites.
So, to the extent we can bring our shareholders and the public in general
information that is valuable guidance, in terms of feature benefits, the
adoption we're getting. Ultimately, so you guys will get your hands on
products, or have reviewers review products, that have our benefits
incorporated in them. I think that's going to be really the best feedback for
you guys are probably going to be able to get.
One last comment I will make. When we spoke on this topic... I guess it was
late last year... one of the things I suggested was that, hey, on our website
we are going to put up information that shows our performance of our waveform.
Check the box, we did that. We're going to show you our efficiency. Check the
box, we did that. We're going to show you that a single chip can do all these
things simultaneously, yep. Check the box we did that.
I think the only thing, frankly that is still sitting out there is we said,
"Hey we're going to give you guys feel for how to fit into
applications," and we will work on that. We'll pull that together so you
guys can get a little bit better about a block diagram, a circuit block to
understand how this fits into handsets and those types of wireless applications.
Does that answer your question? Well, Jim, I think we just lost you.
Jim Whitton: Do you hear me?
Jeff Parker: We can now.
Jim Whitton: Yeah, that does answer the
question. One other little ancillary question and that is... you used the
number 30 million shares, is that fully diluted, by any chance?
Jeff Parker: No, I think as Cindy
mentioned in her presentation... we have a little over 26 million outstanding
today and there's another six million and change they are in the $23 a share
average strike price.
Jim Whitton: OK, thank you.
Jeff Parker: You bet.
Woman 1:
Thank you. Moving on. Our next question will come from Joe Graves.
[41:00]
Joe Graves: Hey, Jeff.
Jeff Parker: Hi, Joe.
Joe Graves: My question is regarding,
what are the potential customers saying about the progress you have made with
your existing customers? The reason I ask is are you able to share some of
these test results that you're seeing with the 3G handsets with some of your
potential customers? And then I would like you to elaborate a little bit more
regarding ITT. I actually had to jump off the call for a second. But I may have
heard you correct. Did ITT actually use the technology in some of their
products?
Jeff Parker: Well, ITT has used the
technology now to show their customers what they are going to be getting in
products that will be designed.
Joe Graves: So it would be fair to say
that ITT uses the value proposition to secure business, right?
Jeff Parker: Yeah, that's fair to say that
and in terms of our ability to share information, yes. We can share with other
companies, hey we've made these calls, our customers made these calls, here's
some of the figures of the merit. We have to use what I would consider good
taste and we can't give out confidential information, but our customers are
very supportive in terms of wanting our company to be successful. They got a
nice lead on the competition and, yeah, they're very enthusiastic for what's
been achieved to date. I think we fully expect us at some level, share of the
performance, etc. that we have been able to achieve.
Frankly, Joe, with other OEMs, we can do these same kinds of calls on their own
shift ups relatively quickly. So that's the other good news I hope you guys
will take away. I mean, this is really moving now away from innovation
development into more of the traditional engineering/design‑end type of
activities.
Joe Graves: And then, one more question
just regarding some of your assumptions for market share. That assumes only
revenues derived from what would be the amplifier business. Would that be
transceiver and receiver related technologies?
Jeff Parker: It's a blend. It's a blend.
We believe there will be others who... just as the first customer did... who
will adopt our receiver technology as well. But we don't assume it will be
100%.
Joe Graves: All right. Thanks.
Jeff Parker: Thank you.
Woman 1:
Thank you. Moving on, our next question will come from Bob Berlacher with
Northwood Capital.
[43:34]
Bob Berlacher: Hi, Jeff, it's Bob Berlacher.
Jeff Parker: Hi, Bob.
Bob Berlacher: You answered part of my
question with Phil's question. But to follow up on that, will the company put
out an 8K? Because this is kind of the first time you have given what I might
call informal and formal guidance for earnings. Will you be 8K‑ing this
conference call or the Q&A or both? Because I think that would be
beneficial.
Jeff Parker: You know that's a good
question. I didn't think about that, but we'll counsel with our... we'll check
in with our council, we may very well do that.
Bob Berlacher: I think that would be a good
move.
Jeff Parker: OK, well, appreciate that. I
appreciate that feedback. Thank you.
Bob Berlacher: Thank you.
Woman 1:
Thank you and it appears we have no further questions. Mr. Parker, I
would like to turn the call back over to you for any further comments or
closing remarks.
Jeff Parker: My only comment is again
thank you for... to our shareholder supporters for your support. You have been
no small measure of us being able to stay the course to be as far as we have
gotten. We are on a very good track right now.
I look forward to our next conference update and to what I think will be a
number of significant events that will occur this year.
So, have a good evening. Bye‑bye.
Woman 1:
Thank you. Ladies and gentlemen, that does conclude today's
teleconference. We would like to thank everyone for their participation in
today's call. Have a great rest of your day.