ParkerVision: Own This Stock By the End of the Summer

ParkerVision (PRKR) didn’t do much in the recent rally; however, the company continues to work with potential customers on their wireless system design which would incorporate PRKR’s technology.

PRKR is a semiconductor company that has developed a breakthrough technology in energy signal processing with primary application in hand sets for which it possesses 72 patents and 98 patent pending.

The benefits that this technology brings to the handset manufacturer is that it:

(1) Increases battery life 2x to 3x (improves unit efficiency and reduces costs),

(2) Eliminates components and utilizes less expensive material, reducing the cost of material specific to its function by 50% ,

(3) Decreases the board space specific to its function by 50% (allows further miniaturization)

(4) Takes less time to manufacture (reduces cost and speeds time to market for new products)

(5) Raises the signal processing capacity of the average base station by 50%

(6) Improves handset signal strength and therefore the clarity with fewer lost connections.

ParkerVision expects to have contracts signed by year end; if that proves correct, then it will take roughly one year for the OEM’s to incorporate the company’s technology into their products.

Management expects to receive between $1.00-1.50 royalty per handset for the transmission function and an additional $1.00-1.50 royalty per handset for the receiving function. Assuming the company can attain a 20% market share by 2011, revenues would grow from $80 million in 2009 to $1 billion in 2011 an increase of approximately 12.5x, with earnings per share coming in around $1.25 in 2009 growing to a double digit dollar amount in earnings per share in 2011.

In May, the company entered into a licensing agreement with ITT which in our opinion is a validation of its technology.

Our point here is that given the timing of the major cell phone manufacturers’ product cycle, if the company is going to get a new contract this year (which we think it will), it will likely occur sometime before the end of September. This doesn’t make Parker a ‘must buy’ today; but we think that you should own the stock before the end of summer.

Disclosure: Author has a long position in PRKR

PRKR 1-yr chart

Comments

[razormd:]

Baloney!!...where does he get those numbers?...I see the ITT licensing agreement but I sure don't see any numbers...in fact I don't even see that ITT says it plans to use anything Parker offers in anything it makes!!...the subsequent quarterly report CLAIMS that royalty income should begin in the second half of 2007 but again offers no estimates as to actual numbers...Parker has been pumping RF hype for over TEN YEARS now...I'll believe royalties ONLY after I see some.

2007 Jul 13 01:31 PM