ParkerVision 2010Q1 Conf erence Call
May 10, 2010
Bob (Robert) Cohen with Western International
Phil Anderson with Pinnacle Fund
Moderator: Please stand by. We're about to begin. Good day, everyone, and welcome to the ParkerVision Incorporated first quarter 2010 conference call. Today's conference is being recorded, and all listeners are in a listen only mode. Following the presentation, we will open up the conference call for questions and answers. The company has requested that questions and answers be limited to one question and one followup per caller.
It is now time for opening remarks and introductions. I would like to turn the conference over to Ron Stabiner with The Wall Street Group. Please go ahead, sir.
Ron Stabiner: Thank you, Jay. Good afternoon, and thank you for joining us. Before we get started, I would like to remain listeners that this conference call will contain 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 our 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 products, maintaining our patent protection, and the availability of capital, among others. Given these uncertainties and other factors for our business, listeners are cautioned not to place undue reliance on any forward looking statement contained within this conference call. Additional materials concerning these and other risk factors can be found in our filings with the Securities and Exchange Commission.
On today's call, we will hear first from Cindy Poehlman, chief financial officer of ParkerVision, followed by Jeff Parker, chief executive officer, who will provide an update on the business of the company.
With that, I will now turn the call over to Cindy Poehlman. Please go ahead, Cindy.
Cindy Poehlman: Thanks, Ron, and thank you to those of you joining us for ParkerVision's first quarter 2010 conference call. We reported today a $3.95 million, or 10 cent per share, net loss for the first quarter of 2010. This compares to a $5.14 million, or 18 cent per share, net loss for the same quarter last year.
Operating expenses for the first quarter were approximately $4 million, or $1.2 million less than the first quarter of 2009. This represents a 23 percent decrease in year over year operating expenses.
The $1.2 million decrease in operating expenses can be attributed to an approximate $540,000 decrease in cash expenses and an additional $650,000 reduction in equity based compensation expense. The reduced equity based compensation expense is the result of completion of vesting on certain prior year awards as well as a reduction in the overall number and magnitude of new equity based awards granted and a lower overall share price.
The remaining operating expense reductions of just over half a million for the quarter were cash expenses, meaning that we saw a correlating reduction in our cash usage during the first quarter of 2010 when compared to 2009. Although some of these expense savings were related to timing, the bulk of them were a direct result of expense reduction measures taken at the end of 2009, particularly in research and development. We anticipate that we will continue to see these cash savings in future quarters as well.
ParkerVision used approximately $2.8 million in cash, which included $200,000 in additional investments in our intellectual property assets during the first quarter of 2010. We ended the first quarter with approximately $10.7 million in cash, which we believe will be sufficient to fund our continuing operating expenses through the remainder of the year.
We did recognize $64,000 of engineering services revenue this past quarter, which represented the completion of services provided to ITT Corporation under the CERDEC contract that was awarded last year. As you will hear from Jeff Parker in just a moment, we remain focused on near term revenue generation from our 3G product offerings.
I'm happy to respond to any questions you may have at the end of the call today, but for now I will turn things over to Mr. Parker for a general business update. Jeff?
Jeff Parker: Thank you, Cindy. And good afternoon, and thank you for joining us for our first quarter update. I'd like to take this opportunity to review the progress that we've made since our last call. And first, I'd like to reiterate that we've reduced our operating expenses nearly 25 percent year over year, but we've been continuing to rapidly advance our first d2p product toward mobile handset commercialization. As I said in our last update, we've been making sales calls alongside our baseband chipset partner. We believe that we've identified the launch customer for our 3G low power consumption d2p products.
We also told you that we're working to solidify a manufacturing partner who would enable ParkerVision to not only ensure a smooth and reliable production ramp of our d2p product but who would be acceptable to our target mobile‑handset OEMs. Well, since that update to you just eight weeks ago, we have made significant progress in all of these areas.
Securing the first handset OEM customer for our 3G product offerings will arguably be one of the most important milestones for ParkerVision, and achieving this goal has been the focus of most of our efforts. This milestone will be an indicator that we've addressed no small number of issues that are required to bring the market a new RF technology product in an industry where orders typically run in the hundreds of thousands of units a month and higher. Companies are understandably cautious about adopting new technologies, as they weigh the benefits versus the predictability of sticking with tried and true methods. But I believe we have overcome this barrier.
D2p brings the much needed benefit of significantly decreasing the consumption of the single largest power consuming item in a 3G handset during a voice call, namely the RF transmit chain. It has become quite commonplace for the most advanced and well liked 3G handsets to receive quite the acclaim about the many features of the handset, usually along with a complaint about the short 3G battery life.
A good example is a new smartphone handset that's named "The Incredible." It received a very outstanding review that said, in part, "Everything about this handset is incredible, with the exception of the short battery life." We believe that the issue raised in this and other reviews is what is motivating our partners to incorporate d2p technology into their product offerings at the earliest possible opportunity. We feel we are definitely in the right place, at the right time and with the right products.
Based on the progress that we've made since our last call, my confidence is strengthened that soon we will have completed and secured both a strong manufacturing partner for ParkerVision's d2p launch and that we will also have completed an agreement with our handset OEM launch partner, which will represent out first design win for d2p in 3G mobile handsets.
What's been most gratifying over these recent weeks is finding that the leadership in the company that we will be launching our first product with shares our vision for bringing to market a truly new approach to RF and mobile handsets, and that they are just as enthusiastic as we are about the benefits that the d2p RF will have in our industry.
So, while I'm not quite able to make an announcement today, what I can say is that it is highly likely that we will be bringing you the news about a design win, as well as our manufacturing partner, very soon, before our next scheduled update.
Before we open this call up for questions, I also want to spend just a moment commenting on the MDB Capital Bright Lights Conference that we're participating in over the next couple of days. We're pleased to be invited to this conference and recognized by the MDB Capital Group as one of the most innovative public companies as ranked by MDB's proprietary IP business intelligence database called PatentVest.
This is the second time that ParkerVision's intellectual‑property strength has been recognized by an independent rating methodology, the first being the organization known as The Patent Board. As a company that has invested considerable time and money in protecting its IP, it is appreciated to have the value of those efforts recognized and measured in a quantifiable approach.
We appreciate the continued support from so many of our long term shareholders. And while the process of bringing a truly new innovation in RF to the mobile‑phone market has been a road that we've had to stay the course, this may very well be our last scheduled conference call update where ParkerVision doesn't have an order backlog, which will be a very welcomed transition indeed.
And so now, I think I'd like to open up this call to our questions operator.
Moderator: Thank you. To ask a question today, please press star one on your telephone keypad at this time. If you're using a speaker phone, please pick up your handset before pressing the corresponding digits. Once again, that is star one if you'd like to ask a question at this time. And we'll pause for a moment to assemble a roster.
And we'll go take our first question, from Robert Cohan with Western.
Robert Cohan: Yes. Good afternoon, Jeff. I've got a few questions. You just gave a presentation, and your exact words were "We'll be launching with..." Those were the words that you just used. So, in your mind, you've clearly got someone that you're going to be using for manufacturing and launching your product in someone's handset. My question is, on a scale of one to ten, ten being the highest, where would you say you are in the progression of getting to a manufacturing deal, and then, secondly, a phone deal?
Jeff: Bob, I believe that we are right on the path that we need to be on to get to completed agreements.
Robert: So where would you say? I know, for the past six to seven weeks, you've been over in Asia probably 95 percent of that time. I can't imagine you're over there eating. So, once again, where would you say you are, on a scale of one to ten?
Jeff: We're not at 10 because, if we were at 10, I'd be announcing the agreements and we'd be having a more expansive conversation. But I'd say we're in a very high single digit number, OK?
Robert: Would you say it's higher than eight?
Jeff: I don't know how to quantify where an eight is, where a nine is, where a seven is. I can tell you that I don't see any obstacle to completing what we're working on. But you've got to go through the process and make sure that all the parties involved agree on how all this is going to come together. The thing that's most encouraging, the reason I said that my confidence has strengthened, is because everybody involved in this; the chipset partner, the handset OEM, the manufacturing partner, and ParkerVision, all do share a common vision of how this is going to come together, how this is going to roll out, and how this is going to get into the marketplace.
Robert: So what you're saying is, verbally, everybody has agreed upon a deal. Now it's in the process of being put on paper? Is that safe? Or would you say it's a little further than that?
Jeff: I'd say the parties, in principle, agree on what needs to get done, and now we're in the process of getting it done.
Robert: OK. Because on the last call, you said, within two months, you should have these things announced. And here we are, one week to go for that two months. Is it possible you could have this wrapped up in the next week?
Jeff: Well, look. Bob, we're going to get it done as quick as we possibly can. I'm not going to give you a date because I don't control all the parties and the signatures that will need to be on the agreements. I can only tell you that everybody we need to work with is working toward getting this done, people are available, and we're working as quick as we can to get them wrapped up.
Jeff: We're all anxious to get this into the marketplace. As I also mentioned in my discussion here, the battery life of 3G handsets is a hot topic today among a lot of people, and it will be very rewarding for ParkerVision to show up with a good solution that ...
Robert: So is your deal encompassing a manufacturer and a phone set guy, or are they separate deals, or do both of them have to line up in order for this to happen?
Jeff: They will likely be separate agreements, although I can't say right now if they'll converge at exactly the same moment, or one will happen, and then the other happen. But it's all kind of happening in parallel, and I just don't want to predict right now whether it will be complete simultaneous convergence, or one will be slightly staggered. But if they're not exactly at the same time, it will be very close.
Robert: One other quick question, and I'm just going to call it what it is here. There's obviously people on the message boards, which I don't really participate in, but I see it, where they're saying that the phone that's going to be, if it does launch, is going to be a gray market phone. I know I asked this on the last call, but I just want to reconfirm. Is the phone that you are expecting to be in, remotely close to even being a gray market phone?
Jeff: I expect that our product will be launched in a branded handset, with a branded name OEM, and that it will be a very nice phone. I don't want to go into the details of what the phone model is, but it's a great place for ParkerVision to launch. And I think we're going to be very proud of...
Robert: Can you talk about, just for a second, what kind of production is the phone doing right now? And is it in existence?
Jeff: I can't. It is, the phone platform is shipping, it is in existence. It is in volume production. And I think it will be a lot more appropriate for me to talk more about those details once we've completed our agreements, and we get to the next conversation here. But let's get to the next, but thanks for your questions, appreciate them.
Robert: Thank you.
Moderator: Our next question will be with Philip Anderson with Pinnacle Funds.
Philip Anderson: Hey, Jeff, how are you?
Jeff: Hi, Phil. Fine. How are you?
Philip: Good. You know, as Bob, as a good broker does, Bob just went after you a dozen different ways, to try to figure out what's happening here. It occurred to me that, when you have an announcement to make, you may want to host another phone call, so that you can get the information out in an orderly way, and handle Q&A in an orderly way. Rather than spending two or three days on the phone, talking to all your shareholders independently.
Jeff: Duly noted.
Philip: Based on your responses to Bob's questioning, it sounds like you're at the highest levels of these companies, and getting attention at the highest levels of these companies. Would that be an accurate presumption?
Jeff: Yes, we've had the good fortune of getting time and attention of the highest levels, yes.
Philip: Are there reasons why, I guess, what are the reasons? And I realize that probably most of the people that you're interacting with are listening on this call, or having their agents listen to this call, but can you help us shareholders understand what, in practical terms, may remain to be negotiated and agreed upon, before signature pages are circulated?
Jeff: Yeah, just to make, really it's to make sure that the details of the work that's going to have to happen between the parties, and all the responsibilities are clearly outlined, and everybody knows what we're all supposed to do, and just to kind of button down the details. You know, this has been a complex set of things to pull together, because everybody wants to make sure that this product flows into production smoothly, that there's no hiccups, that the support is there. And that we all derive the benefit from all these years of hard work that ParkerVision's put into this. That we get the benefits that we've been describing, and that it doesn't get a bump in the road from other possible things that could get in the way just because of lack of good planning. So it's really just been a good exercise of planning, making sure everybody's all going in the same direction. And I would say that the meetings and conversations we've had have been very pleasant, and very collegial, and very positive. And that's why, again, my confidence has continued to strengthen over these past weeks.
Philip: And with the manufacturing partner, or partners, and the launch handset OEM customer, are they interacting with you, and with each other, on a daily basis to move this forward?
Jeff: Well, we're interacting with them on a very regular basis. I can't tell you if itís daily or not, but it's a very regular basis. They've been very supportive, and they're very enthusiastic about this particular product, because this takes advantage of a number of manufacturing technologies that they have. And they also believe in the volume and the future of this product line. So they've been extremely supportive, and they have a history of also manufacturing a fair amount of products that require good manufacturing skills, and some of them with high volume RF applications behind them, etc. So they're very supportive and excited about this application.
Philip: OK, well, it sounds very encouraging. We'll look forward to getting it over the finish line. Thanks, Jeff, for the very hard work.
Jeff: We're close, Phil. Thanks.
Moderator: And as a reminder, it is star one, if you would like to ask a question at this time. Please press star one to ask a question. [silence]
Moderator: We have no further questions in the queue at this time. I'd like to turn the conference back to Mr. Parker for any closing remarks.
Jeff: Well, my only closing remark really is, again, I appreciate the support that many of the long term shareholders, who I know are on this call, have given us. We've stayed the course to get to this point. We've very close to being able to bring you news of a tangible design win, and I look forward to that day in the sooner than later future. So I hope you guys have a great week, and I hope we'll be able to have an update to you guys in the near term. Thanks a lot. Bye‑bye.
Moderator: That does conclude today's conference. I'd like to wish... If you would like to access archived audio cast replay of this call, you may do so by visiting the company's website at www.parkervision.
Transcription by CastingWords