What we know about ParkerVision

 

2009/02/16

 

Paul Michael Farmwald

 

We believe that Jeff Parker is using the GSM Mobile World Congress (Feb 16-19, 2009) in Barcelona as his "Hail Mary" attempt to get a customer and/or raise money. To this end, Jeff Parker has misrepresented the true state of the ITT and Via Telecom relationships, has grossly oversold the royalty revenue potential of the company in general, has delayed implementing and/or announcing layoffs, and has kept the PRKR stock price above $2.00, in order to maintain the possibility of finding a savior in Barcelona. 

 

 

ParkerVision will not obtain revenue from ITT in 2009

 

At this point, it is highly unlikely that ParkerVision will ever collect any royalty revenue from ITT, let alone the $25M that was projected.


From the 2008.03.17 ParkerVision Q4 and YearEnd Conference Call

Cynthia Poehlman:   […] For 2007, we have 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. […]  As we stated previously, we continue to expect cumulative revenues from ITT of approximately 25 million over the term of this contract.

 

In fact, ITT was a vendor to ParkerVision before they became a "customer", and remained a vendor long after ITT ceased its own efforts to productize D2P technology - which we know happened in Q4 2007. Because the contract with ITT was supporting several engineers, ITT didn't want to risk their employment by commenting on the ParkerVision relationship.  Simply put, ParkerVision was supporting these engineers, and ITT would have likely lost the contract income if they had been more publicly forthcoming. 

 

This position has allowed Jeff Parker to blatantly and repeatedly misstate and misrepresent the true nature of the ITT/ParkerVision relationship. For example, Jeff recently claimed that ITT would start ramping volume production with D2P technology in Q1 2009; we know that this statement is completely unfounded, given that ITT is simply contracting engineering designs for ParkerVision.

 

From the 2008.11.10 ParkerVision Q3 Conference Call

Jeff Parker [27:08] […] So I believe we will be able to talk more about ITT in the not‑too‑distant future, but at this time, I really can't tell you anymore other than the opportunities they are working on, from my view, are very significant. And I believe they will get some of the ones they are going after, I don't say get all of them, but they will be good contributors to ParkerVision's revenue stream. […]

Charles Bellows:  [30:18] And that will be completed, you hope, by the end of this quarter?

Jeff Parker:  Turnover to them will be by the end of this quarter and they will start setting up for the volume production in the following quarter.

 

ParkerVision will not obtain revenue from Via Telecom in 2009

 

We have heard that there is essentially no chance that Via Telecom will use any ParkerVision technology in a volume production phone in the foreseeable future (i.e. next year or so), partly because of the lack of any shippable (or useful) D2P silicon, but also because existing suppliers already have both working and superior technology.  We were told that Via Telecom might build 50-100 demonstration prototype phones using the ParkerVision if ParkerVision paid for this work.  We note that this is something Via Telecom will do for any company trying to demonstrate new technology.  Such a prototype phone build only costs $50K, and the customer (i.e. ParkerVision) must supply the design and the chips.  We look forward to hearing if any of these phones are ready to be shown this week in Barcelona.

 

Once again, however, Jeff has misrepresented the details of the true relationship between Via Telecom and Parkervision.  Jeff had stated that royalties would be obtained for D2D technology in 2008.  In retrospect, this promise has not materialized and never really was a realistic possibility.  The Via Telecom deal was also touted to be more valuable financially than ITT. I suppose that a vanishingly small probability of revenue (Via Telecom) is indeed greater than flat zero (ITT).

 

From the 2007.12.21 Cellular OEM Conference Call:

Jeff Parker: As you've read in our press release that was issued earlier today, and with great pleasure, we announced that we have entered into our first licensing agreement with a worldwide provider of chipset, the handset manufacturers. The agreement is for the use of both our D2P transmitter and D2D receiver technologies. These will be integrated into 2.5 and 3G chipsets, for initial shipments in late 2008.

[…]

John Stanley:  Does the five to 10 million dollar royalty number that you put in there assume one of those sides?

Jeff Parker:  It assumes a couple of things, John, that's a good question. We believe that the receive technology will start shifting some time during the first year, albeit not right at the beginning, but we've contemplated that some time throughout that year, we will start to see some of the D2D royalties. There is also the way our royalty works; there is a range based on the complexity of the application; you know, how many bands, different modes of operation and things like that. Though the royalty range is a function of the D2D coming in a little later in the first year, and then a mix of various types of implementations that we anticipated.

 

 

ParkerVision has no future revenue potential

 

The revenue projections for ParkerVision technology have been misstated for the past three years, and this behavior is currently ongoing.  Jeff Parker has made a series of statements, and has allowed analysts to issue reports showing ParkerVision financial projections that have consistently been proven untrue. 

 

Jeff has repeatedly claimed royalties of well over $0.50 to $1.00 per phone. Given that the typical cell phone PA costs under $1.00 (generally under $0.60), and that the entire transmit chain is typically well under $2.00, royalties of $1.00 are far more than the profit of the entire transmit chain. Every cellular chip vendor I have spoken to thinks that such royalties would never happen, and laugh at the foolishness of such claims – even if ParkerVision had working D2P technology.

 

From the 2008.11.10 ParkerVision Q3 Conference Call:

Jim Whitten: Secondly, in reference to Phil's reference to my projection when you said $2 to $3, you are talking about the handsets. That does not, from what I understand, include any potential profit or revenue streams from ITT, is that correct?

Jeff Parker: No, that is correct. Yes absolutely, that is on top of that. […]

Jeff Parker: Thank you, folks. Thanks to those of you who continue to support us. We are working our little tailbones off to make all of us happy in our ability to build the kind of shareholder value that we still know that can be built. We are not going to let these rocky turbulent times get us down. We are going to stay the course and we are going to get to our goals. And our goal is commercial success, our goal is at $2 to $3 a share that we talked about and that's a third of the market. And that de facto standard option and we will get there and with your support, we will be up there as well. So thank you. Have a good evening and I look forward to speaking with many, maybe all of you sooner or later. Bye‑bye.

 

ParkerVision D2P “chip” still doesn’t exist

 

The issued ParkerVision D2P patent (US patent # 7,184,723) does not work and would result in poor efficiency. This is confirmed by three consultants and every OEM we have spoken with, including ITT. Later ParkerVision provisional D2P applications describe attempts to fix the problems of the original issued patent, but these approaches don’t work either, and would also have poor efficiency, especially at low power levels. In fact, the published provisional’s appear to be attempts to “patch” the flaws of the issued patent, and so would tend to prove that ParkerVision has long been aware of the problems with patent # 7,184,723.

 

Jeff Parker is himself aware of this fact, and has purposefully limited the number of technical people in the company who have access to all of the information (design, performance, test results, intellectual property) regarding the chip and its performance within the company. It appears that ParkerVision discovered the problem(s) with patent 7,184,723 in either 2005 or 2006, but, to this date, Jeff Parker has made no announcement of or acknowledged such problems.

 

As of a week or so ago (early February 2009), Steve Cripps is still quite adamant that *none* of the published "explanations" for D2P show him or anyone else how to build a useful power amplifier. The ParkerVision D2P patents describe ideas that are have fundamental conceptual flaws, are complex to implement and simply don't result in a highly efficient power amplifier. The D2P paper presented last fall was complete gibberish, talking about laws of thermodynamics and showing a mixed CMOS/SiGe solution consisting of 4 or 5 chips, which has no chance of being power or cost efficient.

 

 

ParkerVision has almost run out of cash

 

From the last few 10Q filings (and from other data) it is clear that ParkerVision is within days of being out of cash. Even with the above mentioned cutbacks, Parker has probably either stopped paying bills - or will stop quite soon. We calculated that the Cash Less Accounts Payable dropped below zero in early February 2009 - if so, ParkerVision is meeting payroll by not paying other bills. Please check the last few 10Qs and check this for yourself.

 

ParkerVision has been using two outside design centers for the last year or more. ITT has supplied contractors to do RF SiGe design (for the last couple of years or more), and a Silicon Valley company (which we believe is eSilicon) has been doing CMOS design work. We know that ParkerVision has terminated one and almost certainly both contracts, as of Jan 1, 2009. Thus it appears that ParkerVision - due to a shortage of cash - has drastically cut back on the both the D2P and the transceiver design effort.  From our information (and from SEC filingsWhat ) ParkerVision was paying the two companies well over $1M per quarter - a sizable fraction of the quarterly burn.

 

ParkerVision's 10K for 2008 is due by the end of February 2009. In order to get a Going Concern opinion from the auditors for the 10K, Jeff Parker must either (a) raise $20-25M or (b) layoff most of his staff and raise a smaller amount – all in the next few weeks.