Executives
Paul Henning – Cameron Associates
Cynthia Poehlman – Chief Financial Officer
Jeffrey L. Parker – Chairman of the Board & Chief Executive Officer
Analysts
Michael Donahue – Emerging Growth Equities, Ltd.
Ira Nathan – Nathan Financial
Daniel Lewis – GEM Partners
Jim Witt – Laidlaw
Greg [Luen] - LG Partners
Steve Springer - Target Capital Management
ParkerVision, Inc. (PRKR) Q4 2007 Earnings Call March 17, 2008 4:30 PM ET
Operator
Good day everyone and welcome to the ParkerVision fourth quarter and year end 2007 earnings results conference call. Today’s call is being recorded. At this time for opening remarks and introductions I would like to turn the call over to Mr. Paul Henning. Please go ahead.
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 and our businesses and the economy and other factors that may cause actual results to differ materially from our expected achievements and anticipated results. Included in these risks factors such as visibility to maintain technology advantages in the marketplace, achieve timely market introduction and acceptance of our products, maintain product copying protection and availability of capital among others. Given these uncertainties and other factors about our business listeners are cautioned not to replace undue reliance on any forward-looking statements contained within this conference call. Additional information concerning these and other risks can be found or in our filings with the SEC, the Securities & Exchange Commission.
With us today on the call will be Cindy Poehlman, CFO who will review the quarterly and yearly financial results. She’ll be followed by Jeff Parker, the CEO of ParkerVision will report on the company’s business activities.
Cynthia Poehlman
Thank you to those of you who are joining us for our year end update this afternoon. I’d like to spend just a few minutes discussing our financial results for the year end and fourth quarter and then I’ll turn the call over to Jeff Parker for his update. For 2007 we reported revenues of $284,000 all of which were recognized in the second and third quarters. This revenue represents fees for engineering design services provided to ITT Corporation. These services included architectural design analysis and recommendations based on various product specifications put forth by ITT.
Over the last few months ITT has utilized that information to evaluate and determine their internal product development plans. While notably this process has taken longer than anticipated we are extremely pleased and excited about our opportunities with ITT. Based on recent discussions we anticipate that ITT will utilize our existing commercial prototype designs and their own internal resources to design their initial product incorporating our technology. As the result we do not expect to see any significant service revenue from ITT during this initial design cycle. If you recall, one of the reasons we entertained the relationship with ITT who is clearly outside our primary target market is that we believed ITT’s product needs were very synergistic with our ongoing commercial development efforts and therefore would not cause our design efforts to tangent off in an unplanned direction. This is absolutely proving to be true. As we’ve stated previously we continue to expect cumulative revenues from ITT of approximately $25 million over the term of this contract.
For the fourth quarter of 2007 we reported operating expenses of $4.9 million which represented no increase from the preceding quarter ended September 30, 2007. On a year-to-date basis, we reported operating expense of $19.1 million compared to $16.9 million in 2006. As we indicated last quarter the increases in operating expenses from 2006 to 2007 were largely a result of our ability to successfully fill certain budgeted RF engineering and IT design positions as well as ongoing prototype design and fabrication costs.
In 2007 we used $13.5 million in cash for operations and invested another $1.5 million in intellectual property and capital equipment. Our use of cash in 2007 was significantly offset by approximately $6.7 million in proceeds from the exercise of outstanding options and warrants. This included the exercise of approximately 640,000 warrants with exercise prices between $8.50 and $9 and approximately 160,000 options with an average exercise price just under $8. We ended 2007 with $13.4 million in cash. We recently completed the sale of approximately 1.2 million of additional shares of our common stock with proceeds of about $9 million. We believe this additional funding will bridge our working capital needs until such time as we begin generating royalty revenue from our existing licensees.
With that I’d like to turn the call over to our CEO, Jeff Parker for an update.
Jeffrey L. Parker
Good afternoon and thank you for attending our year end conference call update. We have a great deal to be enthusiastic about with regard to our future hear at ParkerVision and I’m pleased that we have this opportunity to provide you with an update and answer a few of your questions. We made great progress last year in securing the first two licensees of our wireless technology. What I want to discuss today is the status of each of those accounts, an update on the technology itself which is the foundation of our success and the progress we’re making towards securing additional accounts.
As many of you follow the company you know that in May of last year the ITT Corporation became the first licensee of our d2p technology. In the second and third quarters last year we recognized a couple hundred thousand in revenue from design services that we provided to ITT under the contract. In our fourth quarter we reported no service revenue from ITT. For those of you who are worried that this is bad news, let me reassure you it is not. We are absolutely still on track with ITT and they remain enthusiastic about the use of our technology in their products. In fact, I would venture to say that little or no service revenue from ITT should be viewed as a positive not a negative. A company with as diverse a line of communications products as ITT could easily consume 100% of a small company’s engineering resources in developing custom designs for their specific use and while that path might allow us to enjoy some short term design service revenue it would absolutely take us off our chosen path of becoming an IT provider to the mobile handset industry with much more significant long term revenue opportunities.
When we entered the agreement with ITT one of the things ITT itself had hoped was that they’re product needs could be synergistic with our commercial development goals. So the fact that ITT will be able to utilize their own internal resources to push and pull our commercial designs for their own use with just a little support from our engineering resources is something that we both quite frankly are very excited about. As we move through the year we will likely have more visibility into ITT’s time frame and I look forward to keeping you updated as best I can which will be constrained by confidentiality that we must and will maintain but which should allow that we can keep you appraised at a high level.
Let’s move now to a review of where we’re at with the technology since it is the foundation for our business success. We’re making rapid progress towards having volume ready d2p silicon for our first commercial customer for use in handsets. We’ve stated in previous calls what the benefits are of d2p for mobile products. Some of the claims about our technology have raised eyebrows from those that think about our technology from a traditional point of view. I can tell you with 100% certainty that everything that we have claimed about our benefits are coming out right on target. In fact, if anything, they are a few performance areas that are even better than my best expectations could have hoped for. The ability to process all the cell phone standards, use silicon not gas, provide high quality wave form fidelity simultaneously with small form factors and unparalleled efficiency has been what we told you we will deliver and exactly what d2p is delivering from the get go. Every one of those benefits is a direct fit with what OEMs and their customers are looking for and it is the reason why both ITT and our first commercial customer chose to do business with us.
In just a matter of days from now we will begin the process of updating our website by putting specific information that showcases the performance of our technology. We will show you how a single d2p RF chip processes all the relevant 2G to 4G standards providing both high fidelity RF wave forms while under those same exact operating conditions uses significantly less power for the complex cell phone wave forms. We will also describe the supporting circuitry so that you can understand the benefits of our technology in a complete d2p handset system. We will be setting up the information in a way that you will be able to understand our efficiency benefits against traditional devices. However, for some of the wave form fidelity results our solution is an entire system and really should not be compared apples-to-apples to individual traditional components that today only idealistically represent a piece of what a total system solution does.
Progress with our first mobile handset application is moving along exactly as we had hoped for. Our teams our actively working together and the relationship is very good. We have a target to deliver volume producing silicone to our first customer in early Q4 that they can then productize in volumes for their first applications which are in 3G handsets. Royalties from this relationship begins when they begin shipping chipsets that incorporate our technology to their customers which are ODMs and OEMs which produce handsets. They’re goal is to begin ramp their first products as quickly as possible once we deliver volume ready silicon. I believe both companies are highly motivated to move the technology into volume production as quickly as possible and we expect this to result in our first commercial royalty revenue shortly thereafter.
What is also encouraging about the silicon development work that we are doing is that it is undoubtedly a spring board that will help us close our next commercial accounts in 2008 as well. By rapidly moving towards volume silicon not only does this help us get to royalty revenues as quickly as possible with our existing accounts it also makes the decision of adopting our technology even easier with the other target accounts that we’re active with. We’re taking the risk out of adopting a new and very compelling technology. While I’m not quite at the point where I’m ready to draw the line in the sand and predict the special call before our next quarterly update which is only in the six, seven maybe eight week timeframe from now based on the current progress we’re making which is very good I am very confident that we will secure more commercial accounts in 2008 that when we aggregate the handset market share of these accounts we’ll account for a meaningful share of the total handset market space. I hope to be able to provide you more visibility on that progress in the near future.
So, in conclusion number one, we’re actively working with ITT and I believe they will be able to leverage off the excellent development work we’re doing in the commercial handset space. Secondly, we’re making great progress with our first commercial chipset customer and we’re working closely with them to get volume ready silicon early in Q4 and to work closely with them to achieve the fastest production ramp possible thereafter. Lastly, I believe we will secure additional commercial OEM accounts in 2008 that will represent a meaningful market share our development and delivery of volume ready silicon for our first commercial account being a significant influence on achieving that result.
Now, I’d like to open this call for your questions please.
Question-and-Answer Session
Operator
The question and answer session will be conducted electronically. (Operator Instructions) Our first question comes from Michael Donahue with Emerging Growth.
Michael Donahue – Emerging Growth Equities, Ltd.
Did you say that you expect royalty revenue in 4Q08? Is that still the timeframe?
Jeffrey L. Parker
Our goal Michael is getting them their silicon at the beginning of the quarter and what we’re going to do is work with them as closely as we can to ramp that thing as quickly as possible. Some of that ramp is a little bit out of our control but I don’t think it will be long after we getting them volume ready silicone that you’ll see that ramp occur.
Michael Donahue – Emerging Growth Equities, Ltd.
And is that with both customers?
Jeffrey L. Parker
ITT, you know I think about ITT their application is a little different even though they can leverage from the products their looking at off of what we’re doing in the commercial space I’ve always said that it’s about a 12 to 24 month timeframe from the time someone signs up until they start to be able to incorporate the technology into their products. So, I would expect in their case late this year, possibly into late first quarter early second quarter next year. Somewhere in that timeframe. It somewhat depends on exactly how they incorporate it.
Michael Donahue – Emerging Growth Equities, Ltd.
Okay. How many deals do you have now in the pipeline that you expect to close in 2008?
Jeffrey L. Parker
Well, I’m not going to share that only because Mike, it doesn’t really make a difference how many we’ve got in the pipeline but we’ve got a number that we’re working actively. I’m very confident that we will close multiple accounts this year and frankly more than the number of accounts we close I think what will be important is those market share those accounts represent and I believe the market share of those accounts will be meaningful, significant.
Michael Donahue – Emerging Growth Equities, Ltd.
Okay. So can we talk about these potential customers that are going to close in 08? Are they tier one chip makers that are going to supply product for tier one mobile phone customers?
Jeffrey L. Parker
I believe they will definitely be tier one or very high tier customers. They will have multiple handset OEMs or ODMs that they support. They, in my opinion, will support worldwide customers and all the ones that we’re really in serious dialog with have been in the business for a while. These aren’t recent startups or things like that.
Michael Donahue – Emerging Growth Equities, Ltd.
So, tier one mobile phone customers?
Jeffrey L. Parker
That’s who they support. But, they also support the other customers as well. They support a variety of customers.
Michael Donahue – Emerging Growth Equities, Ltd.
Okay. Are we going to be able to find out who your next customers are? Or, how is that going to work?
Jeffrey L. Parker
I would hope so, that would be nice. That would be one of our hopes but I can tell you we’ll have to wait until we get that signed. That’s always one of the last items on the negotiating checklist that gets handled. With ITT we were able to convince them that it was important to be able to share their name and with the first commercial customer we weren’t quite able to get that done although frankly for good reasons on their part. But, with the next one, I just don’t know Mike. I’d love to be able to share it, I hope to be able to share it but you know, we’ll know when we get there.
Michael Donahue – Emerging Growth Equities, Ltd.
They didn’t express the same type of concern about that as the first customer that that was a big issue?
Jeffrey L. Parker
From my view, that point is always one of the very last things that you talk about. It’s kind of the thing that nobody really talks about until – that’s not a negotiating point that we want to put in the critical path to getting all the other things negotiated. We tend to put that to the very end. Although for this conversation that may have moved up now but let’s hope not.
Operator
(Operator Instructions) We’ll move to Ira Nathan from Nathan Financial.
Ira Nathan – Nathan Financial
I was thinking really of the same questions as the previous gentlemen mainly will the new accounts be subject to the same confidentiality agreements as I’ll just say Company X?
Jeffrey L. Parker
Honestly, it’s really customer by customer, it just depends. Even when you look today at mature companies that have been providing products to many of the customers that we’re targeting, some of them frankly just have almost a ground rule they don’t want their name used, others frankly are much more laid back there in that area. I’ve seen announcements frankly in the last couple of months from large chipset providers who are providing chipsets to customers where they say, “We just got an order from a large OEM.” And, they won’t identify the name and I know why they won’t identify the name is because those particular OEMs don’t want their names used and there are other OEMs that frankly don’t care. They’re happy to have their name used and for us it just depends on who we end up getting next and what their attitude is towards that. But again, I honestly look at that as kind of the last – those tend to be the last thing on a negotiation that occur. Those are generally said just before signing.
Ira Nathan – Nathan Financial
One other question, I gather from what you have said that we really cannot expect any revenues throughout fiscal year 08?
Jeffrey L. Parker
I don’t believe you’ll see any engineering design services throughout 08 and I think that the royalty ramp with start either very late in the year or more likely at the beginning of the following. One other point Ira, I think what’s really important for ParkerVision this year isn’t does the royalty ramp start in the middle or late Q4 or early shortly thereafter, I think it’s going to be measure more by how many products is this technology’s chipset being designed into? What’s the pipeline that’s filling up? It’s the design wins, it’s what they call in the industry the sockets that are being won with this technology by the companies that are adopting it.
Ira Nathan – Nathan Financial
Alright. I just did not want myself or anybody else to say at the end of each quarter, “Gee there was no revenue.”
Jeffrey L. Parker
No, I appreciate it.
Ira Nathan – Nathan Financial
We shouldn’t expect it.
Jeffrey L. Parker
No, no Ira that’s a great question, I appreciate your asking it.
Operator
We’ll move to Daniel Lewis with GEM Partners.
Daniel Lewis – GEM Partners
A couple of questions, assuming you were to get some other customers on board at or around middle of the year, how quickly could those customers move into volume production of themselves given that you’ve already made a lot of efforts with chief development with your first commercial customer? What implication does that have for timeliness of royalty and production for those new prospective customers?
Jeffrey L. Parker
If the customers who come on next are targeting the same basic application meaning 2g, 3g, 4g handsets they will be able to use the designs of the silicon that we’re already working on, that’s one of the attributes of our relationship is we own those designs and so their ramp will be largely dependent on how aggressive and how quick they want to get into production. I mean there’s obviously a minimum timeframe it takes just to logistically get something designed in. Could it be done in less than 12 months? Probably, maybe 9. I don’t think you could do too much less than that. It depends on what interface they’re looking for and exactly how they want to fit it into their product line. But if the interface is relative straightforward and they want to fit it into their product line similarly to the way it’s currently being partitioned and designed, I would think they could do it in the 9 to 12 month timeframe, something like that.
Daniel Lewis – GEM Partners
And what do you mean by basic design? And then you referred to 2g, 3g or 4g. Did you mean not multi-modes?
Jeffrey L. Parker
No, they silicon we’re designing is capable of multi-mode, what I mean is if they’re not looking to – you know everybody has perhaps different ideas on how they want to partition things, where they want the silicon from one part of our system to reside versus others, so if they adopt the chipset in the way our silicon is being readied right now, which is very attractive and very compelling, at least we think so and so does our first customer, then I think they’ll be able to move very quickly into a volume application. If they decide they want to incorporate some of the silicon into come of their own chips or they want to change partitioning or things like that then that’ll take a little bit longer.
Daniel Lewis – GEM Partners
So it’s quite possible to use your existing design for higher end phones or how do we –
Jeffrey L. Parker
No, it is. It’s definitely possible to use for higher end phones. The multi-mode capability is inherent in the silicon we’re designing.
Daniel Lewis – GEM Partners
And is the first phones that your silicon going into is it low end phones or high end phones?
Jeffrey L. Parker
The first phones that the current silicon is going into are more the entry level 3g phones.
Daniel Lewis – GEM Partners
So the lower end phones?
Jeffrey L. Parker
That’s correct.
Daniel Lewis – GEM Partners
And what kind of lag period would you expect from the time that those initial shipments happen to when your same initial commercial customer starts to ship from the higher end phones?
Jeffrey L. Parker
They could evolve that very rapidly, Dan, because the output of our technology really can be switched. You know when you think about lower end versus higher end phones, let’s change it maybe to single mode, 3g type phones versus multi-mode to 2, 3 maybe even 4g phones, a lot of what you’re thinking about there is how do you switch the output of the d2p between half duplex type applications like 2g and 2.5g and full duplex applications like 3g or even 3.9g [hsupa], so a lot of that architecting is really beyond our chipset, it’s really into the front end that it attaches to between our chipset and the antenna and that can be done relatively quickly. I hesitate to give you a quarter, two quarters kind of timeframe, but it’s probably somewhere along the lines of something like that.
Daniel Lewis – GEM Partners
You reference your first commercial design win as – you’re predicting that it will be $5 and $10 million in the first year of shipment. Is $10 million the upper band of what is possible or is there, I mean depending on the ramp, could it be better than that and can you give us a band of what it might be in 24 months?
Jeffrey L. Parker
It can definitely be higher than that. That ramp was based on what we think is realistic in terms of production ramping and all the kind of logistics that you go through to get something into a production environment which deals with more than just the production of chips, it deals with reference designs, test setup. There’s a lot of things that go into getting these chipsets into products. If the production ramp goes better than expected it could definitely be higher than the $10 million. We hope and don’t think it’ll be lower than the $5 million. That’s why we gave that range. If you were to turn the clock forward beyond that first 12 months and things have kind of ramped and are running, I hesitate – I’d rather sit down with Cindy frankly and kind of go back through the numbers again and give it you just kind off the hip, but it could be significantly higher than the $10 million. And don’t forget they’re also incorporating the receiver technology into their products, the d2d receiver. That’s not anticipated to start until about six months after the [transa] technology so that in itself will also start to contribute 12 months beyond that, additional royalty revenues as well. There is a couple of different factors that play into that that can significantly increase the revenue beyond the first year.
Daniel Lewis – GEM Partners
I think investors feel that there’s no frame of reference as what it could be and they have no sense of whether it would be $15 million in year two or they just have no sense of it other than substantially more.
Jeffrey L. Parker
Well, let me do this. It’s a good question, it’s a good question. Let me work with Cindy for our next call to see if we can’t give you some more guidance on that. But honestly I don’t have that off the top of my head and I don’t want to shoot from the hip on that.
Operator
We’ll move to Jim Witt with Laidlaw.
Jim Witt – Laidlaw
Reference to Dan’s question, the first line where you’re talking about $5 to $10 million, your contract that you signed December 20th to this OEM, that OEM is not an OEM of handsets, is it?
Jeffrey L. Parker
No, they’re a chipset provider and they provide chipsets. That’s right.
Jim Witt – Laidlaw
So therefore the determinant in this equation is the handset OEM.
Jeffrey L. Parker
That’s right. The determinant is how their customers view the chipset that incorporate our technology. That’s exactly right.
Jim Witt – Laidlaw
And that handset OEM you implied is a fairly large OEM.
Jeffrey L. Parker
Well, they have range, they have a whole range of customers from large handset OEMs down to some of the more emerging market OEMs.
Jim Witt – Laidlaw
Then I’d have to assume that the first OEM for the chips obviously they’d probably be in competition with other people in that space.
Jeffrey L. Parker
Absolutely.
Jim Witt – Laidlaw
Therefore it would make sense for them to keep their name private.
Jeffrey L. Parker
That’s correct. There’s a good strategic reason why they’ve asked us not to share their name.
Jim Witt – Laidlaw
And that would also assume that after a period of time the other people in that space would wake up to what’s going on and would want to sign a deal with you obviously to get in business.
Jeffrey L. Parker
We are trying to utilize that to the best of our ability to get other people to join the –
Jim Witt – Laidlaw
So that to me would be a foregone conclusion that it’s incumbent upon them to sign up to get part of that pie.
Jeffrey L. Parker
And that’s why I think as move rapidly toward volume silicon this year it will continue to put incentives toward other companies to want to sign up and start to use the technology as well.
Jim Witt – Laidlaw
I have two questions out of Dan’s particular thing, is it quite possible that as the OEM handset producers going along, that he likes what he sees and starts considering other parallel lines in his equation?
Jeffrey L. Parker
Most of the handset OEMs today, the trend is toward multiple suppliers so absolutely to the extent that they like what they see they would want to source it from more than one supply.
Jim Witt – Laidlaw
Yeah but I’m talking about now also the OEM, the handset OEM. The handset guy, if he likes your technology, isn’t it quite possible that he would consider putting it into some other parallel lines before November or October?
Jeffrey L. Parker
I would say the handset OEMs who are interested in this technology are definitely interested in more applications than just the 3g application for this technology. There is no question they’re interested in other modes of operation for this technology, which means other product lines.
Jim Witt – Laidlaw
And along with that rationale, when you’re talking about signing up people are we going to be signing up any more handset OEM people?
Jeffrey L. Parker
Our focus, I truly believe is on the chipset providers because if you look at the handset OEMs today, they’ve really become more influencers than they have become chipset developers internally. Most, if not all of the handset OEMs who had their own internal chipset development teams have pretty much either pushed those teams out to other companies, closed those teams down, some of them have taken divisions and spun them off to separate public companies or private companies but they are pretty much universally handset OEMs are going the direction of being integrators of chipsets rather than developers of chipsets.
Jim Witt – Laidlaw
But the chipsets still move the donkey here. It’s the handset OEMs that move the donkey, right?
Jeffrey L. Parker
Well the handset OEM definitely is a powerful influencer and we continue to be in dialog and keep handset OEMs updated on our progress and what we’re doing because they definitely do influence the chipset providers in the direction that they’d like to see them move and they’ve been very helpful for ParkerVision and I think will continue to be.
Jim Witt – Laidlaw
So probably my final hypothetical situation is since we’re in March and if we got to July and they had a good ongoing situation with the OEM handset people, it’s quite possible that we would be talking about other lines.
Jeffrey L. Parker
I think, Jim, as we show people that we’re able to deliver the volume producible silicon that that will stimulate them to look at additional lines. Right now I think they’re rightfully staying focusing on let’s get the first thing done that has value and merit and we could get our arms around quickly and make it to the market as quickly as possible and not to expand until people that see that we’re clearly on that path and I think that’s the right approach. Eating the sandwich one bite at a time instead of trying to swallow the whole thing and not getting it done in a timely fashion.
Jim Witt – Laidlaw
I guess what we all, all of us –
Jeffrey L. Parker
But I want to point out what we develop is as I said earlier in another question is inherently multi-mode already and this is what you’ll see on the website. The little digital engine that runs this thing will deliver any of the cell phone wave forms, so it really becomes an interface to the data cam processor concern and it becomes an interface to the antenna concern. But between those two which is our chipset is inherently capable of doing any of those cell phone standards. That’s why I say as we deliver that volume producible silicon they’ll automatically see, ah, there’s other applications we can do with this, they’re hitting stride and delivering what they said they would and I believe that will automatically stimulate additional applications.
Jim Witt – Laidlaw
I think listening to Dan and other people and listening to the critics we use as a financial sanity here that this is going to open up the door to hopefully we’re not nuts hundreds of millions of potential units.
Jeffrey L. Parker
That’s right. I think that –
Jim Witt – Laidlaw
And that’s what the game is I guess but there are speculators there.
Jeffrey L. Parker
Well that’s because you’ve developed a platform technology, not a technology that is just very specific to one specific standard.
Jim Witt – Laidlaw
So this is what we’re hoping for which –
Jeffrey L. Parker
Your hope is well founded.
Operator
Well move next to Greg [Luen] with LG Partners.
Greg Luen – LG Partners
A straightforward question, you have stated that you will have revenues from ITT in 2009, you have stated that you will have revenues from your first chipset manufacturer in 2009, you have stated that you expect to have additional meaningful OEM signings in 2008 which will have a faster ramp therefore leading to revenues in 2009. You or you and your CFO have consulted with the analyst from Emerging Growth in the past. He is using estimates of earnings that are well over $1.00, I do not know exactly what they are, could you please comment on the logic, the likelihood, the believability, anything of those estimates.
Cynthia Poehlman
First of all I think it’s important to note that the information that Michael Donahue at Emerging Growth obtains from us is the same information that all of you obtain from us. We don’t give direct earnings guidance to the analysts. Those models are Emerging Growth’s models, they’re not ParkerVision’s models. So they have access to the same information that you guys have access to in terms of being able to build and obviously difficult to build a model for this company at this stage when we don’t have commercial terms of our agreements are not publicly disclosed. I know Jeff at the Roth Conference tried to give a little bit of generic guidance to kind of help provide some information that would allow any of you to go out and build a revenue model from that, but I don’t know how to respond to that beyond just to say that those guys have access to the same information that you do.
Greg Luen – LG Partners
So there would be no judgment on whether those numbers have any basis in reality that you could offer?
Cynthia Poehlman
We actually have a corporate policy not to provide commentary on analyst reports.
Greg Luen – LG Partners
How would you begin to share with us any information that would determine the worth of your company? Since that’s obviously a question that the market is addressing right now.
Jeffrey L. Parker
I think that turns back to the Roth Conference and some of the information we started to provide which is to give a range of what we believe the royalty revenue earning opportunity for the targeted applications we’re going after can be and to try to distill that down into a market share and how that market share can relate to revenue and then ultimately earnings for the company. So what I tried to do at the Roth Conference was to explain, look we don’t want to give our royalty formula out because frankly that disadvantages us and we’re negotiating with OEMS. I don’t think that the shareholder base wants us to disadvantage ourself. On the flip side people want to get a range of what’s the possibility. So we took the lower end handset applications and said, look here’s the value we bring, we believe that OEMs will not share with us perhaps half of the value we bring and we disclosed what that was and maybe they want us to take only 10% but we believe we can do better than that, we kind of gave put a range around that and then we went to the higher end and we said if there’s a fully featured phone that looks like this other end and then we took a blend of those and said if it was weighted equal between low end and fully featured phones here is the range of what this market space the way it’s currently predicted to grow over the next couple of years can look to ParkerVision. So then it becomes an issue of what kind of market share do you think we can achieve. Are we a 2% market share company, a 5% -
Greg Luen – LG Partners
Here’s a question for you, Jeff, I don’t care what I think, what do you think you can achieve?
Jeffrey L. Parker
I said at the conference and I’m comfortable saying to you guys now that if in the next – when we get to our first full year of run rate I believe we’ll be somewhere beyond the high single digit market share and depending upon which accounts we get signed up this year somewhere in the probably low double digit market share which will put this company into profitability and potentially into a very significant valuation based on those metrics.
Greg Luen – LG Partners
And what is the first full year of your run rate?
Jeffrey L. Parker
Starting in the beginning of next year and running through the end of that year.
Greg Luen – LG Partners
So 2009 you expect your market share –
Jeffrey L. Parker
I think by the end of the year the run rate, what I said, will be in the high single digits to the low double digits based on the customers we have.
Greg Luen – LG Partners
So for the year it would be in the mid to high single digits?
Jeffrey L. Parker
Yeah, probably by the time it gets blended I think that’s probably reasonable.
Greg Luen – LG Partners
And you’re claming the market to be a subset of the market so you’re dealing with –
Jeffrey L. Parker
I’m dealing with 3 and 4g handsets, that’s right.
Greg Luen – LG Partners
So you’re dealing with 600 million phones, roughly?
Jeffrey L. Parker
That’s right and there’s different forecasts out there for that grade, there are more aggressive forecasts than that and I don’t think I’ve seen anything that’s lower than that.
Operator
We’ll take our last question from Steve Springer from Target Capital Management.
Steve Springer - Target Capital Management
Couple of comments and then I’d like to ask a question with a follow up perhaps. First of all I’d like to say I was glad to see, Jeff, that you bought stock on this latest deal.
Jeffrey L. Parker
Well, thank you. I was happy to do it and I believe in my heart that it will be a great investment.
Steve Springer - Target Capital Management
Well it certainly sends a signal to the market. The second thing is I think this updating the website is a very good move. I’m glad to see that, it’ll give more information, help to continue to debunk the vitriolic criticisms about the company’s technology. So I think that’s a good thing.
Jeffrey L. Parker
Well, thank you. And frankly we’ve got people here who have been working diligently to do that and we just want to make sure when we get it up there that it’s crisp and clear and that you guys get a lot of good guidance from it.
Steve Springer - Target Capital Management
My question relates to again a follow up for previous questions that have been asked on these calls and were asked previously on this call and that is this, I assume that the reason that companies are negotiating with you to adopt your technology is because they believe that your technology is going to significantly improve their products and represents a substantial step forward in gaining market share.
Jeffrey L. Parker
That’s right, that’s the only reason people engage us in the dialog.
Steve Springer - Target Capital Management
So that’s the premise that you do not sign an exclusive supply agreement with these companies you’re negotiating with, do you?
Jeffrey L. Parker
We do not, that’s correct. We want to leave the market space open for us to gain as wide adoption as possible.
Steve Springer - Target Capital Management
Right, so you get someone like ITT and you’re negotiating with these others and you’re indicating that you’re going to sign these contracts, these supply agreements with a couple of others this year, perhaps earlier in the year rather than later, so presumably these companies are not stupid. So they see that you’ve got this technology, they say it’s a good technology, they want to incorporate it in their products and they see that you have not signed a noncompete agreement or an exclusive supply agreement with them. So they must assume that you are negotiating with other parties as well. So let’s assume that the other parties are not stupid either, so the other parties that are looking at the same technology that the people that you’re negotiating with see this technology and presumably they’re interested too. This is a long winded way of saying that the people that you’re talking to recognize that other people are going to validate your technology in the same way.
Jeffrey L. Parker
That’s right.
Steve Springer - Target Capital Management
So let me ask you this question, Jeff, this is a long winded way of getting to an actual question, who do they think they’re kidding when they say we are going to sign a supply agreement with you but we don’t want you to disclose who we are? First of all people in this business, in the cell phone business, everybody knows what everybody else is doing, they know that you have this technology, they know you’re negotiating with all these other people but they refuse to allow you to use their name, okay, but all I’m telling you is that this is increasing your cost of capital. This sale of stock at $7.50 would not be taking place at $7.50 if there were greater transparency about who you have contracts with and what they really mean. And so what I’m saying is, is you’re signing contracts with people who are using, for whatever reason, they refuse to allow you to use their name or hint at their name, which you guys don’t do, and it’s raising your cost of capital, costing your shareholders money and then the whole thing is in a sense illogical.
Jeffrey L. Parker
Let me comment. There are good strategic reasons for this customer’s request and I believe the day will come when we’ll be able to explain that and you will go, aha, that makes complete sense. I mean, it does make complete sense, I just can’t share it with you at this time. As far as it’s cost of capital, look, we would talk with shareholders a year ago a lot of what we hear is do whatever you have to get your foot in the handset space, it’s so vast, it’s so valuable for your company, do whatever it takes, even enter into agreements just to give it to someone to get started, which we haven’t done. And I think that comment comes from people realizing the handset space is a very challenging space to get invited into. You have to have something that isn’t of incremental benefit but is significantly better than what’s being used and some of the hurdles to adoption deal with the chicken and egg of how you convince someone you can produce something in very high volumes when it hasn’t been produced yet in high volumes and it takes a very special culture that’s willing to take that step forward and work with a company like us to do that. There have been plenty of people who’ve tried advanced architectures that frankly have not been able to make it through all of the landmines between concept and high volume production and this particular company is wiling to not just make an adoption but to do it in the rate that will ramp pretty quickly to millions of units per month. So when I look at the value of that type of customer and they have a good strategic reason for not wanting us to discuss who they are right now I am perfectly happy to accommodate that and frankly in some kind of perverse weird way I think it’s actually helping us with the discussions with our customers because if you think other companies are a little worried about who else is going to show up with this technology in handsets in the not too distant future I think they are and I think that’s going to result in the next account. So yeah is it ideal? No, but have been doing business now for 30 years and I’ve still never the seen the absolute ideal any business situation, it’s always a give and take and it’s working with customers in a way that you can get a win for yourself and a win for them as well.
Steve Springer - Target Capital Management
Jeff, just one last thing, I agree with that but I’ve been an investor in defense intelligence companies and defense companies and people that are dealing with the CIA and DARPA and the defense intelligence agency, blah, blah, blah and they’re not permitted to disclose their contracts either. But they find a way to tell you who they’re doing business with in a general sense so that you can figure it out for yourself and that has to do with can do lawyers and can’t do lawyers.
Jeffrey L. Parker
Well in this case it honestly just has to do with the customer’s request and I wish I could tell you more right now but will be I think the telsale when people can get their arms around actual handsets that incorporate the technology in the not too distant future. They’ll then be able to see exactly where this came from and exactly who’s adopted it and hopefully that’s when I’ll also be able to talk more freely about why the request was what it was and I think you’ll understand at that point why we honored it.
Operator
That does conclude our question-and-answer session at this time. I’ll turn the call back over to our speakers for any final or additional comments.
Jeffrey L. Parker
Thank for your attendance for today’s call. I know these are challenging times for reasons that are beyond any of our control but we do appreciate greatly your support and as I said at the beginning of the call I am very bullish on how the company is positioned to execute this year and what that will lead to in ramping revenue and real earnings per share and we look forward to the next call update with you. Have a good evening. Thanks.
Operator
That does conclude our conference call for today. We do thank you for your participation.
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