According to CNET, Android Authority, and numerous technophile websites, Sony (SNE) is about to launch its new 6.4-inch Xperia ZU "Phablet," which competes with Samsung's (SSNLF.PK) popular Galaxy Note line.
This high-end Sony smartphone-tablet crossover will be water-proof... and Neonode (NEON) supports under-water operation and include a Full-HD display that supports high-performance touch from almost any input device i.e. a finger, stylus, pencil, or off-the-shelf paintbrush.
Thus, these sites conclude that Sony, who is fanatical about handwriting functionality and is a big Neonode fan/licensee, is using a NEON-based optical-infrared touch solutions for its anticipated Phablet.
As we all know, Sony was Neonode's first licensee back in late 2009, following NEON re-emergence from bankruptcy. Neonode valiantly tried to bring a first-of-its-kind smartphone in 2004, and sold only 50K units before being forced into insolvency during the Wall Street apocalypse of late 2008.
Since its inaugural licensing, (apparently Sony nurtured-along Neonode, and its optical technology, in early 2010) Sony has brought four generations of Neonode-based eReaders to the market. At this point, it seems that the Sony-Neonode relationship is about to expand into new vertical.
At the recent SID Conference (in Vancouver last month) and Education Expo (in Japan last month), Sony demonstrated its new 13.3-inch slate product, which is targeted for intensive handwriting applications (such as education and legal/Street professionals). Based partly on the fact that Neonode has a link to the Sony Slate on its website, I firmly believe this product is built-upon Neonode's touch technology.
According to my checks (and multiple proclamations by management), Neonode's MultiSensing technology is particularly suited for handwriting applications, as its LEDs scan at about 1,000 times (Hertz) per second, versus most capacitive sensors at a mere 60-120 Hertz. While some capacitive sensors are jacking their scan rates to 400 Hertz (handwriting needs a scan rate above 400 Hertz), this will likely come at a serious power cost.
Most significantly, it looks like Neonode is migrating its technology from low-tech eReaders, up into high-end premier devices at the bleeding edge. Apparently, there is a pervasive attitude on the Street, that Neonode's inexpensive optical infrared solutions are only suited for low-tech and low-end devices.
With Neonode about to disrupt the Windows 8 PC market ($15 total system cost per laptop vs. Uni-Pixel (UNXL) at $25-$28, along with the litany of metal meshes), along with its imminent ramps in children's tablets, printers, autos, outdoor displays, large-format tablets/slates, and smartphones... I am confident the 4.9M shorts (who represent a 23+ day cover ratio) will be squeezed soon-enough. Who knows, perhaps a Sony Windows 8 certified laptop is just around the corner.
What does this mean for the stock and financial prospects?
By my estimation, Neonode's 2014 prospects only continue to improve. In light of ramps in printers (I estimate $15M+ of revenues in 2014), children tablets (I estimate $8M+ of revenues in 2014), handsets (I estimate $5M+ of revenues in 2014), auto (I estimate $15M+ of revenues in 2014), PC laptops (I estimate $15M+ of revenues in 2014), and eReaders (I estimate $6M+ of revenues in 2014)... it looks like NEON will be able to generate $64M in 2014 revenues on a cash-opex base of $19M. With pre-tax margins of $45M, and taxes at ~25% (there are some tax loss carry-forwards), net income could easily eclipse $34M, which would equate to 2014 EPS of $0.85.
Thus, I wonder what kind of multiple investors will soon be putting on NEON's operating business, not to mention Neonode's scary IP position.