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  • UniPixel Notes 28 comments
    Jan 27, 2013 4:45 PM | about stocks: UNXL, SYNA

    A few random notes on UniPixel (NASDAQ:UNXL):

    1) For those of you who don't know, Synaptics (NASDAQ:SYNA) is a leading touch controller and touch module company. They've produced roughly a half-billion in revenues over the last twelve months, and have a market capitalization of $1.2bn. As I noted in my original article, touch controller suppliers are the linchpin in the touch market. It's crucial to pay attention to what they're saying and what they're doing. With that said, here are some noteworthy comments from Synaptics' CEO, Rick Bergman, lifted from the company's conference call last week on 1/24:

    I think it's important to point out that the market expectations for touchscreen enabled notebooks have dramatically shifted upwards. IDT's projections for notebooks with touch is now 25% of the unit shipments by 2014.

    The fact is that Windows 8 demand touch, and more specifically touchscreens within an exploding array of new form factors including ultrabooks, hybrids convertibles, sliders and detachables.

    Synaptics has an excellent product line, our design pipeline is building and we have established a firm pathway towards providing the right high performance, cost optimized solutions to drive the adoption of large touchscreens and notebooks in even larger surface areas. In looking more specifically at the tablet, or large touchscreen market, tablets grew past 100 million units last year, and combined with large touchscreens and notebooks is expected to see 200 million units in 2013, and close to 300 million units the following year.

    ….In addition, we expect Windows 8 notebook touchscreens powered by Synaptics to begin shipping in key OEM products within the next few months. To wrap up my remarks, two underlying factors remain fundamental to our industry, the first is that increasing end-user experiences are raising the bar in human interface solutions, and the second is the demand for lower power thinness and quality of a touch experience is unrelenting. (bold and italic highlights are mine)

    I will leave it up to you to connect these dots to UniPixel in the way you see fit.

    2) Some UNXL investors are equating early capacity figures, supplied by management, with revenue production. We should all remember that there's a long period of ramp-up and qualification before UNXL can start real production runs. The company has mentioned pre-pilot runs, pilot runs, pre-production runs, and finally production runs. Even though they'll be building up capacity in the second quarter, they aren't going to be selling much UniBoss until the third quarter - when production is fully qualified. I'm assuming close to zero UniBoss revenue in 2Q.

    3) Mike Malouf at Craig Hallum had an interesting note out following CES. He walked through the UniBoss manufacturing steps individually and answered a number of FAQs. I thought the most important comments, however, related to what he was seeing at CES more generally. He talked about the fact that Intel (NASDAQ:INTC) is actively pushing customers and OEMs to embrace touch (Microsoft (NASDAQ:MSFT) too, but that's well known). Intel has gone so far as to require touch compatibility for any manufacturer integrating its new Haswell microprocessor.

    I don't follow the processor space closely, but I believe that Intel has struggled to make inroads in the mobile processor market. As a result, they are probably doing everything in their power to bring some growth to PCs and notebook/smartbooks. One could argue that part of the reason desktops and notebooks have ceded share to tablets is because they have lacked inexpensive touch functionality. Thus, finding an inexpensive touch solution for large format displays would seem to be fairly important to someone like Intel (and Microsoft).

    These giant companies likely see Rick Bergman's "exploding array of new form factors" as a great opportunity to sell their wares. Bringing UniBoss under the "Wintel" umbrella in some sort of partnership might win them a greater slice of this emerging opportunity. Prodding their OEM and supply chain partners into a UniBoss solution could make a difference in an intensely competitive market.

    4) The short piece put out on Friday hardly merits discussion. Suffice it to say that anyone who is convinced by the "analysis" and "due-diligence" that went into that paper deserves to be short UNXL. That's true for the Ben Wiley and Xuhua pieces as well. We should all hope that these shorts are using rallies to increase the size of their positions.

    Disclosure: I am long UNXL.

    Stocks: UNXL, SYNA
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Comments (28)
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  • Brian Coleman
    , contributor
    Comments (62) | Send Message
     
    Thanks Scott. Here is a recap of this issue as it came up on the MSFT call.

     

    <<Microsoft's latest quarterly results are a mixed bag; record revenues, a slight fall in profits and Windows going full steam ahead – but CFO Peter Klein was taking a cautious tone at Thursday's analyst call...

     

    The CFO acknowledged that...Redmond also faces a hardware issue, with not enough touch screen devices running Windows 8 on sale.

     

    Klein was diplomatic enough not to blame OEM manufacturers directly for failing to build enough low-cost touch devices for consumers – he left that to Chris Suh, general manager of Investor Relations. "The consumer segment was most impacted," Suh said. "Demand exceeded supply for the limited amount of touch-screen devices available.">>
    28 Jan 2013, 12:20 PM Reply Like
  • Green River Asset
    , contributor
    Comments (260) | Send Message
     
    Author’s reply » thk u Brian.
    28 Jan 2013, 04:40 PM Reply Like
  • Chris Hofmann
    , contributor
    Comments (756) | Send Message
     
    Nice synopsis Scott. I listened in to the Synaptics call as well and thought their many of the numbers they listed (including some of the ones you mentioned above) seemed very conservative. For example, they expect 200 million large screen touch devices in 2013, yet many firms believe there will be over 200 million devices just in tablets sold in 2013.

     

    They also spoke very highly of in-cell, despite its major yield issues, especially in large screen devices. I had hoped they would mention alternative technologies, but they stuck to their guns on in-cell.
    28 Jan 2013, 03:26 PM Reply Like
  • Green River Asset
    , contributor
    Comments (260) | Send Message
     
    Author’s reply » Agreed, Chris. SYNA is probably on the conservative side. I just think it's important to call out the tone and direction of their commentary.

     

    In-cell is much more important to SYNA in the here and now than non-ITO technologies so it makes sense that they'd focus there. They've made it known that they are welll-positioned for in-cell and they need to let people know that they made a smart investment in developing the technology.

     

    I'm guessing that they'll be calling out nickel-plated copper mesh grids on their quarterly calls by year end......
    28 Jan 2013, 04:40 PM Reply Like
  • Couceironeto
    , contributor
    Comments (33) | Send Message
     
    On the 26th it will be released the earnings report and on the 27th a call will take place, is that it?
    29 Jan 2013, 04:33 AM Reply Like
  • kcchris
    , contributor
    Comments (57) | Send Message
     
    Nice comments,

     

    UNXL is in a great place right now. They are the lowest price solution in a market that is looking for a lower price. If the company can expand capacity quickly sales should ramp with capacity.

     

    There are quite a few rumors about companies that are aligning with UNXL. You are right concerning the test runs that will be done prior to production. However, I expect the first sales of UNXL to happen in April. The initial deliveries will be small because only one plating line will be up and running.

     

    We have little data currently on potential partners. Uniboss will make it's entry into the market in the 2nd qtr. If the production of Uniboss is smooth with no major yield issues adoption will be fast in the 2nd half of the year. One thing appears clear. There are several large companies that are aligning with UNXL. Production of Uniboss is the issue. Once production begins it will become an easy sell.

     

    Not sure the speed of uptake. It remains clear that demand for touch screens far outweighs demand. If the industry needs 50 million touch screens to fill their needs they will be knocking down UNXL's door.
    29 Jan 2013, 01:10 PM Reply Like
  • Green River Asset
    , contributor
    Comments (260) | Send Message
     
    Author’s reply » Chris, I think the company is planning for pilot runs through most of May. June could see some sales if things go smoothly. I'm counting on July for production beginning in earnest.
    29 Jan 2013, 01:43 PM Reply Like
  • netmore
    , contributor
    Comments (37) | Send Message
     
    Thanks Scott. I have position of unipixel but I also have some questions:
    1. about tmos:
    On February 2, 2009, Samsung Electronics and UniPixel announced the signing of a Joint Development Agreement to collaborate on advancing the development of UniPixel’s TMOS (Time Multiplexed Optical Shutter) display technology. TMOS display technology can offer a potential savings of 60% of the bill of materials in manufacturing LCDs, power consumption can be lowered and brightness can be improved.

     

    In May 2010, unipixel sold all of TMOS related patents to Rambus, Inc. In connection with this sale, we entered into an Sale of TMOS Technology agreement with Rambus whereby we may choose to provide engineering support services to Rambus in furtherance of its development of the TMOS technology.

     

    question: 1) how much is tmos sold? 2).uniboss could be another tmos?

     

    2. I'd like to study the detail of emboss process , could you pls give some links about it?

     

    thank you.
    3 Feb 2013, 01:50 PM Reply Like
  • Green River Asset
    , contributor
    Comments (260) | Send Message
     
    Author’s reply » Netmore,

     

    TMOS isn't sold as far as I know. Rambus may have integrated the technology into other products, but I don't know that for a fact. The story with TMOS is that UNXL made a strategic error and allowed themselves to become highly dependent on Samsung to commercialize the product. Samsung, it turns out, didn't really want to commercialize TMOS, they just wanted to understand the technology. Samsung supplied UNXL with faulty backplanes so that UNXL couldn't make the technology work properly. I've gotten this account from several different sources so I'm comfortable with it.

     

    The most important point I take away from both TMOS and FPR is that the company made certain strategic errors that they are unlikely to make again. As a relatively new investor in UNXL you benefit from these errors as they have forced management and the board of UNXL to approach the UniBoss opportunity more carefully.

     

    UniBoss is unlikely to be another TMOS. UniPixel has a volume commitment agreement with a large PC OEM. They are also receiving upfront cash payments from that OEM to develop the manufacturing infrastructure. The structure of this deal speaks to the promise this large PC OEM sees in UniBoss. There are a few other partnerships that will likely be struck in the coming months; this will underline the opportunity in front of UniPixel.

     

    UniBoss doesn't involve an embossing process. It actually uses printing. They don't talk about it in their presentations in any detail. There is a bunch of IP around the process. TMOS did use an embossing process.

     

    This is the most recent presentation of which I'm aware....http://1.usa.gov/WOznbX

     

    Hope this helps.
    4 Feb 2013, 08:57 AM Reply Like
  • Chris Hofmann
    , contributor
    Comments (756) | Send Message
     
    GRA,

     

    A few comments:

     

    I do have a more updated presentation as of Jan 4th. Shoot me your email (do I have it already?) and I'll forward it to you.

     

    Also, and please correct me if I'm wrong, but I was under the impression that UniBoss does utilize embossing in some way, shape, or form, and that this was part of the reason it was called Uni"Boss" (as in em"Boss"ing, not just because its the boss and sets the standard). I know that it also uses printing and metal baths to "grow" the copper on the printed lines, but I was under the impression that something about the embossing process is what eliminated the need for photo-lith or laser abrasion.

     

    Again, I could be wrong, and thanks for the great comments on the TMOS situation.
    4 Feb 2013, 09:28 AM Reply Like
  • netmore
    , contributor
    Comments (37) | Send Message
     
    Hi GRA,
    Thank you for the information. Seems TMOS is sold and the statement could be found at the top of page 10 of unipixel's 2011 annual report, which is issued on Mar. 8, 2012. However, don’t know how much the deal is.
    4 Feb 2013, 09:11 PM Reply Like
  • netmore
    , contributor
    Comments (37) | Send Message
     
    Hi Chris,
    Would you pls send me the presentation? My email: netmore@gmail.com. thanks.
    4 Feb 2013, 09:11 PM Reply Like
  • Chris Hofmann
    , contributor
    Comments (756) | Send Message
     
    forwarded.
    4 Feb 2013, 09:41 PM Reply Like
  • Green River Asset
    , contributor
    Comments (260) | Send Message
     
    Author’s reply » Hi Chris, pls do send me that presentation.

     

    I don't think that unxl discourages people from believing they are embossing the film. I think that Carclo/CIT believe that UniBoss uses and embossing process to lay the seed ink - this demonstrates the lack of merit in their claim. UniPixel uses another technology to deposit/print the ink. We can talk through it.
    4 Feb 2013, 10:39 AM Reply Like
  • netmore
    , contributor
    Comments (37) | Send Message
     
    Hi GRA/Chris,
    Thanks Chris for the nice ppt. May I have two questions:
    1. At page 13,
    Milestone achievements, July 24, 2012,
    Made first shipments of Diamond Guard product from production lines

     

    But I did not see any revenue for this production?

     

    2. At page 28, U17 has been ready in Q4 2012 with a capability of 150,000 sq.ft / day. I remember Scott has visited Unipixel recently, so did you visit this production line?

     

    thanks a lot.
    5 Feb 2013, 09:13 AM Reply Like
  • Green River Asset
    , contributor
    Comments (260) | Send Message
     
    Author’s reply » Hi Netmore,
    1) Don't expect much Diamond Guard until UniBoss ramps. Just because they are making shipments doesn't mean they are recording revenue. I'm guessing these shipments are samples, pre-pilot, and pilot runs. The company has made some changes to DG - adding thickness, and combining it with polycarbonate to increase the stiffness (when it's replacing glass).

     

    2) I've seen the printing line a couple times. They've made some recent improvements to it. I am still in Texas and just visited the new plating line. It is an impressive facility and they are ramping it right now. I may put up more on this later. Thx
    5 Feb 2013, 10:45 AM Reply Like
  • netmore
    , contributor
    Comments (37) | Send Message
     
    Glad to know that, thank you Scott.
    5 Feb 2013, 10:49 AM Reply Like
  • kcchris
    , contributor
    Comments (57) | Send Message
     
    Thank you Scott, The manufacturing lines are the biggest question mark. it is good to know you visited the line. Did you actually see it up and running?

     

    Were the attendees yesterday current stockholders or potential stockholder?

     

    I think everyone is waiting for a manufacturing announcement as well as the 2nd partner. A new partner will likely validate the manufacturing process.
    5 Feb 2013, 11:28 AM Reply Like
  • Green River Asset
    , contributor
    Comments (260) | Send Message
     
    Author’s reply » Chris, saw the end of a run on the plating line. They are still testing it to get the chemistry and timing right so that they have a very stable production process. They're spending almost as much on testing and quality assurance as they are on the equipment. They have some pretty high tech. testing and monitoring equipment. My opinion is that they have the margin structure and the motivation to make sure that this works from a manufacturing standpoint. They know that there's plenty of doubt out there and they're determined to prove that they can do this.

     

    Attendees were a mix of current and potential.
    6 Feb 2013, 11:14 AM Reply Like
  • netmore
    , contributor
    Comments (37) | Send Message
     
    Hi Scott,
    Thank you very much for the information.
    My feeling is not very positive from your report. Seems there is not a schedule when the test will finish and nobody knows if other issues may emerge after that. What could we get from the annual report on Feb.26? Can Unipixel fulfill the production plan with the unnamed PC maker?
    6 Feb 2013, 02:00 PM Reply Like
  • Green River Asset
    , contributor
    Comments (260) | Send Message
     
    Author’s reply » Netmore,
    There is a schedule. Management has said that they will be producing at 65k/mo rate by the end of April I believe. I think they'll get there quicker than that. But that's not revenue producing production. They've got to pass a lot of tests for their customer and run pre-pilot, pilot, and pre-production runs. They say they'll get to full volume production in June/July. I'm guessing we'll see revenues start to build in 3Q. The second quarter won't have much.

     

    There's a lot we don't know, and there's a lot that management doesn't know. It's the nature of the beast. My feeling is that unxl and its partners will be able to produce quality product and meet the timetables unxl management has laid out. There will be hiccups, but I haven't found a convincing argument for why production will not work. Fuji and Atmel have quicker and larger ramp plans and they seem to be progressing quite well. UNXL is working with partners just as large as these companies, and the UniBoss process is more straightforward, so I don't see why they cannot achieve similar results.
    6 Feb 2013, 04:26 PM Reply Like
  • netmore
    , contributor
    Comments (37) | Send Message
     
    Thank you Scott!
    6 Feb 2013, 07:25 PM Reply Like
  • Brian Coleman
    , contributor
    Comments (62) | Send Message
     
    Scott-

     

    How did this investor meeting come together? I would love to have attended. Is this something the company does regularly?

     

    Brian
    6 Feb 2013, 02:59 PM Reply Like
  • Green River Asset
    , contributor
    Comments (260) | Send Message
     
    Author’s reply » Brian, it was a Ladenburg trip.
    6 Feb 2013, 04:27 PM Reply Like
  • Greenfire87
    , contributor
    Comments (630) | Send Message
     
    GRA,
    Quality, clear & competent work!
    11 Apr 2013, 06:32 PM Reply Like
  • Green River Asset
    , contributor
    Comments (260) | Send Message
     
    Author’s reply » Thk U Greenfire...appreciate the feedback.
    11 Apr 2013, 06:51 PM Reply Like
  • Greenfire87
    , contributor
    Comments (630) | Send Message
     
    Your welcome. I feel like I should be paying you & Chris both. Homage, not cash! lol
    12 Apr 2013, 10:19 AM Reply Like
  • Chris Hofmann
    , contributor
    Comments (756) | Send Message
     
    I accept cash, precious metals, and shares of UNXL.

     

    I do not accept bitcoins.
    12 Apr 2013, 10:41 AM Reply Like
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