ParkerVision 2010Q4 Conf Call

April 1, 2011

 

Ron Stabiner

Cindy Poelhman

Jeff Parker

Walter Schenker, with MAZ Partners

Duane Thomas, from Thomas Financial

Robert Cohen, with Western International

Charles Bellows with White Pine Capital

Robert Cannon with Cannon Capital

Wilson Jaeggli with Southwell

John Ziegelman with Carpediem Capital

Phillip Anderson with Pinnacle Fund

 

Operator:  Good morning, and welcome to the ParkerVision Incorporated fourth‑quarter 2010 conference call and webcast. Today's conference is being recorded, and all listeners are in listen‑only mode. Following the presentations, we will open up the conference call for questions and answers. The company has requested that the questions and answers be limited to one question and one follow-up per caller. As it is now time for opening remarks and introductions, I would like to turn the conference call over to Ron Stabiner, with The Wall Street Group. Please go ahead, sir.

Ron Stabiner:  Thank you, Sean. Good morning and thank you for joining us. Before we get started, I would like to remind 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 demands, achieving timely market introduction and acceptance of product, 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 risks can be found in our filings with the Securities and Exchange Commission.

On today's call, we'll hear, first, from Cindy Poehlman, chief financial officer of ParkerVision, and she will provide a review of the company's fourth quarter and year‑end results; followed by Jeffrey Parker, chief executive officer, ParkerVision, and he will provide an update on the company's business.

And with that, I will now turn the call over to Cindy, if you would go ahead, please.

Cindy Poehlman:  Thank you, Ron. And welcome to those of you joining us this morning for ParkerVision's 2010 fourth‑quarter and year‑end conference call. We reported yesterday a net loss of $3.3 million, or seven cents per share, for the fourth quarter of 2010, which compares to a net loss of $4.9 million, or 13 cents per share, for the fourth quarter of 2009.

For the year ended December 31st, 2010, we reported a net loss of $15 million, or 35 cents per share, compared to $21.5 million, or 65 cents per share, for 2009. This represents a 30‑percent decrease in our year‑over‑year net loss. This significant decrease in our net loss was the result of a $6.4‑million reduction in our operating expenses. Approximately 2.3 million of the expense reduction relates to non‑cash items, primarily our share based compensation expense. The remaining expense reduction, of approximately $4 million, represents cash savings resulting from reduced spending in a number of areas, the largest of which was a reduction in our use of outside design resources and other related development costs during the year.

Concerning our current cash position and liquidity requirements, we ended the year with approximately 6.5 million in cash and short-term investments. We added approximately four million to our balance sheet this week with the completion of a registered direct equity offering which closed on March 30th.

We used $11.2 million in cash for operations during 2010. This was roughly four million less than our cash usage in 2009. We continue to review operations and identify additional cost savings, where possible. So far, in the first quarter of 2011, our cash usage is well below the 2.8‑million quarterly average that we saw in 2010. However, we do expect to incur some additional costs this year, for production tooling and related items, as we begin production of our chipsets.

Based on our projected capital needs for 2011, our current cash resources may not be sufficient. As a result, our auditors did include a going concern paragraph in their audit opinion for 2010. The inclusion of this going concern language does not have any impact on the carrying value of our assets or liabilities. Rather, it is cautionary language, indicating that we may need additional capital at some time later this year.

It's important to note that the four million of additional equity capital, closed earlier this week, not only significantly reduces the gap in terms of our future liquidity needs, it also provides us important leverage to negotiate better terms and conditions for both future capital resources and business opportunities.

We were pleased to be able to identify, in our 10‑K filing, the identity of our baseband partner, VIA Telecom. VIA is a leading fabless semiconductor company with a core focus in CDMA baseband processors. They're headquartered in San Diego, and they have design operations in the United States and China and sales support offices throughout the US and Asia. Their customer base includes a number of tier‑one and tier‑two handset OEMs, including three of the top five handset OEMs. They have key partnerships with CDMA network carriers, including Verizon, Sprint, and China Telecom.

I'm sure Jeff will speak more about our relationship and our recent business activities with VIA in his remarks. And so, with that, I think I'll turn the call over to our CEO, Jeff Parker.

Jeff Parker:  So thank you, Cindy. And good morning, and thank you for joining us today. So, last year, we focused our resources on the goal of securing our first handset design win, with a handset OEM who would launch our d2p technology in 3G handsets. To achieve that goal, we've been working closely with our baseband partner, VIA Telecom, who introduced us to one of their significant customers, who's a rapidly growing handset OEM and who VIA feels has the right profile to be a good launch customer for our product. This handset OEM supported us in the design of our d2p chip into a 3G model of their phone, including building phone boards and working with us on the performance‑testing requirements for our solution.

In collaboration with Via, we completed the test process about a month ago, and we delivered a formal report to the handset OEM. The test report is large ‑‑ megabytes of data, many hundreds of pages. The testing was run on the sort of advanced test equipment that wireless carriers, handset OEMs, and some wireless‑chip companies use to verify the operational performance and, to some extent, the quality of various mobile‑handset functions.

The result of the testing shows that our d2p chip provides the RF signal quality that we knew our technology would deliver, and that it does so while consuming significantly less power and generating much less heat than the traditional transmit and power amplifier chains that we replace.

Just to give you a sense, the testing covered quite a number of different performance conditions. As an example, signal quality was tested over a very large, dynamic range of operating RF power and frequency, and different signal types which represent different data rates deployed by different carriers relevant to their many different networks. So as you start to put that together, you can see that the matrix of testing grows pretty quick. Or picture that same matrix now run to ensure that the operation of our transmit chip doesn't jam or interfere with the sensitivity of the receiver in the phone. These were the kind of tests that were run, and they were run on Via's test equipment by VIA staff.

So with testing successfully completed and delivered, what is the next step? An order. When? As soon as possible.

I'll be the first to acknowledge that the completion of a comprehensive test report took longer than we expected. While we're frustrated by the speed of this process, we have not and do not see roadblocks that are impeding our forward progress with this handset OEM. And we continue to stay the course, and we're working closely with a program team that includes both VIA and the handset OEM, and we remain confident that this OEM will, in fact, be our product launch partner.

But as we move through this process, there are other significant activities that we're also engaged in. From an operations standpoint, we continue to prepare for volume production. And from a marketing and a sales perspective, we've never been in a better place. With the voluminous test results from the completed testing process and the components available, there are a number of OEMs and others who we believe will find our offering to be very attractive for CDMA handsets.

Our baseband partner, Via, has a number of quality customers, and with our test reports and readied components, we can start to expand product awareness for the d2p chipsets, a product that's very attractive to any handset OEM looking to remove power consumption while delivering quality RF signals in 3G CDMA.

The capital we just raised allows us to continue to move forward in securing our first order and ramping production, while also giving us some runway to engage with additional customers. With tested product in hand, we believe that companies will start to look at ParkerVision as more than just an improved component on the come, but rather as a strategic opportunity.

Getting traction in the marketplace with an order and ramping product shipments can't come too soon. We, like you, want to see the pace of events for ParkerVision begin to move along much more quickly, and we believe the activities we've scheduled over the coming weeks will help in accelerating this pace.

The marketplace for three and 4G handsets continues to have excellent growth, and we believe it will for the foreseeable future. From what we hear from handset OEMs and other industry companies, the desire for significantly better power management within these types of products is strong and growing.

The time frame and dollars that we've invested in products and patents has been significant. And I believe that we are very well positioned at the forefront of what is a strong trend, as companies accelerate their efforts to remove power consumption from one of, if not the most, significant contributor of power consumption in three and 4G handsets, the transmit chain.

I hope to be able to provide more color concerning our sales activities as we move forward. But for now, I expect there's probably a number of questions that you may have, so perhaps let's go ahead and open for your questions so that we can have an opportunity to address them. Sean, open up the call for questions, please.

Operator:  Absolutely. Thank you. Ladies and gentlemen, if you have a question at this time, please press star then 1 on your touch‑tone telephone. If your question has been answered, or you wish to remove yourself from the queue, you may simply press the pound key. Again, ladies and gentlemen, if you have a question, simply press star then 1 on your touch‑tone telephone. One moment please. Our first question comes from Walter Schenker, with MAZ Partners. Please go ahead with your question.

Walter Schenker:  Hi, Jeffrey.

Jeffrey:  Good morning, Walter.

Walter:  Hopefully someday I'll get to Florida.

Jeffrey:  [laughs] Hopefully I'll be here someday so you can come visit us. That would be great.

Walter:  Given that there is a matrix, and a wide matrix, as you point out, in the testing, can you give us some sense, across that ‑‑ so therefore, it's a general term ‑‑ as to what level of power savings and head reduction in those tests the chip was able to provide?

Jeffrey:  Sure. We were originally tested with VIA in a handset that was the traditional transmit chain in their baseband processor, and we've been benchmarked against that test, which happened late in 2009. They then tested a sample handset we built with them, and we created a power curve over the power‑output differences, when you're nearer or far from a base station. And we created that power curve, and it saves anywhere from, in the sweet spot of where a CDMA phone operates, which is maybe 0 dBm, five dBm, which is one to five milliwatts of power, out to maybe 17 or 18 dBm, which is 50, 60 milliwatts of power. In that range, which is where your phone is operating most of the time, we save anywhere from, on the low end, 60, 70 milliamps of power, up into the 100, 125 milliamps of power. Those kinds of numbers are what gives you the opportunity to extend the battery life by 40, 50, 60 percent over the traditional talk time or data‑surfing time.

That curve we provided them, or they tested and we created together, is exactly the same curve that we still have today, based on the recent testing that was done. So what they saw is that now, through these wide matrix of tests, we've passed all the different various performance metrics that you need to pass to get into shipping a handset on a carrier's network and that curve of power consumption that we had in the sample phones before those has been maintained and in fact in some areas is a little bit better.

So that's what they saw. And so the predictions that we've been making and what we've been talking about based on those original tests now move forward to these latest tests, haven't changed, and as I say, maybe in some of the really important areas have improved a little bit.

When we get up to the higher power output in the phone or lower which is less of the operating time for a typical handset, the numbers are little bit different. Not as great, because there isn't as much power to save on the lower end.

And on the higher end, although we do save significant power, it's not at a range where the phone operates much of the time at all. That's when you're on the very, very fringe just about to drop a call.

Walter:  OK. And heat savings is also significant, you said?

Jeffrey:  When you run a power amplifier in the traditional component up near the max, the peak power of the phone, it's going to in an ambient phone temperature environment 72 degrees Fahrenheit, it's going to run in the 200, 220 degree Fahrenheit range. When you run ours in the same environment, it's going to run at about 100 degrees ‑‑ half or more ‑‑ less than half the heat. And that is a big deal because handset companies today are looking to make the form factors of their phone thinner, and they're looking to pack more features into their phones as these phones do more and more applications. And heat's a problem. So this is one of the very attractive benefits of our chip is that it's generating almost no heat.

Walter:  And my last question and I'll get off. The matrix of tests you ran were for a specific handset, as I understood it, may be wrong. Does that mean you have to go through similar extensive demonstration and testing for any additional handsets?

Jeffrey:  Well, we don't think so, but let me put some flavor around, some color around, that. This design we believe can be lifted and used in other handset models. And so what happened is we worked with a handset OEM. They gave us a form factor. We designed the chip and the stuff around our chip so it would fit into that phone. However, if you look at the section that we're in of the phone, which would be that section that represents the CDMA modem, meaning the baseband processor and its flash memory, and the transfeed function with the filters on it, that whole section now can be lifted as a schematic and a reference design, and it can be reused in other phones.

Will it fit exactly in other phones? Probably not. They'll probably need to shift something around here and there. But it would not be unreasonable to think that the vast majority of it is reusable, 80 percent of it, 90 percent of it. What you've really proven is that in situ your chip works like it's supposed to, and that's really significant because now other interested OEMs to use this aren't going to have to go through that proof of process. We can use these test reports. We own the test reports. And we can show them, and we can give a demo of this very quickly.

And I think it's going to move conversations going forward straight away to help design into form factors that we're looking at, versus all the proof you have to do before you can get a handset OEM engaged in that kind of a dialog. So it's going to shorten the process of adoption greatly. And we're going to be working more like every other component manufacturer works once their component's been accepted, more in the design‑in phase, versus the proof first and then you get to the design‑in phase. And the proof first has been a lengthy process.

Walter:  OK. Thank you.

Jeffrey:  Thank you.

Sean:  Our next question comes from Duane Thomas, from Thomas Financial. Please go ahead.

Duane Thomas:  Sure. Hi. Good morning, Jeff.

Jeffrey:  Good morning.

Duane:  I have two questions for you. It is my understanding that since the beginning of the year you have spent a lot of time in Asia. Can you tell us actually how much time you have spent in Asia, number one?

Jeffrey:  Well, I'll put it to you this way. I've been in Asia more than I've been in the United States. You know I haven't actually taken the calendar and laid it out on a table in front of me, but it's been a lot. Most of my year so far has been spent in Asia.

Duane:  OK. And lastly, with the amount of time you have been spending in Asia, can you give us an idea of what you have been working on, and also tell us what the level of commitment from your partners are, especially VIA Telecom?

Jeffrey:  Sure. So you know there are different things that I've been working on. I mean testing was done in Asia. The handset OEM we worked with is in Asia, so anything that deals with design discussion, working with program manager people, things like that, that's all there. VIA has a couple different offices in Asia. Some are focused on sales. Some of them are focused on application support and engineering support. So our semiconductor provider is in Asia. So a lot of the supply chain and the customer base and the testing is all in Asia. So all of those things have been things I've been working with this year.

In terms of what VIA's commitment is, there is a tremendous amount of support that is required to interface between their baseband ‑‑ and this is true of any baseband ‑‑ and the RF, anybody's RF. There's a driver that has to be written and supported.

These phones are getting more and more complicated. You know it's not just that the phone has a CDMA modem in it and it makes a voice call. It's now oh, by the way, it deals with data. It deals with all kinds of priorities with applications. Does a voice call come as a priority over surfing the Internet? Or what happens if X, Y, or Z occurs? It's becoming an ever more complex matrix.

So the reason I'm sharing that with you is the amount of resources to keep a driver and firmware updated for any reference design is not a trivial commitment, and VIA has been doing that, and that's a big commitment.

Perhaps their biggest commitment that they've made is when they introduced us into one of their best customers, because what they're putting out there is their reputation. And these customers are not easy to get and it's takes a lot of attention to detail to maintain them and to grow them, and the last thing you want to do is bring something to a customer that in any way impedes the progress with the relationship.

So their commitment in taking us to one of their best customers and urging them to become our launch partner is a big commitment. And it's probably their most precious asset, or certainly one of them.

So they're committed to our program. I believe they're committed to it because they not only believe in the technology, but they've seen that we've stayed the course. We have done everything that we've been asked to do, both by them and their customer. And they've seen that we've been setting up supply chain management production with some of the top production people in the world, some of whom they introduced us to. Again, they used their connections to help us even in our production set up which again is their reputation.

And I'm very appreciative of that. And I don't underestimate the value of that. Because this is not an easy marketplace to break into, but when you have someone behind you like this, it makes it possible.

So that's been kind of at a high level the nature of the relationship. And we've also taken up a fair amount of time from some of the members of the senior management team who also have a lot of other things on their plate. So I hope that give you a little bit of the sense of it anyway.

Duane:  Thank you very much, Jeff.

Jeffrey:  Thank you.

Sean:  Our next question comes from Robert Cohen, with Western International. Please go ahead with your question.

Robert Cohen:  Thank you. Good morning, Jeff.

Jeffrey:  Good morning.

Robert:  You talked about that you guys own these reports now.

Jeffrey:  Right.

Robert:  Of the test results. The test results that were done in early 2011, were those test results done by you, or were those done by VIA, or your OEM possible customer?

Jeffrey:  Yeah, OK. So the OEM customer is the one that dictated, "These are the tests I want run." VIA ‑‑ we provided the hardware in terms of the RF ‑‑ and VIA ran the tests using their equipment, which is industry standard equipment, but it's a very sophisticated expensive setup. And they ran the test on their equipment and with their staff. So they did the testing. We supported it, but they did the testing.

Robert:  So you were not responsible for the test, so you could not have manipulated the test of any kind.

Jeffrey:  No, no. We were responsible for getting them the hardware, and they were responsible for running the test.

Robert:  So in layman's terms, Jeff, can you tell us in a simple explanation what their results concluded, what did the OEM get out of it, and what did the test results prove that maybe your test hadn't proved to them, or they couldn't understand?

Jeffrey:  Well, we have already run a large number of subsets of the tests that they ran. But it really takes another level of sophistication and test equipment to run the volume of testing that shows that overall of these different operating conditions that the product is working to meet the specs of the standards, which is what the handset OEM wants to see. So you know it's not that we hadn't looked before at the same kind of performance metrics, but we don't have the kind of equipment that it takes to run it over that huge matrix of possibilities.

You know I want to see every frequency in very small steps. I want to see every RF power output in very small steps. I want to record all of the important metrics during those conditions. What's the error in the data that's running through the system? Sometimes they inject noise into the signal to see that you're able to be robust enough that in the presence of real world noise that it doesn't either drop the call or degrade the data unacceptably. And it's just a huge matrix of "what if" possibilities.

And then that equipment not only runs it, but it records all that. And then it provides written report results. I mean I actually was when it was all said and done was actually surprised at the volume. We started dong the printing and I was kind of surprised, you know 100 pages, 200 pages, 300 pages, 400 pages. It just kept coming. And it takes time. It takes a lot of time to do that.

Robert:  So, Jeff, look. VIA technologies has been, I guess we'll consider it, your partner now for over two years. And I've done some research on VIA. They do business with Nokia, Samsung, LG, basically most of the majors. And I know that with any company, their customers are their most important assets. I can't understand if this technology didn't work... First of all when did VIA in your view understand that the technology absolutely worked? VIA has stuck with you for two years. I can't imagine they would be out there taking you to their clients if this wasn't a viable solution. I don't understand how they could continue to spend time with you and money with you if the technology didn't do what they thought it did. Can you elaborate on that a little bit and explain that?

Jeffrey:  Well, Bob, look, I think you've said it. I mean the fact is they're not going to use their most precious asset, their customers, until they're convinced that the technology is solid enough to actually go into volume shifting handsets. So they put us through quite a bit of proof of that before they're willing to do that. And I think the tipping point with them came late in 2009 when we had the sample handsets, and they were actually able to see that we'd moved from a big circuit board with demonstrative capabilities into the form factor that you have to fit into.

But then that process took time also because, OK, they have enough confidence they took us to one of their best customers. Well, their best customer picked a form factor and said, "Here. We want to see that it goes into this phone." And the space that they have in that phone for our portion of the system was pretty small and pretty thin, and we had to accommodate that.

And my hat's off to our team. They were able to do that and preserve all of the benefits that we deliver. Not an easy thing to do. And so, Bob, you're not wrong. That action by VIA I think speaks the loudest because they're not going to use their precious asset, their customer base, to tinker around with the new technology that they don't believe is ready.

Robert:  I've just got a couple, just quick other little things. Why is it that VIA at this point has decided that's it's all right for you to disclose your name? Is it because you guys are so close now to working with their OEM that the cat could be out of the box anyway? Could you elaborate on that?

Jeffrey:  Here's really all I want to say on that. You know, look. They're privately held. They don't have to operate in the public domain the way we do. I appreciate their willingness to allow this disclosure in our 10K. And let's just say, hey, I think it's a start in the right direction.

Robert:  OK. In the customer OEM, can you give us an idea of the size and magnitude of how many phones they are manufacturing in a year roughly?

Jeffrey:  I can only say this right now. They make phones for all the major cell phones standards that are shipped in Asia, so not just CDMA, but also the competing standards to CDMA. They have relationships with all the main Asian carriers. And the most important thing to me is that when I asked them, "How many of our units do you think you'll use in the first 12 months?" their answer was, "Two or three million units." And the conversations I had with them recently about the types of models and the number of models this would go into supports that statement that they gave me when I first met them in the middle of last year or spring of last year. So you know they're a good‑sized company. They're growing fast. And most importantly to me, they can give us a nice launch from which we can build with additional customers.

Robert:  OK, I'm going to ask you just one other question. It may be a little bit of an uncomfortable question, but I'm going to ask it.

Jeffrey:  OK.

Robert:  With the test results that were done by VIA and the OEM and yourself, is there any way that the OEM could dispute that your chip does exactly what you've said it does? Is there doubt in the ability of that chip at this point?

Jeffrey:  Look. I can tell you this. I sat with the program manager who went through the report page at a time, and at the end of the discussion the program manager said, "Great. This is what we wanted to see. Let's go now work on the next step," which is the phone launch and is off working on that right now. I got no hint of any issue whatsoever from the program manager at this handset company anything other than, "Hey, this looks really great." And real enthusiasm about the fact that the heat generated by our product is so much less when you can still meet...and by the way, other people can generate less heat, Bob. They just don't have a product that works at that point. People have tried to get to this result.

But they were very taken with the heat being so low, and I think it has to deal with some form factors that people are thinking about for their next phones and having trouble figuring out can you make the phones this thin and still have them be reliable with a lot of heat that's generated inside? That's challenging. We helped alleviate that problem.

So I got no feedback whatsoever other than enthusiastic, positive feedback. So let's hope this is going to lead us to an order and in the very near future. That's what this is all about from my perspective.

Robert:  But my question is, was there anything in the test results that disputed your claims?

Jeffrey:  No. Everything in the test results supported everything we've been saying.

Robert:  OK. Thank you.

Jeffrey:  Thanks.

Sean:  Our next question comes from Charles Bellows with White Pine Capital. Please go ahead, sir.

Charles Bellows:  Yeah, Jeff. Looking at it a little bit differently than Bob just did, does the OEM need to run any tests in your mind to confirm, i.e., belts and suspenders?

Jeffrey:  We've run every test we were asked to run. I know of no other tests that have to be operated.

Charles:  OK. So they're not going to try and do a sample from your perspective to make sure everything flows through?

Jeffrey:  No.

Charles:  OK. And could you remind me of ‑‑ it's been a long time since you talked about it ‑‑ what the potential, or what the current structure of the economics of the units are now that you're...?

Jeffrey:  Sure. Yeah, OK. Well, I think the last time we talked about this we said you know we see ‑‑ remember these units we're starting with are focused on the Asia 3G handset space. The transceive function in those types of phones is typically in the, let's just say, $3 range. We see the opportunity, when you look at the margins for the components that we replace, typically those are in the 40, 45 percent region gross margin. And we see the same opportunity for ParkerVision, roughly $3 a phone, roughly, we won't start out at 40, 45‑point margins. It'll start out lower than that, but as we ramp and we get volume, we can see a pretty clear path to getting very similar margins if we keep optimizing and we're good at what we do. Hopefully we can get it beyond what industry margins are because we've got an advanced technology with the benefits that they bring, and hopefully we can get some premium on that. But that's order of magnitude of what we're looking at.

Charles:  And as I recall the order that we've been waiting on to be let is a million units. Is that correct?

Jeffrey:  Yes, the initial blanket purchase order is for a million units, hopefully that will be a subset required to meet the customer's first year requirement.

Charles:  OK. Do you any concerns, or does VIA have any concerns, given the disruption to the silicon production that goes into TSMC in Japan? Because there's a good part of their ingot production that comes from two plants that have been shut down and just coming back. Do you have any concerns that your pieces may be put at the lower end of the pile?

Jeffrey:  I don't have a concern, but it's not because I know that I shouldn't have a concern, Charlie. I haven't had time to really study it. I've been so focused on getting this order [laughs] and finishing up that testing process that I've been kind of "blindered" to everything else around me. So I'm not going to sit here on this call and tell you that we might not be affected by that. I don't know that we won't. I don't have any indication that we will. I do know that VIA is considered a very good customer of the semiconductor companies, and hopefully we'll be able to attach ourselves to the goodwill of their relationships.

They've been able to do that for us with other companies that we have been working with to get our production ramp set up. But I honestly can't tell you in this call that I've got any sophisticated amount of knowledge about how the whole Japanese disaster may or may not impact us. I don't know right now.

Charles:  OK. OK. And then one last one, and you can tell me if my assumptions are wrong, and if so, how they should be changed, and then that goes to your focus. I am assuming given the fact that you are tied to the VIA baseband that the logical other OEMs for you are their customers, and that those would be the first places you would go. And in fact I think in one of the other calls you said that you were waiting until you had things really set at the first OEM before you started making calls. So have you been introduced and have you begun those conversations, and how long do you think it is before you can begin to get some traction at some of these others?

Jeffrey:  I think VIA's strategy for us is to stay focused on the launch OEM so that we make sure that, number one, the introduction they made turns into good business for all of us and that it's a net positive, that we don't somehow stub our toe somewhere because we're spread too thin, and then it turns into, yeah, you've got a great technology with a great product, but for some other reason creates a problem for them. They don't want to do that, and I'm committed to doing everything in our power that that won't happen. So they really want us focused. That said, they have been willing recently to start to open up additional conversations with other companies, and I really don't want to go into any more detail other than that right now.

Charles:  OK.

Jeffrey:  But they are willing to do that, and they've started that. And if they listen to this replay, I appreciate that.

Charles:  So the other way of looking at it is that it's been an extended period that you have worked with VIA in here and that you have been in front of the current OEM, the one you're hoping to have this order from, and that's been sort of a 12 to 18‑month process that you have been in.

Jeffrey:  That's right.

Charles:  Is that about correct?

Jeffrey:  That's about right. And I think the way I'm feeling right now is that they continue to remain very committed to helping us get this thing launched and trying to guide use through this process in a way that we're not biting off more than we can chew, but that we take advantages of the opportunities that both of our companies see in front of us.

Charles:  And I guess the question then given that period of time do you think in going to the other OEMs, when that is actually deemed by VIA as appropriate, that you can cut that time in half?

Jeffrey:  If the OEMs beyond the first one want to use the existing product, not some new product or some extension of the existing product, I think it can happen very fast. I mean I hesitate to give you an exact answer, but let me put it to you at least from this perspective. The first handset OEM we've had to go through the proof of the technology in their form factor and then finally get to the program of launching a handset, which is where you are now. With the other guys, we're not going to have to go through the proof the technology in their handset. They're going to get right to the, "Let's talk about our form factor."

So you've already got the test reporting. You've already been through all that. So you've eliminated a very lengthy step that you have to go through the first time. You just can't skip over that step. But you've gone through that now. So that's going to be quite abbreviated, if at all, and then you'll get right to the design phase.

Charles:  OK. Great. Thank you.

Jeffrey:  Thanks.

Sean:  Our next question comes from Robert Cannon with Cannon Capital.

Robert Cannon:  My question was just answered. Thank you.

Sean:  Our next question comes from Wilson Jaeggli with Southwell.

Paul:  Hello, Jeff. It's Paul for Wilson, here.

Jeffrey:  Hello, Paul.

Paul:  Just to get a little further clarification on the last caller's question. From the standpoint of the OEM, you know of no additional testing required on their part. From the evaluation process, what remains from their end on evaluating your technology, if anything?

Jeffrey:  Nothing that we are aware of.

Paul:  OK. So from a hindrance to receiving an order, you're not aware of anything on the baseband or the OEM side that remains to be done.

Jeffrey:  No, Paul, what I would hope would happen next, based on my understanding of how this particular handset OEM roles out phone programs is that we would be told, "OK, here's the phone model. We need X thousands." It wouldn't be tens of thousands. "X thousands of chips in a certain short timeframe for the first production units so we can get our production line tuned up for whatever the differences are between what we've been using and yours." And then they start to provide orders of volumes on a monthly basis that represent the ramp of that particular phone model, and you know phone models like this can be anywhere from on a low end 50, 60,000 units on a month, to 150 or 250,000 unit s on month.

And it kind of goes up and down depending on the month and what's happening on the marketplace and the time of the year. But that's what we would expect to happen next from the conversations we've had.

Paul:  And for this specific phone model, do you have any color or insight as to when the OEM is planning to launch?

Jeffrey:  We're trying to get that information, and I don't have that, but that's what VIA is committed to helping us get and to get going on this. And so we think we're just right in the middle of the normal process with this handset OEM, and we're working to get that next step done so we can get the component built, shipped, and get them into production.

Paul:  Well, great. I really appreciate all your time and commitment, and best of luck.

Jeffrey:  Thanks. Thanks. Say hi to Wilson. Appreciate it.

Sean:  Our next question comes from John Ziegelman with Carpediem Capital. Please go ahead with your question.

John Ziegelman:  Hi, Jeff.

Jeffrey:  Hi, John.

John:  How are you?

Jeffrey:  I'm OK. [laughs] I want my order. Anyway, go ahead.

John:  A series of connect‑the‑dot questions. I'm not that familiar with VIA. I think you mentioned that their OEMs represent three of the top five handset OEMs. Who are those top five handset OEMs?

Jeffrey:  The top five handset OEMs today would be Nokia, Samsung, LG, Motorola ‑‑ I believe is still in the top five. You know the fifth one continues to flip up and down. There's a lot of contenders these days. I don't remember if it's Sony. It used to be Sony Ericsson. It may still be Sony Ericsson. You've got others who are getting up into that six, seven, eight slot who are contenders for that, and as smart phones grow ever more prevalent, you're seeing those guys kind of rising, and people who have just general generic product lines falling. So I mean some of the contenders you'd see below number five would be companies like RIM, HTC, ZTE, believe it or not, from China. There's all kinds of companies in that next category.

John:  OK. And I'm tooling around their website, but I'm not really seeing an identification of their customers. Obviously Motorola would be off the list, so of the top five that you mentioned...

Jeffrey:  Yeah, on their website they do list Nokia, Samsung, and LG.

John:  So one could assume that the OEM that you're talking to would be one of those three?

Jeffrey:  The one thing they've asked me is not to identify who our launch partner is, and I'm going to absolutely respect that. But I will tell you that it's one of their better customers, and it's a very fast growing company, and we'll be thrilled to be in their handsets.

John:  OK. And secondly, a clarification on I think what you said earlier. I thought you said the first customer and the first 12 months would represent two to three million units, but then somebody asked specifically what the initial order was. Those aren't inconsistent. You expect a million initial and throughout the course of 12 months to do two to three million.

Jeffrey:  That's right. What happens is, when a program is launched in a shipping handset, they'll do a rolling forecast, and so as their needs go up and down, your orders, they will refresh that rolling forecast every month. The forecast may roll forward for three months or four months, or something like that.

John:  OK. That's really it. Thank you.

Jeffrey:  Thanks, John.

Sean:  Again, if you have a question, please press star one. Our next question comes from Philip Anderson with Pinnacle Fund. Please go ahead with your question.

Philip Anderson:  Good morning, Jeff.

Jeffrey:  Good morning, Phil.

Philip:  Now that the VIA Telecom has been unblinded, I've been trolling around their website during this call trying to find some information about how a big a business they really are and what our opportunity is, and the information on the website is fairly sparse. There's some press releases that give us some tantalizing bits one of which was issued on February 24th of this year that says that VIA has 30 percent share with China Telecom. They have a 30 percent share of VIA Telecom CDMA market in China. Do you have a sense of what China Telecom's CDMA volumes are within China, and elaborating on that, can you help us understand how large a business VIA Telecom has in CDMA?

Jeffrey:  Yeah, I do not off the top of my head still unfortunately have how big China Telecom's CDMA business is. I know it's been growing significantly because they've launched, I think about a year ago, the EVDO part of the CDMA standard, which is the high data rate part. So you're seeing China Telecom doing the same kinds of things that someone like a Verizon or a Sprint here is doing in terms of more smart phones or high end, or more feature‑rich feature phones. But you go to China, and you see people carrying lots and lots of phones that look a lot like the phones here with all kinds of Internet connectivity and applications to support that. I don't remember honestly what their unit volume is, but that's a good point. If people were to go on the web you could I'm sure find what their unit volume is and take that times the percentage and that'll give you a sense.

It's a good number. It's an exciting number, and they continue to grow, and I don't think it's my place to... Look, I don't know exactly what is and isn't publicly disclosed by VIA. I don't know if there's some article out there that specifically states that we shipped last year X units, so I don't want to speak out of school. Since they've been willing to go into our 10K, I don't want to abuse that, but I think if you do a little Internet surfing, that you would see some things that would be pretty encouraging to you.

Philip:  Let me give you a little help on that subject. So there's a press release here from November 2009 where VIA Telecom says that they shipped 30 million chips in the first half of 2009, and expected chip set growth to be 50 percent in 2010. So if they shipped 60 to 70 million chips in 2009, they could have shipped 100 million chips plus or minus last year. What is your understanding of the opportunity to substitute our CDMA based chip with their current chip? How deep into their portfolio does our technology create an opportunity to substitute?

Jeffrey:  I think it creates a very significant opportunity. Look, when you start to look at the kinds of numbers that you just described, if the ParkerVision company was able to gain a reasonable double‑digit market share of their shipments, you know 20 percent, 25 percent, let's just use that. You can see that based on the per unit guidance that I just provided earlier, you're up into the north of maybe 50 and south of 100 million dollars in revenue. So in a company that's pre‑revenue, that's a pretty good first step. My goal has been and remains, let's get this company to a cash flow push in the profitable place. That's got to be our first goal once we finally get revenue going. And the reason I've been bullish on this relationship beyond what I've discussed earlier in terms of their willingness to support the relationship in the way they have, is they do have enough volume ‑ and they are a rising star, they're growing ‑ to in a realistic way for ParkerVision to get to that goal.

And recognize they've done that growth without the competitive advantage that ParkerVision brings into their portfolio, which they now have something that no one else in the world has. So one of the things I'm hoping for is the same kind of benefit in this relationship that I've had in other businesses I've been involved in.

I was in a partnership with Carrier Air Conditioning Corporation back in the '80s and early part of the '90s, and in that relationship it started out with us attaching ourselves to momentum that Carrier Corporation had in the marketplace. However, once we got going, we actually brought new business to Carrier Corporation, and I would be very pleased and happy and I hoped they would also that we could also pull our own fair share of the product differentiation benefit, which is to bring some new business opportunities to them. And you know when that kind of synergy occurs, the relationship just continues to grow and flourish.

Look, when we started out with VIA a few years ago in this relationship, they were a significantly smaller number of units than they are today. We made, I think, a very good decision to partner up with them.

And I think if we just stay the course, heads down, keep our focus on the goal, they've told me all along, your first customer, the first sale, is going to be hardest. It's going to take the longest. It's going to be the most frustrating. We've been there. But you'll get through that, and once you do, the gates will open, and the next ones will come a lot faster and be a lot easier. So make sure the first one is successful.

Philip:  OK, thanks very much for the comments, Jeff. Appreciate it.

Jeffrey:  Thank you.

Sean:  We have no further questions in the queue at this time. I'd like to turn the conference back over to Mr. Parker for closing remarks.

Jeffrey:  OK, well, listen, I appreciate you folks joining us today on our conference call, and I also appreciate some of the kind words that I've heard from people who've said, "Hey, thanks for being away so much and trying to get this job done. We know it's not easy." And sometimes it is kind of lonely being away that long, but we are very bullish that this is going to turn into something significant, and we've got to get through that next step, and we will get through the next step and get this order and get on with the opportunity to grow this technology into a meaningful business. So thank you for your support and have a great weekend. Bye‑bye.

Sean:  Thank you. That does conclude today's conference. If you wish to access archived audiocast replay of this call, you may do so by visiting the company's website at www.parkervison.com. Thank you.

Transcription by CastingWords