Financials

 

ParkerVision Conference Call and Commentary, March 17, 2005

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ParkerVision Conference Call and Commentary, March 17, 2005

 

Jeff Parker, March 17, 2005:
“In general, we view 2004 as a transition year. One of the most encouraging achievements made last year was to successfully narrow our focus exclusively to being a wireless technology based company. Even though we closed the sale of the video division in May, due to the transition services that we provided the purchaser, our focus on wireless wasn’t truly pure until November of last year. Certainly between that and all our staff had to do for the 404 control compliance, there were certainly quite a few additional activities that we don’t have at that same degree going forward. I am very encouraged now about our focus and that we have these activities being behind us.”

 

Commentary
2004 is a transition year as well? ParkerVision sold its video business on February 26, 2004 for $14 million, and Jeff Parker now claims they did not focus purely on wireless until November of 2004. ParkerVision burned through $22 million in operating expenses in 2004, and if wireless wasn’t pure until November, how much of the $22 million in expenses can be attributed “to the transition services that we provided the purchaser,” and given these additional expenses, how much money did ParkerVision actually make on the sale of its video business? Also keep in mind that the video business accounted for 100% of ParkerVision’s revenue in 2003, 2002, and 2001, where net losses were $22.0M, $17.3M, and $16.6M, respectively.

 

Jeff Parker, March 17, 2005:
“I believe that we are very well positioned for 2005. This will be the year that ParkerVision will emerge with many areas of commercial success for the RF technology that we have been so diligent to reduce to a science and bring to market. I believe that you will find that our strategy to begin commercializing D2D in branded wireless networking products to the retail market will prove to be a significant factor in helping us also secure OEM business in this year. When ParkerVision showed up on the market last year with WiFi products that supported depth, distance, and reliability and entire home coverage. This industry is myopically focused on more bandwidth, not particularly concerned about distance and bandwidth even though it did not particularly help the vast majority of consumers using WiFi at this particular time. Distance and dead zones and reliability were not considered particularly important to OEMs until last year.”

 

Commentary
If the fourth quarter of 2004 indicates what ParkerVision will achieve, where they recorded net revenue of $19,000, then one would expect that 2005 would be an improvement, but how much of an improvement will they actually achieve? Given the track record at ParkerVision, which includes the failure of its video business and now the ongoing failure of its wireless business, we do not expect much from ParkerVision in 2005.

 

Jeff Parker, March 17, 2005:
“So over just the past few months you can see a definite change in the WiFi trends. Distance is now being touted as something to be very important, and WiFi product lines are being introduced at significantly higher prices to address this newfound industry belief that ParkerVision has been touting from the beginning. We have always said D2D is the technology enabled to best blend performance, size, cost, and power consumption and I believe as the market continues to evolve and as ParkerVision introduces more products this year you will find each subsequent product introduction will be hitting closer and closer to the sweet spot of what it takes to achieve meaningful commercial success.”

 

Commentary
If “WiFi product lines are being introduced at significantly higher prices to address this newfound industry belief that ParkerVision has been touting from the beginning,” then why did ParkerVision write down the value of its inventory by $2.8 million in the fourth quarter of 2004, and why have prices for ParkerVision’s SignalMax products eroded significantly over the past six months? In the fall of 2004, ParkerVision priced its SignalMax wireless PC LAN card at $99 and its wireless 4-port router at $200. On Amazon.com, the LAN card now sells for $69.99 and the router sells for $86.99.

 

Jeff Parker, March 17, 2005:
“We will begin sampling our 802.11g products in the very near future, likely in the next four to six weeks. Our g products will be marketed as the only digital g in the marketplace, meaning that our transceivers are digital while the rest of the industry is using the old analog transceivers. In our dialog with consumers and retail customers alike, there has been excellent reception to understanding that digital electronic is state of the art and is likely to provide much better performance and much more consistent performance over time. In our case, since our digital g is powered by our D2D technology, we will be explaining that our g solution will provide distance and data rates that will go toe to toe with the much more complex, more expensive, and more power hungry, and not as reliable technologies that are showing up in the marketplace today to try and provide better coverage.”

 

Commentary
Where are the 802.11g product samples, when will ParkerVision actually get an 802.11g product in retail stores, and will they sell enough product before they run out of money?

 

Jeff Parker, March 17, 2005:
“Our technology allows us to bring high performance g to the marketplace today while still having the very elegant designs that do not require shielding or tuning and maintaining superior reliability in the presence of other wireless devices when compared to the analog based products. In essence, our drumbeat is unchanged. I would expect that you would start to see our digital g products showing up in stores sometime late in the second quarter. I would also expect the cost and performance of our digital g to be very attractive to any number of OEMs that we are already in dialog with and for a wide range of applications. What we are consistently hearing from the OEMs we are in dialog with, many of whom who have tested now our b products, that if our digital g provides the same performance as our b products but at the g data rates, and there are a wide range of applications they are interested in using our product in. Wireless networking is still very much in its infancy, with excellent growth at present and ahead. We will be able to sample to OEMs in the second quarter our g and we are encouraged that this will lead to our first OEM business on a variety of fronts.”

Commentary
Jeff Parker promises you will “see our digital g products showing up in stores sometime late in the second quarter,” and “we will be able to sample to OEMs in the second quarter our g and we are encouraged that this will lead to our first OEM business on a variety of fronts.” Once again, similar to its existing SignalMax products, we do not expect ParkerVision to sell much of its 802.11g products, if and when they become available in stores.

 

Jeff Parker, March 17, 2005:
“We have learned a lot by working closely with our retail customers. One milestone we achieved in 2004 is the shipment of one million dollars of WiFi products. Getting products on the retail shelf was not a trivial achievement and we are now heavily focused on working with some of our key retail accounts to grow our sell through and are very encouraged about this important area.”

 

Commentary
We cite inadequate management at ParkerVision for their extreme difficulty to implement what is basic and fundamental for the rest of the industry, where companies like Belkin and Linksys have never stated “getting products on the retail shelf was not a trivial achievement.” Getting a product that customers want in stores is not difficult for most companies, but for ParkerVision, after years of trying, perhaps just getting there is a major accomplishment, though their $19,000 in net revenue for the fourth quarter doesn’t indicate much success beyond that.

 

Jeff Parker, March 17, 2005:
“Our first national retail account, CompUSA has been very supportive of our efforts. One of the chicken and eggs that a new company on the shelf has to work through is to prove that your products are worthy of getting the retailer’s attention to participate in any number of programs that will dramatically increase sell through. Of course, until you earn that right you don’t get access to all the tools of the trade so hence the chicken and the egg. I am happy to report that at CompUSA we have now earned that right, and so throughout this year you will see ParkerVision SignalMax products evermore visible in the kinds of sales and marketing activities that I believe will have significant positive impact on our sell through and in helping us build our brand.”

 

Commentary
We commend ParkerVision for getting shelf space in stores like CompUSA, but like any other product that just sits on the shelf, we do not perceive this as an accomplishment until people actually start buying the SignalMax products.

 

Jeff Parker, March 17, 2005:
For starters, you will see freestanding displays versus a very limited shelf space that we currently have. These displays will help us better describe to the consumer the many advantages of the D2D technology, our digital G and its digital transceivers, and why our product is an excellent choice for both home and small businesses alike. This will also help us to build better brand awareness all around. You will also see ParkerVision products advertised in Sunday magazine circulars. This activity will start more toward the middle of the year, and I believe you will see us every three to five weeks depending on the time of the year. ParkerVision will also be participating in various programs that will help the retailers and commercial sales associates much better explain why ParkerVision products are an excellent choice for many of their customers’ applications.

 

Commentary
With less than 0.1% market share, ParkerVision has already lost in wireless networking, and they have no chance of surviving, so advertising their products will only add to their already exorbitant sales and marketing costs, and will ultimately expedite their path towards bankruptcy. 

 

Jeff Parker, March 17, 2005:
As many of you have seen on our website, Larry Mondry, the CEO of CompUSA uses ParkerVision in his own home because of the reliable broad coverage that he enjoys from our product. On the topic of additional products, we expect to be sampling our first cordless phone product based on the D2D products as well in the next four to six weeks as well. It has taken us a little longer to complete this product, but for those of you that have used our WiFi products, I hope you realize that we don’t field the product until it is absolutely right. That has been our goal and our mantra on our cordless phones and we are well down the path of getting there on that. However, there is quite a bit of interest in various channel partners for the cordless phone from ParkerVision who are anxious to try this phone based on the reliability and quality of our digital transceivers.

 

Commentary
Continued delays and unfulfilled promises are for mismanaged products that do not work, which in turn increase the cost of making the product. ParkerVision entered the cordless phone market on July 20, 2004 when they acquired the Aero2000 cordless phone from Consumerware for about $1 million, where Jeff Parker said: “We expect to be in production with the D2D-based cordless phone in the fourth quarter of this year (2004).” If and when ParkerVision introduces its cordless phone, they will attempt to compete on price and quality against established brands from competitors like Panasonic and GE. ParkerVision will therefore be a low-volume, high-cost supplier with insignificant sales competing against dominant, high-volume, low-cost competitors with well-known brands. This is a formula for failure, and as a result, ParkerVision’s not-yet-released cordless phone has already failed on two levels: they cannot even get it to market and when they do, it will cost more than the competing high-quality brands.

 

Jeff Parker, March 17, 2005:
“The first two and a half months of this year have been extremely busy for the company, our WiFi products have just landed on the shelves, I believe, last week of Office Depot of Canada which now begins to give us more presence in the Canadian marketplace. We announced in January, our digital power amplifier technology and product line up which I believe will both significantly enhance our own brand of products later this year and early next as well as making our WiFi offering even more attractive to OEMs. The power amplifier also extends our offering into the important cell phone marketplace, and since our January announcement, we have had many contacts by OEMs for both cell phone and WiFi applications alike. The reaction to this offering has been extremely good.”

 

Commentary
And who are the paying OEM customers? More specifically, if ParkerVision’s power amplifier technology is so good, why haven’t they closed one single OEM deal?


J eff Parker, March 17, 2005:

“We also recently announced that we have selected IBM Microelectronics, where we will manufacture our power amplifier chips and likely additional products to be manufactured there as well. This relationship is in addition to our already existing good relationship with Texas Instruments. I am encouraged that IBM will use ParkerVision as a valuable up and coming customer as there have been articles about IBM’s semiconductor business moving away from taking on smaller emerging customers at the rate that they did in the past.”

 

Commentary
We do not consider paying IBM, or paying Texas Instruments, a vote of support for ParkerVision’s D2D technology because both TI and IBM will not reject a paying customer.


Jeff Parker, March 17, 2005:
“And, of course, as Cindy just mentioned, ParkerVision completed a private placement for just over $20 million net to the company to continue to fund our business plan. I believe that the balance of this year will continue to be just as busy with advances as what you’ve seen in the first two and half months. Hence my early comment that it’s my view that ParkerVision is very well positioned towards achieving a growing number of commercial successes this year and beyond for its unique wireless technologies.

For those of you that have been invested in the company for a number of years, I continue to thank you for your support and enthusiasm and belief in us. Bringing a disruptive technology to market, making it a commercial success, has many challenges and obstacles to maneuver around, and I believe we are getting better and better at getting to our goals with a technology that I still believe has been an extraordinary investment of our time and dollars. To those of you that are more recent shareholders, we also thank you for your support, and for discovering the opportunity that ParkerVision is now narrowly focused on making a commercial success, and we hope that you will become long term shareholders that will enjoy shareholder increases that you will find are very attractive.”

 

Commentary
With its history of fifteen years of losses and negative cash flow, ParkerVision has now decided to become “narrowly focused on making a commercial success?”

 

Jeff Parker, March 17, 2005:
And so on that note I think this is a good time for us to open up for questions, so ahh, could we ahh, take questions please?

 

Commentary
After completing a private placement just two days prior to this conference call on March 17, 2005, the only question came from Will Lewis at Baystar Capital, who began his question with: “Hey Jeff and Cindy, congratulations on a pretty important transition year.”

 

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