On Feb. 15, 2011, Microvision announced new business strategy by shifting product development to alliance partners or ODMs. Instead, it will focus on the advanced development for future pico projector. It also predicted the availability of PEK sampling with DGL inside in the coming Q3. Through the above arrangements, it is looking to lower the cash used in its operations in 2011 by approximately 40 percent.
As an investor, here is a list of events we should be closely watching:
(1) The Q3 availability of PEK sampling with DGL inside coincides with what I have in mind as the 5000-hour reliability test which probably started in either Dec. 2010 or Jan. 2011 when Soraa announced its latest advancement of DGL technology. We want to make sure it's on track.
(2) The slim-down of the company is either prepared for acquisition target or staying in a dormant mode. Since I don't see any "Shareholder rights plan" or "poison pill" in place, so "buy-out" is obviously an option although DGL's era is just less than a year away. As far as "dormant mode", as long as MVIS can receive another round of financing or support from equity partner. It will be staying in that mode for a while until the cloud is cleared.
(3) The new burn rate per quarter is about 9 millions. Considering MVIS only has 21 millions before last quarter, after the deducting the 15 millions which just announced, only 6 millions cash left. Therefore, Microvision will need another round of financing in the coming weeks.
For an individual investor, what should we do at this point? Here are some suggestions:
(1) First of all, do you think Microvision will go bankruptcy? Personally, I don't think so. In worst case, it could be a buy-out target with $3~$5/shr at a minimum. If more than one bidders come into play, it could go up to $10/shr.
(2) If you have any other better short-term investment target, you may want to consider to exit now as PPS will be pressured until another catalyst such as the official Q2 release of NionCom's high end media player with PicoP inside.
(3) If you still believe MVIS can survive in the long run. Buy more when the dust settled down. The best entry point is probably when the daily trading volume falls into the range of 200K~500K. This is what I am planning to do.
