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ParkerVision, Inc. (NASDAQ:PRKR)

Q3 2009 Earnings Call

November 16, 2009; 4:15 pm ET

Executives

Ron Stabiner - Wall Street Group

Cindy Poehlman - Chief Financial Officer

Jeff Parker - Chairman & Chief Executive Officer

Rob Sterne - Director

Analysts

Charles Bellows - White Pine Capital

Philip Anderson - Pinnacle Fund

Wilson Jaeggli - Southwell Partners

Jim Whitten - Laidlaw

Operator

Good day everyone and welcome to the ParkerVision third quarter 2009 conference call. Today’s call is being recorded. Now, I’d like to turn the call over to Ron Stabiner with Wall Street Group; please go ahead.

Ron Stabiner

Good afternoon and thank you for joining us. Before we get started, I’d like to remind listeners that this conference call will contained 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 expected achievements and anticipated results.

Included in these factors is the ability to maintain technological advantages in the marketplace, the ability to increase manufacturing capacity to meet demand, achieving timely market introduction and acceptance of our products, maintaining our pattern production and the availability of capital, among others.

Given these uncertainties and other factors current business, listeners are cautioned not to place undue reliance on any forward-looking statements contained within this conference call. Additional materials concerning these and other risks can be found in our filings with the Securities and Exchange Commission.

On today’s call will here first from Cindy Poehlman, Chief Financial Officer, will be followed by Jeff Parker, Chief Executive Officer of ParkerVision, who will also provide an update on the business of the company.

With that I will now, turn the call over to Cindy so, please go ahead.

Cindy Poehlman

Thank you, Ron and thanks to those of you joining us today for our quarterly conference call. On November 9, we reported a $5.7 million or $0.17 per share net loss for the third quarter of 2009, this compares to a $6.6 million or $0.25 per share net loss for the third quarter of 2008. On year-to-date basis for the first nine months of this year, we reported a net loss of $16.6 million or $0.53 per share compared to $17.3 million or $0.66 per share for the same period last year.

Although we did not recognize any revenue this quarter we did see a reduction and our comparative operating expenses of approximately $1 million or approximately 14% on a quarter-to-quarter basis, largely due to cost control programs we instituted earlier this year. We ended quarter with approximately $3.3 million in cash after using approximately $4 million for operations during the third quarter. Our cash usage for the third quarter of 2009 was higher than average largely due to timing on payable.

Year-to-date through September our cash usage for operating activities was approximately $10.6 million. We also invested an additional 700,000 in our pattern portfolios during the first nine months of 2009. Today we added $14.6 million in capital to our balance sheet with the closing of our under written offering with Piper Jaffray. Jeff Parker will discuss this offering and greater detail as well as provided general business updates.

So with that, I’m going to go ahead and turn things over to Jeff Parker.

Jeff Parker

So thank you Cindy, and good afternoon and thank you for joining us in our third quarter conference call. There been several significant events since our last call, so let me outline for you, what I hope to cover today. Since our last call, we received the purchase order from ITT, that’s the result of several initiatives that we worked on with ITT and their customers for the incorporation of our technology and to military ratio products.

We delivered with these exceptions of mobile phone handset samples from our chipset licensee, now we just finalize the capital financing for the sale of common shares of stock that resulted in our $14.6 million additional working capital for the company. I will briefly discus each of these events and I also want to provide an update on the progress we’re making with LGIT or HEDGE program as well.

So I’m going to start with the most recent of these three events and work back to the earliest. As you are likely seeing, we announced today that closing of an approximate $14.6 million capital rates for the company, this resulted in an additional 8 million shares in common stock being issued and we now have 41 million shares outstanding. Some of you asked, what motivated the timing and the amount of this funding.

As you know, we filed the $50 million shelf registration back in the middle part of September to provide the company, the flexibility, necessaries to support our working capital and other corporate needs. The Board and Management determined that it was appropriate to increase our working capital before the end of 2009, in order to focus our existing commercial opportunities without the distraction that a thin balance sheet could create.

That distraction is not only on the part of management, but also our customers, you need to understand that we have not only the technical where with all the support their current and future product needs, but also the financial where with all to hold up our end to the bargain.

We also felt the significant milestone of delivering our technology in mobile handset samples with an important milestone to achieve before we start additional support from the investment community. As to the amount, our goal is to ensure that our working capital was sufficient to fund our revenue growth.

I’m pleased that we now have the necessary working capital to move our company to the next step, which is namely the production of chipset that incorporate our d2p transmit technology in the mobile phones. At the same time, I can also say that it’s our goal to use these moneys to fund the revenue ramped, so that we do not have to be back in the market seeking capital under these kinds of conditions again.

As a large shareholder in this firm, I am as motivated as anyone to grow our shareholder value through the achievement of revenue growth and product designing as quickly as possible and so that takes me to our second topic, which is our recent announcement of these acceptance of our sample handsets and the significant to that event.

First of all, relative longer than expected to get this handset completed. I’m very pleased with the end result that we achieved. One of the greatest attributes of our d2p technology is the power savings that it delivers. We’ve said that by incorporating d2p versus the standard RF transmitter chains that are used today, that we could increase the talk time in our 3G handset by up to 50%, but I’m please to report is that the performance we achieved not only met that expectation, but exceeded it.

We took an existing mobile phone reference design as owned buyer chipset licensee, we’ve removed the existing transmission, which is a volume production state-of-the-art solution and we’ll replaced it with d2p. Everything else in the phone remain the same the same baseband processor, the same receiver etc. The net results that one power consumer for the total phone is measured during a phone call; the d2p base phone consumes less power at every single level of RF transmitted output power, regardless of whether the phone is close to the base station, far from the base station or any place in between.

Our mobile phone network is laid out, so that the majority of the time you not only the outer fringe of the cell and you’re not right under a base station, both the time just somewhere between us to experience. The most significant talk time gains using the d2p technology are realized only between those two extremes in this case the d2p phone measured power savings that translates into up to a 60% increase in talk time. Even on the extremes being adjacent to our base station are on the front. The d2p savings result in meaningful power savings but what we’re shipping today.

In addition to the d2p phones delivering excellent talk time increases, we also saw very good performance in terms of the signal quality that we transmit. Our customer totals that we exceeded their expectation of those power savings and in those type of performance. One of the benefits of our technology is that, because it is a unified solution, it has the ability to transmit from the laboratory to the mobile handset form factor and still deliver the same excellent results.

Today’s mobile phone transmit solutions which accreted from multiple subsystems often have some degradation when moving from the lab to our mobile phone form factor, this is what our customer expected to see in d2p implementation as this is the norm. They were pleasantly surprised to experience the d2p installed in the smartphone factor of the mobile handset displayed exactly the same performance as on the laboratory’s demonstration board, thus exceeding their expectation. This was one of the shuttle d2p benefits.

The next steps with our chipset licensee, is that we will support them as a solicit orders from their customers, who are handset OEMs and ODMs and we will continue to assist Poehlman putting d2p in the volume production as a result of orders as they expect to receive. Our customers as indicated to us that they would expect to see mobile handsets, shipping with d2p inside by the second or third quarter of next year.

In order to facilitate that goal, we would anticipate that chipsets will need to ship as earlier to Q1, 2010 which means taking orders for those chipsets in the very near term. We certain look forward to supporting them with their goals. Next topic I want to discuss of our HEDGE program. Although most of our recent updates have been focus on the sample phones we’ll also continue to make progress on the development for our HEDGE module that we’re developing with LG Innotek or LGIT.

They feel the data chip without powered by ParkerVision and together we have succeeded in generating interest from handset OEMs, or looking what we were developing and how can we use in their future phone products. Where well on our way to having all the complaint HEDGE performance and data from the platform we have been putting together and cooperation with LGIT.

Based on the expect result for this platform along with out experience and putting to gather the sample phones for our licensing customer, I am very confident that our technology will deliver the same extraordinary result in HEDGE, but we deliver in our sample 3G phones. Our focused of LGIT is to make the shortest path possible between now and first production samples, so we can get to revenue generation with this HEDGE product as early as possible in 2010.

Last but not least, you see that ITT with awarded a contract by on us military sure that, to spend ITT and ParkerVision and demonstrating the d2p technology in a military radio application with instance to the government. The intelligence program with verify the d2p in a particular application and once verified, sure estimate enthuse the fund the additional steps it will take to create production devices based on technology, which ITTs was then ultimately manufacture and ParkerVision would receive royalties.

ITT has several other contract proposals out the typical or multiphase program for ITTs customers fund various stages from prototype prove do initial volume production from various military and other government applications. So in Synopsis our focus year is to remain engage and activities to grow near term revenue for ParkerVision namely to support our chipset licensee as they incorporate d2p in the volume handset to continue working with those LGIT and some of the handset OEMs to incorporate our technology in the HEDGE phone and continue supporting ITTs as they secure orders from their military and government customers to test them incorporate d2p into their product.

So, with update now I would like to open this call for your question, please.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Charles Bellows - White Pine Capital.

Charles Bellows - White Pine Capital

Jeff, I just I want to be clear on this that right now you are in the design, but you have no orders and we’re in the process of going out to see if it’s acceptable to the handset makers. Is that correct?

Jeff Parker

Our customer, the chipset vendor is in a process of doing that now with their customers. So that program is to create the sample phones, prove the technology as I described, takes up to the handset OEM and ODMs that our customer sell chipsets too and to then get orders from those companies that they already do business within volume and to begin a production ramp that incorporates data fee into their chipset.

Charles Bellows - White Pine Capital

As I had understood it’s a four that one of the benefits was, that this was going into an existing model, is that correct?

Jeff Parker

It’s an existing reference design. They have a reference design and they sample that reference design to companies, who can then take it and, push and pulled around a little bit, or changes the phone factor to entirely, it’s really been discretion of the customer. I mean, I’m obviously not very familiar with this reference that I’m having work with our team and this company for a while with us and I’ve seen volume phone shipping in the marketplace that are very close to this reference design.

So I see what the customers do. They don’t ship it exactly than where they made modified it slightly, only that’s what I saw on this particular one, but that’s the starting point from which they work.

Charles Bellows - White Pine Capital

What’s the cost savings between this and what it would be with the normal structure?

Jeff Parker

It really depends on how our customer wants to price it, that’s really their decision. If they want, they can offer cost savings, they can offer no cost savings, that’s really their call and also depends on how they want to deal with the increase in battery life meaning, they sent back to me some thoughts from some of people, they’ve been speaking to already that they can cut the cost even further if they don’t want to offer longer battery life. I mean, there are certain phone models that may end up with the same talk time in a smaller batter and that offers even further cost savings. So there’s different ways that it can go.

Charles Bellows - White Pine Capital

So it sounds as thought what we have is or now out at the handset people and they will have the decision, if they even want to use the product.

Jeff Parker

They will have that decision. Our customers indicated that they think that they will be shipping chipsets that will be in models that will be on the market in the second or third quarter of next year.

Charles Bellows - White Pine Capital

So in that case, we would maybe see some orders flowing in on the first quarter?

Jeff Parker

That’s right.

Charles Bellows - White Pine Capital

Do you feel that with the cash you have and given everything going on that this is all the cash you’re going to need given a burn of $4 million?

Jeff Parker

We’re going to hold our operating expenses. We’re going to very carefully manage of this cash as I’ve said in my presentation. I think everyone will be back to the market again in this type of the situation. I’m gladly got the capital to get this company moving forward, but…

Charles Bellows - White Pine Capital

You were out of money, if don’t have cash coming in until the first quarter, so I mean it does. You have to be very happy.

Jeff Parker

The goal is to get this company self sustaining, we’ll have to do this again. We can do that obviously by generating revenue.

Charles Bellows - White Pine Capital

So there won’t be any confirmation of acceptance of the phone by the people who actually have the final say in it. How we’re going to see any of that other than wait until, maybe we see some orders coming in that first quarter?

Jeff Parker

I think that’s the best way. I think we need the wait and see orders come in and then I hope that I can communicate to you guys that we’ve seen orders come in and that’s now initiated the launch and I think that’s the absolute best way to do it.

Charles Bellows - White Pine Capital

At one point that you had said that, when you got to model phone and I understand the need to get it to the handset people, that you were going to be able to show that to the shareholders, so that they could see that, you actually had one that one worked.

Jeff Parker

We can definitely do that. I’ve been traveling with one and I will continue to travel with one and should our path across or we end up in some mutual location, we’d be happy to show up there or they will even just some kind of a little, I don’t it’s kind of the demo, but I’d be fill the show at the year, may a call to you on it.

Charles Bellows - White Pine Capital

When do you think your customer is going to be willing to state who they are as opposed to staying under the covers?

Jeff Parker

I hope sooner than later, because I think we’ve delivered and then some, but I can tell you that when we feed chips shipping from the end to their customer and we have an invoice to goes to them, then we’ve material against with revenue. As a revenue generating event, I would assume, that will become material we’ll have to make know certain facts based on the way the securities loss were.

Operator

Your next question comes from Philip Anderson - Pinnacle Fund.

Philip Anderson - Pinnacle Fund

Jeff, approximately how many sample phones did we ship to our customer? Do you have a sense as to how many customers, our customer either would have forwarded them to or intense to forward them to for evaluation?

Jeff Parker

I do, I don’t know that is appropriate for me to share that information I think it’s confidential. I can tell that, they’ve indicated that they have multiple customers not one customer, but a number of them, where we created I don’t know somewhere between a dozen and 18 of phones and we have more that are in process are being created.

Although, they’ve indicated they don’t feel they’re going to need a whole lot more sound samples which on a great, so candidly what they’ve indicated to us and I am very happy to hear as they don’t think ParkerVision should be focused on too much else with them going forward with them, getting the thing into production and getting revenue going. So I think they feel like, we’ve done what we needed to do. He held up our end of the bargain and provided us with a very nice formal acceptance along those lines and indicated, it’s all about production now.

Philip Anderson - Pinnacle Fund

Did that mean, that they think they can go out and get orders without having much involvement from ParkerVision?

Jeff Parker

Yes, I think they can get the orders without a whole of lot of our involvement. I think that, we’ll have to get seeing this support them as they get into the production ramp and we’re happy to do that. Obviously, we’re motivated to generate revenue as quickly as possible.

Philip Anderson - Pinnacle Fund

I think, kind of picking up on a comment that previous caller had made, the idea of putting a demonstration on your website, a picture of the phone if you can do that maybe some performance back so that investors can actually see the phone in lieu of having pass with you kind of intersect on another, might be an interesting idea?

Jeff Parker

Yes, we’ll look at that still that an interesting idea.

Operator

Your next question comes from Wilson Jaeggli - Southwell Partners.

Wilson Jaeggli - Southwell Partners

Jeff, I can tell as someone who has received the phone call on one of your phones, which may BlackBerry Bold sounded as good as your new phone did. Can you give us, your best idea of this presentation that will be made to Customer No.1’s customers? I mean they’ll have a phone, will they have hooked up to anything, were they tested on site that these potential customers. What will they actually do?

Jeff Parker

I don’t know for a sure. I can tell you what the sounds are capable of, that sounds are capable of connecting to actual networks, but I view them on actual networks. They’re capable of picking up to test equipment that can also verify the performance of the phone. It’s a base station simulator type piece of equipment that most of the handset OEM and ODMs already owned. They can do it in that way or they can do it in both ways. You can get this phone up on operating network, if you have permission of the network owner in literally minutes and it’s not a big deal.

Wilson Jaeggli - Southwell Partners

So we deliver the physical product, because we’re number one as needed and it’s in their marketing and sales hands. What physical you’re using to deliver to LGI here? Are you delivering phone to them also, Board, what do you delivering?

Jeff Parker

LGI is one of a platform and this platform that showcases all of the performance attributes for their HEDGE application, show that were compliance and that we have all the performance that we agree to deliver to them. What I hope to tell you, but this is obviously really a collaboration within our two companies, which is I hope to tell though, right to modules that are satisfactory for their handset targeting customers and that we do a few steps between here and there as possible probably known. They don’t have revenue generating activity.

Wilson Jaeggli - Southwell Partners

So once you’re satisfied with it, it is our job to deliver modules?

Jeff Parker

No, it’s not job. We deliver the silicon from which they will build the module, which then get sold by them to the customer.

Wilson Jaeggli - Southwell Partners

We deliver the silicon and they will package in test?

Jeff Parker

Correct, they have their own module production facility.

Wilson Jaeggli - Southwell Partners

You mentioned the hopeful timeline here with Customer No.1. Do you have similar timeline with LGI or is it just too early?

Jeff Parker

Too early, Wilson, we’re not ready to show this yet.

Operator

Your final question comes from Jim Whitten - Laidlaw.

Jim Whitten - Laidlaw

I want to ask question in response to a prior question. Customer No.1 have to produce any spec sheets that will be sending out or where they be do any advertising of the new product.

Jeff Parker

I don’t know if they’re doing any advertising, but I do believe that they are creating spec sheets. I mean, they have spec sheet today for their other chipsets and it’s my impression that they are creating or have created spec sheets, which features, the end results of the technology that we delivered for them.

Jim Whitten - Laidlaw

So, that’s in the work so, there’s Bob finalize I take it.

Rob Sterne

Jim honestly, I don’t know if finalize they’ve done the works, but it’s one of the other.

Jeff Parker

It doesn’t sound like we do. So, I guess I’m going to thank everybody for joining us on this call today. Appreciate the time you’re spent with us this afternoon and I’d look forward to bringing you more updates in the future of that hopefully we’ll showcase the goals of the company, which is revenue generation and products in the marketplace. Thank you very much. Have a good evening.

Operator

That does conclude today’s conference. If you wish to access audio archive cast of this replay, you may do so by visiting the company’s website at www.parkervision.com. Thank you.

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Source: ParkerVision Inc. Q3 2009 Earnings Call Transcript
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