Financials

 

August 8, 2007 Q2 2007 Earnings Conference Call

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Corporate Participants
Paul Henning
Parkervision, Inc. - Cameron Associates company representative
Cindy Poehlman
Parkervision, Inc. - CFO
Jeff Parker
Parkervision, Inc. - Chairman, CEO

 

Conference Participants
Mike Boylan
McGinn Smith – Analyst
Philip Anderson
Pinnacle Fund – Analyst
Greg Lowen
Crossfire Capital – Analyst
John Stanley
Stanley Partners – Analyst
Wilson Jaeggli
Southwell Partners – Analyst
Daniel Lewis
Jim Partners – Analyst

P R E S E N T A T I O N

 
Operator
Good day, everyone and welcome to the ParkerVision second quarter earnings results conference call. Today's call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Mr. Paul Henning. Please go ahead, sir.
 

Paul Henning
Parkervision, Inc. - Cameron Associates company representative
Thank you. Before we get started, I want to remind listeners that this conference call will contain forward-looking statements which involve known and unknown risks and uncertainties of our business, our businesses and the economy and other factors that may cause actual results to differ materially from our expected achievements and anticipated results. Included in these risks are factors such as the ability to maintain technology advantages in the marketplace, achieve timely market introduction and acceptance of our products, maintain product patent protection and the availability of capital among others. Given these uncertainties and other various factors about our business, listeners are cautioned not to place undue reliance on any forward-looking statements contained within this conference call. Additional information concerning these and other risks cane found in our filings with the SEC, the Securities and Exchange Commission. We'll begin today's call with Cindy Poehlman, the CFO, who'll review the quarterly financial results of the second quarter, she'll be followed by  Jeff Parker, the CEO of ParkerVision, who'll report on the Company's business activities. Cindy, would you like to go ahead, please?

 

Cindy Poehlman 
Parkervision, Inc. – CFO
Thank you, Paul, and thank you to those of you who are joining us for our second quarter update. Our results this quarter reflect90,000 in revenues with a net loss of 4.4 million, or $0.18 per share. This compares to a second quarter 2006 net loss of 4.3 million or $0.18 on a per-share basis with no revenue. Year-to-date, we reported a net loss of 8.9 million, or $0.37 per share, compared to a net loss of 8.6 million, or $0.38 per share, for the same period last year. We ended the second quarter with 19.4 million in cash, which is an increase of approximately 400,000 from our cash position at the end of the first quarter. I'd like to spend a couple of minutes on the revenues and also on our cash position, which are the most notable items from a financial standpoint this quarter. Our revenue this quarter was from engineering design services. As you know, we announced the first licensee of our d2ptechnology in May with the signing of a licensing agreement and an engineering services agreement with ITT Corporation. Our second quarter revenues represent the start-up activities with ITT, which occurred during the last six weeks or so of the second quarter. Our future service revenues will be impacted by the level of services provided under this contract which may vary from time to time, but obviously, will also be favorably impacted by having a full quarter of results versus the half a quarter of results we see this time. In addition, we do anticipate that we will have additional customers of our engineering services in future periods, which will also favorably impact revenues. In connection with this quarter's service revenue, we recorded costs-of-sales of approximately 76,000. Cost-of-sales reflects not only the direct labor cost of the individuals providing serves, but also an allocation of indirect engineering overhead. These indirect overhead costs are not incremental costs directly related to the IT services, but rather our facility and other similar operating costs that would be incurred regardless of the services performed for ITT. With regard to the cash positions, we saw a $400,000 overall increase in our cash balance this past quarter. This is the result of approximately 3.7 million received from the exercise of standing options and warrants during the quarter, offset by 2.7 million of cash used for operations and an additional 600,000 of cash invested in capital equipment and patents. Year-to-date, we’ve received a total of approximately 4.4 million from the exercise of options and warrants, primarily warrants priced in $8.50 to $9range. Our current cash position of 19.4 million carries us well into 2008 without consideration of additional cash from customers. I’ll be happy to address any questions you may have regarding the financial statements during the Q&A session at the end of the call today. But for now I'd like to turn the call over to Jeff Parker for an update on business activities. Jeff? 

 

Jeff Parker
Parkervision, Inc. - Chairman, CEO
Okay. Thank you, Cindy, and thank you to those of you who are joining us this afternoon for our quarterly update. This quarter, I’d like to focus on three areas that are representative of the progress we are making. First our relationship with our first d2pcustomer, the ITT Corporation. Secondly, the status of relationships with our commercial target customers and third, the status of our technology. As you heard in our last call about 12 weeks ago, we welcomed ITT Corporation as the first licensee of ourd2p technology. We began providing services under an engineering services agreement shortly thereafter and our team is very excited to be assisting ITT's technical team in designing products that incorporate our technology.

 

As I mentioned in our previous update to you, this relationship has helped credential what we've proposed to commercial customers and is certainly providing a positive reference point. While I won't get into the specifics of ITT's application, I feel very comfortable reporting as we progress down the path of assisting ITT and applying d2p to their specific needs that the technology continues to demonstrate the strong benefits that we've been discussing since the inception of d2p. I also want to acknowledge our strong technical leaders and their teams and I am very pleased with the tremendous progress that we've made in just a short 10 weeks in working with and supporting ITT. As we mentioned previously, ITT's product needs are extremely synergistic with the needs of the mobile handset market.

 

This is important because it enables us to move forward with, ITT's design goals without losing sight of our primary target market and its needs. So that leads us to an update on business development activities in the mobile handset market. Each quarter I wrestle with how to help investors understand the significant progress we're making on this front while at the same time not providing details that are confidential and inappropriate to disclose at this time. So I've decided to take a few steps back and address this from a 10,000-foot view rather than a 30-foot view and the way I'd like to do this is to talk about why our technology continues to be such a compelling fit for the cellular industry and why we remain so confident that we will successfully establish a leadership position in this industry.

 

As 3G phones become more prevalent in the marketplace, the issue of improved talk time has become more widely accepted as a known and significant barrier to consumer satisfaction with 3G networks. Here are just a couple of the many examples that I can cite for you. Steve Jobs, the CEO of Apple was quoted recently in an interview about why Apple's iPhone didn't adopt 3G's wideband CDMA into their phones, and I quote, when we looked at 3G, the chipsets are not quite mature in the sense that they're not low enough power for what we were looking for. They were not integrated enough so they took up too much physical space. We cared a lot about battery life and we cared a lot about physical size.

 

Down the road, I'm sure some of those tradeoffs will become more favorable towards 3G, but as of now, we think we made a pretty good doggone decision, end quote. And Steve's comment is quite representative of what we're hearing from many others in this industry. There's another example of the adverse impact that 3G has on battery life that can be found on a technology website called [aninpeck], where they ran a Samsung phone, both in the 2-1/2G EDGE mode as well as in the 3G wideband CDMA mode and basically their results show that 3G reduces the talktime by 1/2 versus EDGE. In fact, the actual talk that they calculate, which is based on a 1,200 milli-amp battery, which is a pretty large mobile phone battery, correlates exactly with the talk times that our calculations have predicted for legacy technologies and that we've been providing the OEM's for some time now.

 

My only other comment on the importance of increasing talk time is that the talk time calculations we provide for legacy technology are assuming a relatively ideal condition, meaning that the phone performance in these tests usually isn't degraded as it would be in real life when it's held up to your head. If not being operated over long periods of time and areas that are hard to reach, such as the interiors of large buildings and such. Which is why some of the network carriers that we work with now tell us that our calculations on the legacy technologies are oftentimes too generous in what a traditional solution for wideband CDMA actually provides and they get complaints all the time for phones with talk times that don't even achieve two hours. My point is that because the 2G GSM networks can use power amplifiers that can operate over a large non-linear range, the talktimes are not as adversely impacted in non-ideal real world conditions as 3G phones whose amplifiers must be kept in the linear operating region and its efficiency is far worse than what a 2G phone can achieve in non-ideal conditions. Just to remind you from previous discussions we've had, d2p significantly closes the gap by enabling talk time increases for wideband CDMA of about 70% over traditional linear power amplifier based solutions. In terms of opportunity for d2p and 3G, this phase is just beginning. In 2007, there are 240 million 3G handsets that are predicted to be shipped, but it is expected that this number grow to 500 million per year by 2010, which will still only representing about30% of the total handset shipments.

 

Because 3G products are really in their infancy, OEMs will have their eye on how to find efficiencies in lots of areas for many years to come, as well as the marketers of those handsets will be looking to add features to 3G. The OEMs will be looking to find space savings for the fundamental phone functions so that new features can be added. And remember, the average life of a cell phone handset is only about 18 months. So designing opportunities in this space tends to be fairly frequent. Another example to help you understand that this 3G market will have a lot of time opportunity in front of it, is to look at 2Gby example. By the year 2010, it's predicted that 70% for of the market will still be just for the fundamental 2 and 2-1/2G handsets.2G started shipping in 1991 and 1992, over 15 years ago, yet some major chip companies are just this year introducing lower cost, more highly integrated 2G chips that they made significant investments to bring on the market some 15 years after 2Gstarted shipping. 3G wideband CDMA networks were just being made available in many of the major markets over the last year or two.

 

So wideband CDMA is in its infancy and there will be many years of opportunity for those that can bring the significant benefits to products to serve that space with meaningful improvements. In our situation, we've added the benefits that our technology is also highly beneficial to some of the extensions of 3G, such as the 3.9G, HSUPA, for high speed data uplink, that many carriers will want to provide to their customers assuming practical solutions that are power efficient can be fielded. So some of you may ask why it is taking so long to get the target customers adopting such a beneficial advancement to their products. In reality, companies of this size and stature move at a pace that is comfortable for them and that has been proven  to be successful in adopting new technologies into their products.

 

Since the only real benchmarks that the investment community can see is the announcement of a material agreement. You don't get to see all the other progress that we see before that occurs. And we continue to see plenty of signs that point towards adoption. We have OEMs that have moved into very specific implementation discussions with us that ties up some of their precious resources and that we don't believe it's just an exercise. We have OEMs that have indicated that they're sorting out exactly how they intend to do business with us and that this is taking some time as it isn't a step that they do casually and in addition to this progress, that we're seeing behind the scenes with OEMs, that we've been engaged, we also have a few new dynamics that have occurred recently that we think may help us in creating a greater sense of urgency. First, we've been approached more recently by other companies in this space that are seeking to create better solutions for their customers.

 

And while these companies may not represent the primary targets that we've been in dialogue with, some of these are very large companies and still on the top tier and particularly to the extent that their adoption of our technology haste potential to decrease a sense of urgency we're looking for, we will certainly foster these relationships. Secondly, as you are aware from previous conversations, we've initiated a program directed at network carriers about a year ago. We believe that this was an important segment of the marketplace to educate about d2p technology and the benefits. One of the benefits from the program that we're seeing from these efforts is that we're getting firsthand feedback about what wireless consumers do and do not like about their cell phones and this helps us validate and quantify our benefits. It's very helpful and carriers confirm that the actual talk time their customers are experiencing in the wideband CDMA is significantly shorter than what was predicted and printed on the box. In fact, several carriers confirmed to us that their customers are not satisfied with handsets whose talktimes have dropped from the 4 to 6-hour 2G talk time down into the 2 or 2 1/2 hour timeframe. In fact, some are experiencing even less than two hours. And some of our carrier relationships have now evolved to result in carriers who are willing to proactively encourage OEMs to move forward with our technology and who have even said they would participate in network tests withd2p and have even shared a willingness to shoulder some of the product development costs for an OEM to incorporate d2pinto their products.

 

Lastly, I'd like to discuss the progress we've made with the technology and our processes for integrating this into products. Since we're confident the commercial handset adoption is when not if, we continue to advance the tools and processes that will assist OEMs in moving as quickly as possible through the design engineering all the way in design and production. We’ve created a great deal of silicon verified intellectual property and it's now at this point, we've been able to develop and evolve our own tools and processes that would help speed OEMs to market. We've also started to work with a tier one RF chip manufacturing test equipment company that help OEMs move to volume productions more quickly. What these ParkerVision tools, processes, silicon verified IT and manufacturing test readiness all mean is that d2p is being readied and in my opinion, will rival the way legacy technologies are designed and readied for production.

 

By being more streamlined and timed to market and providing the support that enables OEMs to move to successful implementation with a very high level of confidence. So ParkerVision hasn't just created the technology and the silicon that verifies that it performs as built, but it's creating many tools and processes to enable design, development and volume manufacturing support to ensure success for OEMs that adopt d2ptechnology.So what I hope you take away from today's call is that we remain highly confident that we will successfully bring some of these OEM relationships that we're building to the close of successful business programs. Our technology is truly in the right place at the right time, it provides advances for handsets that are spot-on and there's nothing in alternate technology that we've seen or even heard about the challenges what we are offering. 3G networks are just now deploying and the growth projected for3G over the foreseeable future is tremendous. And what is so very compelling about our technology is that an OEM who adoptsd2p is adopting a radio platform solution that will carry them well beyond the 3G market into 3.9G and even 4G. In fact even into other applications that they may want to evolve into later. A single radio platform that will allow them to design mobile handsets well into the future without an architecture redesign that leverages the most use of low-cost CMONTs and CMONTS silicon germanium of any architecture available. So to recap, we are very pleased with the launch of our formal designs, processes with ITT and how our technology is delivering the benefits we believed it would. We are making excellent progress in advancing into solid relationships with target cellular OEMs who continue to spend substantial time and energy on our offering and how it fits into their future product needs and we’ve had the good fortune recently of expanded interests coming our way from other OEMs that we didn't target and perhaps who will move into relationships with us relatively quickly. We've started to see growing support from several network carriers that we start dialogue with last year and lastly, we continue to advance the technology offering to include the science and tools that will enable our customers to get into product and production with a certainty and at a pace that rivals anything that we’re aware of in this segment in the industry. Our foundation is solid and as the year progresses, I believe we'll be able to report that this foundation continues to grow and be reinforced in very meaningful ways. So, with that,
 

Operator
Why don't we go ahead and open up this call for questions that we may have

Questions and Answers

Operator
Thank you. (OPERATOR INSTRUCTIONS) we’ll take Mike Boyla  with McGinn Smith.

Mike Boylan
McGinn Smith - AnalystGood afternoon. Are there any models regarding, that you can disclose regarding signing up any OEMs, would it be like some dollar figure per handset or something like that?
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
The business model that we've been in discussions with, and of course, you never know until you got something signed and done, but looks a lot like what we've done with ITT in the sense that there's an engineering services agreement that people seem very interested in because the parties, we and their engineering team work together to define the process of getting this thing done, and then we assist them in various ways of helping their own team get the designs done. And then there's, as I mentioned at the end of the call, tools that we can provide that can be very helpful in using this technology and turning it from what they conceive it might want to be into exactly how they might want to partition it in and embrace it. And the there's also in all the dialogues we're talking to, a royalty and, of course, it's based on application and volume.

Mike Boylan
McGinn Smith - AnalystOkay, thanks very much.
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
Thank you.
 

Operator
( OPERATOR INSTRUCTIONS) We'll go next to Philip Anderson with Pinnacle Fund.

Philip Anderson
Pinnacle Fund – Analyst
Hi, Jeff, how are you?
 

Jeff Parker
Parkervision, Inc. - Chairman, CEO
Hello, Phil. Thanks, fine.

Philip Anderson
Pinnacle Fund - AnalystGood.
Jeff, in three months or so since ITT has signed up and whatever advancements have been made on the technology in proving to a customer that your chip set can do what you profess it can do, can you talk to us about, can you elaborate, become more specific. You mentioned the word tools and processes, how those have been advanced and can they be used to shrink the sales cycle with both the OEMs that the Company's been going after for a year or longer now and also, you mentioned some new prospects which have come in, a multipart question as usual for me, van those tools and processes be used to condense the sales cycle for those prospects which have come over the transom recently?
 

Jeff Parker
Parkervision, Inc. - Chairman, CEO
Okay, that is a good question. So, yes. So the work at ITT, it's been encouraging from a couple of fronts beyond just ITT. One of the reasons that I'm so pleased with what's happened, is I've watched our technical team support their needs in a way that we’re able to get them information in a very timely basis, satisfy their questions, think they've become obviously encouraged and enthusiastic about the technology to start with or they wouldn't have taken out a business relationship with us. I can’t speak for them but I think that's even grown further since they've been able to start to apply to their actual application and seen that yes, the technology does what they need it to do. And then in terms of the tools, there are many different very exciting tools that our team has developed that will help, because we unify the entire process from a base spanned input signal all the way to the RF output at power because we control that whole function, we've been able to develop some very unique, I think very exciting tools that this industry will look upon some day as not being a trivial part of our technology. It allows them to simulate how it's going to function, assess the performance of their wave forms under various operating conditions, automate lot of the processes of determining various aspects of the performance and how it'll work under different system partitioning options. Still it's to numerous to mention but it's kind of how do you support a team of engineers who are trying to take now a technology and drive it into products with time to market being a primary consideration and with the end result being highly predictable, which in the RF world, lots and lots of engineers will tell you, is hard to predict. And I think what our team is doing, at least with our technology making that much more predictable and much more, giving people a much higher level of comfort that this has been reduced to a science. And so that's a lot of what we've been showing and working with ITT on, and I think it will definitely help commercial OEMs. It'll help anybody who uses our technology get to market faster just because it automates a lot of the design process and, frankly, it consolidates what you have to do in a traditional approach using many, many, many people down to many fewer people, which, again, helps time to market also helps keep your costs under control. I hope that answers your question. It's kind of a complicated topic but it's -- I'm very pleased with what I see is happening with ITT and how that’s translating into our commercial customers.

Philip Anderson
Pinnacle Fund – Analyst
When your engineers are using these tools, which model out the performance and so on, would an engineer at a prospective customer shop have -- how much confidence could they have that this modeling would in fact be accurate in the real world? Can they get enough confidence that they would be confident to give you a purchase order?
 

Jeff Parker
Parkervision, Inc. - Chairman, CEO
The beauty is our simulation for these tools match up with the real silicon. So I think there's a very high level of confidence. In terms of does this translate into sales, one would certainly think so. I mean everything we can do to help people understand that this isn't your grandparents RF, it's tomorrow's RF, I think, will help us get more and more traction.

 
Philip Anderson
Pinnacle Fund – Analyst
Jeff, what is -- and then I'll hop back in the queue, but what is your sense as to how these tools may have reduced the time to market if someone were to sign a contract with you today, can they get their phones into the marketplace in nine months, in a year, longer?
 

Jeff Parker
Parkervision, Inc. - Chairman, CEO
That's a little bit of a complicated answer only because it depends on things like are they going to take our silicon-verified IP on some of the fabs that we've developed it and go run with that, take it and advance it to the next steps to get it to production volume readied and characterized and are they going to partition it the way we partitioned it. If they do all those things, they’ll get to market much quicker if they decide, hey, we're going to start from our own process and start from the ground up it’ll obviously take longer. I hesitate to give you an exact timeframe other than to tell you that in the RF world, if they were to take the world we've done and take it to the next steps, use our tools, I think you'd find they get to market much faster than with any legacy technology they're working with. And I think that's exciting to me is because, now we just don't have a great technology with the benefits the size and costs and efficiency; we also have a time-to-market story. But, I want you to be clear time-to-market in the RF world and the RF components definitely take longer than your digital, pure digital components and things like that. If we're comparing apples to apples, where we're starting from versus starting with the legacy technology, I think we would be found to be extremely attractive. I think that is very exciting.

Philip Anderson
Pinnacle Fund – Analyst
Okay. Thanks very much, Jeff.
 

Jeff Parker
Parkervision, Inc. - Chairman, CEO
Thanks, Phil.
 

OPERATOR  INSTRUCTIONS - We'll go next to Greg Lowen with Crossfire Capital.

Greg Lowen
Crossfire Capital – Analyst
Hey, Jeff, how are you doing? This is Greg Lowen.
 

Jeff Parker
Parkervision, Inc. - Chairman, CEO
Hi, Greg, fine. Thank you.

Greg Lowen
Crossfire Capital – Analyst
I want to ask you a question; I don't want to put you in a difficult position. It's all about facts and you decide how you best can answer it. But if you don't mind.
 

Jeff Parker
Parkervision, Inc. - Chairman, CEO
Yes.

Greg Lowen
Crossfire Capital – Analyst
One of the statements you've made repeatedly, whether in print or verbally is that you are in contact with OEMs that represent75% of the phones manufactured, something like that.
 
Jeff Parker
Parkervision, Inc. - Chairman, CEO
That's right, yes.

  

Greg Lowen
Crossfire Capital – Analyst
And by definition, that means the only one that one can add that speak to the clarity with that statement is that you have said indirectly that you're in contact with Nokia because that's the only way to get to 75. Everyone else can slip through the cracks. With that statement, and I know you're not making it directly, but it's an analysis that's fair, Nokia came out with an enormous set of announcements today and if you don't mind, I just want to read a couple of thoughts and then I just want to so where or if can you reflect on them because they came up with a chip set development strategy today in which Nokia will discontinue parts of the own chip set development and expand its use of commercially available chip sets. However, they will continue to develop its leading modem technology. Nokia will then license this technology to the chip set manufacturers who will use it in chips sets they will develop and produce for Nokia and if they decide, produce for the open market. The definition of a modema modem converts the digital language of a chip to the analog language of a radio. Therefore, it sounds somewhat into our area of expertise. Is there anything that you can offer to discuss how Nokia's changes still make us relevant, irrelevant, more relevant, I don't even know how to ask the question.
 

Jeff Parker
Parkervision, Inc. - Chairman, CEO
Yes, I understand. Here's about all I can say. All I can say is that the trends that I see in the market both from, starting at the consumer who uses a handset all the way back through the guys who are responsible for creating and making the handsets, one of whom you just mentioned. All those trends, in my opinion, are largely in our favor and that I believe will benefit any company that can show up with silicon-verified and electrical property that truly drives the kind of benefits that we can provide and can demonstrate and can prove 100 times over. So, I would consider announcements like that to be favorable and that’s about all I can say.

Greg Lowen
Crossfire Capital – Analyst
All right, just in -- to work with the language that you just used, can you then give us some sense of how in your working with these OEMs, how they have come to, I don't know what the word is, to appreciate the IP and the value and the protections they  have generated for the IP?
 

Jeff Parker
Parkervision, Inc. - Chairman, CEO
Yes, that's a process. And some of it is -- some of that is by the way a little time consuming. We'll sit down and we'll talk about where the unique intellectual property is, why ours does something that others have been unable to do. We have the good fortune of having a pretty strong foundation for having prepared for this moment by putting in place an intellectual property program years ago that has a very strong discipline of how often we file, when we file, how we file, the nature of our filings, how we track them, how we work with the patent office, the expertise that's been developed right from our CTO's office on through the Company. And so the benefit of that is it allows us to sit with these OEMs and to say, by the way, here's some of the intellectual property that's been filed and depending on the OEM and where we are in the discussion and what kind of agreements in terms of non-disclosure we've got with them, we can provide them with a little or a lot. The other thing that we have is quite a nice track right now of patents that are issuing. The first d2p patents issued some number of months ago covers a very key portion of the technology. Not all of it, but a nice key portion of it and we've been able to now openly talk with people about that, and by the way I might have had a similar OEM look at that and go why in the world did you guys get a patent on that. I think people look at that and go wow, that's really cool. That's a good one. And there are others, and I can't talk about specifically what they cover but there are others that will be in my opinion issuing in the near future that will continue to build that level of confidence with OEMs that we have got this thing covered and we've got it covered very adequately. We have a very sophisticated program for that that we can get OEMs on the right page of understanding that they're not going to look silly if they agree to pay us for this IP that some day others aren't going to have to do that. I am very comfortable with our position on that.

Greg Lowen
Crossfire Capital – Analyst
Thanks, Jeff.
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
Thank you.
 

Operator
And we'll go next to  John Stanley with Stanley Partners.
 

John Stanley
Stanley Partners – Analyst
Good afternoon. A couple of questions, if I may. Jeff, how do you compare to legacy power amp companies such as Anadigics that are now selling into the 3G space who are claiming similar benefits to what the d2p offers?
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
That's a good question. When you look at doing an analysis on a 3G handset and you say I want to see what does it take to really get meaningful increases in talk time. Recognize, first of all, you've got to increase the efficiency of the entire transmit chain by like hundreds of percent. Recognize that transmitter and power amplifier are only a piece of the phone, right. You've got a receiver in there, you've got a base stand processor for small periods of time while you're talking, the display is on and other things are going. In order to give the kind of talk time increases that we describe, you've got to do something that really significantly increases the efficiency like 100s of percent. What we see in the market today from companies who deliver power amplifiers, is first of all, that's just a piece of the puzzle, that's not the whole solution. So you can't just look at the power amplifier and come to a conclusion. You can get a sense and you get a little bit of an understanding but you got to also add the other components that created a transmitted radio signals, the modulators, the frequencies synthesizers, et cetera. In addition to  that, you can't just look, a lot of the power amplifiers spec sheets, John that I see out there, will pick one or two output powers that might be used in a phone and get examples and say well from that you drive a conclusion. That's not true. Okay, if I just look at full power and a mid power, which is typically what are spec, and I say well at full power I'm X percent efficient and at mid power I'm Y percent efficient, therefore you can calculate a talk time, that's not true. You have to look at what’s the entire efficiency curve from full power all the way through the curve of power control because these power amplifiers for 3G are being controlled over a wide range of power output and you have to plot the efficiency of that curve on top of what’s the network curve in terms of the power usage of the power output powers and it's a pretty complicated affair. And frankly, weave the good fortune of having some folks in our organization who have a long history and a lot of knowledge in how to do those calculations and it's not trivial. And so when we sit with carriers and we walk them through that, we've had feedback from some of the carriers of wow, you know, you guys are pretty unique. We typically don't have people from the component companies coming in here who understand this as a system. They then to pitch a component, they pick a couple of points on a curve and they tell us from that, we can give you longer talk time. Well, I've done those calculations based on some of the work, the math work of our technical leaders and when you look at some of the new power amplifiers out there that support multiple optimized power amplifiers in the same package, maybe it’s got a big power amplifier for full power and they switch to a small power amplifier for mid power, the net result, John, they increase the talk time for a 3G handset, literally some small single digit percentage. And if we had a lot of time, I could walk you through why that is, we've walked other people through that. Does it increase talk time? Yes. Does it increase talk time significantly? No. What we see out there today are linear power amplifiers that people are trying to control a little more smartly. Some of them are using switching mode power supplies, by the way, where they'll actually control the voltage going to the main portion of the amplifier and kind of scale it as the power level out to the power amplifier goes down. And, by the way, when I suggested in this conference call that we see a 70% increase in talk time for wideband CDMA applications, that's comparing it to a highly controlled, very high quality wideband CDMA power amplifier. I'm not comparing us to the worst thing that out there. I'm comparing us to the state-of-the-art of what's out there. So yes, over the traditional legacy, these new linear power amplifiers will increase your talk time a few percent and that's pretty much the story.
 

John Stanley
Stanley Partners – Analyst
Okay. And then also, Jeff, is there any sort of push-pull from the carriers and is that creating any incentive or sense of urgency for the OEMs?
 

Jeff Parker
Parkervision, Inc. - Chairman, CEO
It's more recent, this type of activity or, as I mentioned, we started talking about it a year ago. But just like the OEMs, they did their due diligence, they've been to our laboratory, they've seen how the technology works, they've read our patents and they go through the whole process. And so it's now culminated in the next step with some of them saying. Hey, we really like this. We like the fact that you can do so many different modes of cell phone standards to the same power amplifier, to the same chain. We like the efficiency, we like the fact that it frees up some space and so they see enough of an advantage that, yes, they’ve just recently said how can we help you and we said well, you could start to ask your OEMs to put this technology in their handsets and we've actually provided some of them with who are the OEMs we're talking to. And yes, they're starting to try to help us get that done and I was very pleased to hear when some of them said, hey, you know, we wouldn't be -- it wouldn't be the first time. We've actually been willing to put some money toward helping design this in. If that's an objection by somebody, we can help ease that objection if that's what it takes to get it going. That's more recent and I can't tell you it that it's helped yet but I think it will. It certainly can't hurt.
 

John Stanley
Stanley Partners – Analyst
Okay, thank you.
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
Thank you.
 

Operator
And we'll go back to Mike Boylan with McGinn Smith for a follow-up.

Mike Boylan
McGinn Smith – Analyst
Hi, Jeff, to follow up on the questions brought up regarding Nokia, I missed that story today but I have been reading it as we’re on this call and they refer to it as musical chairs with a lot of people changing. They mentioned a technology to run on second-generation phones called EDGE.
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
Right. Right.

Mike Boylan
McGinn Smith – Analyst
Unless I missed it I didn't hear you comment that do you guys --
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
We do EDGE. Our focus has been on doing the combination of GSM EDGE and wideband CDMA, or what people trying to call WEDGE. We also show people sure, CDMA. But we actually have some interesting efficiency curves that we've shown recently on EDGE that was actually dated, it was taken from an OEM themselves and plotted on a chart and it was plotted against best EDGE efficiencies that are in the market today and our efficiency curve is quite high and flat across the power range and the traditional best curves are sharply dropping with the power. So it's a very nice pitch for our technology, frankly. But the reason you don't hear us spend a whole lot of time talking about EGDE, is people today aren't really having a big issue with talk times in EDGE. EDGE, just like GSM, is a bursted signal, it doesn't transmit all the time, it transmits maybe an eighth of the time. So it’s on and then it's off for seven-eighths of the period and then it's on and it's off again. It depends on how much data you're trying to move through it, it could be on for longer periods. Generally speaking it's not on for very long. In fact, I believe the iPhone, which is using EDGE, chose the lowest data-rate EDGE that's available, so it's on very little periods of time. Now it doesn't move much of data, so that is the penalty. But because it also doesn't run very long, it's not using up much power so the battery life on EDGE phones is pretty good. Five hours, four, five hours, maybe six hours if it's a big enough battery. So that's not where people are motivated to do something different. We have to do EDGE and be backwards compatible. Just like we have to do GSM and be backwards compatible. It's the 3G networks and beyond that people are struggling with and that's why we focused a lot of our efficiency discussions on that.

Mike Boylan
McGinn Smith – Analyst
This announcement today by Nokia is really -- 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
Well, I think the announcement by Nokia is not uncommon as a trend that you see, which is people moving toward more sharply-focused activities on what is it that they do do well, can be real efficient at, can be highly profitable at, and then turning to experts in other areas and asking them to focus on their area of expertise, and certainly one of the things Nokia over the years has shown is they're a wonderful integrator of all kinds of technologies and components, and probably one of the best, if not the best, supply chain management companies in this space in the whole world. So, I think, that's why I said earlier, when this topic was brought up, that will trend in my opinion, as a very good bellwether for ParkerVision because we're highly focused on a best in class solution, for a very important but frankly very difficult space. RF power amplification is not for the faint at heart. And I can tell you lots of people have tried over the years and even decades, and we certainly fight this on our higher arton our patents and have failed. So the fact that large tier one leadership companies like Nokia have chosen to focus and enable other people to kind of pick up the ball and run with it on their area of expertise, I think is a great bellwether for ParkerVision.

Mike Boylan
McGinn Smith – Analyst
They do mention that Texas Instruments is working with them on software tools for third generation 3G chips.
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
That would be consistent. They've had a long standing relationship with TI in that area, in fact.

Mike Boylan
McGinn Smith – Analyst
Would you see that as a competitor to you or possibly a compliment?
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
More of a compliment. My view is Texas Instruments real focus themselves is really on the base stand and modem side. Not so much on the RF, not that they don't do some RF. I look at a lot of telephone tear down reports where you can buy reports of phones that have been torn down and I look at them every week, we have a service we subscribe to that provides those to us and I can't ever in the last several years of looking recall ever seeing a single TI component in the radio. I know they make them, I know they do them, but I haven't seen them. They're certainly not -- I haven't seen them in the main stream of the tier ones.

Mike Boylan
McGinn Smith - Analyst
That's an interesting thing that you look at. So you look at the phones being torn down to see what's in them?
 

Jeff Parker
Parkervision, Inc. - Chairman, CEO
Oh yes. We see study much silicon is used for each function, what the cost is, what the trend, the whole bit.

Mike Boylan
McGinn Smith – Analyst
Thanks very much.
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
Thank you.
 

Operator
And we'll go next to Philip Anderson with Pinnacle Fund.
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
Hello.
 

Operator
Mr. Anderson, please go ahead.

Philip Anderson
Pinnacle Fund – Analyst
Hi, Jeff. Sorry, I had the mute button pressed. With the advances that you have made on the tools on the modeling ability and how accurate it is, do you think that that would help a new customer come to a purchasing decision quicker? And let me just add on to that. The Company has been proving itself to its prospective cellular OEM customers for some time now, perhaps even for a year or longer. Would a smaller prospective customer, do you think, perhaps be able to make a decision faster now that they're coming in with the benefit of these new very accurate modeling tools?
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
I think that's -- yes, I do. As I said earlier, anything we can do to help our customers automate process, reduce the number of people necessary to do the implementation. Increase the certainty of a decision success and speed them to market, I think, opens up the opportunities of who we can do business with successfully.

Philip Anderson
Pinnacle Fund – Analyst
In engineering and R&D bandwidth perspectives, would you be able to service a large and a small customer simultaneously, would you have to do them one after the other?
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
You know, Phil, honestly, the only reason I don't want to answer that is because it totally depends on what they need. If the customer is looking to do various implementations for various system partitioning and are willing to put this on multiple platforms. There are so many things that could influence that. I'll put it to you this way, I can feel legitimate circumstances where we could only support one other customer right now, who engaged with us in a way that would really kind of tie us up for a bit of time until we could expand our resources and expanding resources in our pool takes some time if you're going do it right. Or, I could see a very nice relationship where they do a lot of the heavy lifting, we do support them, but it's a very narrow focus, and that could definitely enable us to have more than one additional commercial customer at the same time. It really depend son the customer and what they expect and what we agree to do. I don't want to skirt it but the answer is really you could go either direction depending on the customer.

Philip Anderson
Pinnacle Fund – Analyst
Okay, thanks again, Jeff.
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
Thank you.
 

Operator
We'll go next to Wilson Jaeggli  with Southwell Partners.

Wilson Jaeggli
Southwell Partners – Analyst
Hi, Jeff.
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
Hi, Wilson.

Wilson Jaeggli
Southwell Partners – Analyst
A two-part question here, but both dealing with ITT and then military phone. First of all, can you give us a little more granular information, if you would, where you stand on the project, how long you've worked with them, when do you think they get the market, are you on their timeframe, have you have missed any benchmarks here along the way, are you ahead of schedule? Secondly, to kind of follow up with what Phil has questioned here a couple of times trying to speed up your sales cycle. Your results here with ITT, are they enough to convince potential other commercial customers to maybe speed up their decision process. In other words is I guess, the question I'm asking you is the technology similar enough for a military radio compared to the commercial radio components here within a cell phone, are they translational enough here that the success of one area could lead to convincing people to act in the another?.
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
Okay, that's a lot. Thanks for the question. Let me see if I can chip away at this. So in terms of their application helping us with commercial OEMs, I can't go into the specifics of it but I will tell you their application is very challenging and I do believe it helps us in a lot of dimensions to convince commercial customers that the technology has the legs it needs to be used in cell phone handsets. That said, cell phone handset companies are going to do their own due diligence, they're going to come to their own conclusions, but yes it's helpful. There’s no question it's helpful. And I frankly think the agreements and the way we have structured the engineering services and the license and the whole bit, that's very useful. Those templates I think are very useful. They may not be executed exactly the same but it wouldn't surprise me if a lot of it is reused. In terms of our results thus far, obviously I can’t give you specific timeframes for ITT because that's confidential and they would be more than mad at me for doing so but I can tell you that I believe if you pick up the phone and got to the person who could give you information on the relationship that they would tell you, we were very enthused to enter into it 12 weeks ago and we're even happier today that we did it than we were there then. And that's important to us because frankly we view them as probably a very good reference point for our next customers. And they are not an undemanding customer and in either their application or their timeframe. Let me put it to you that way.

Wilson Jaeggli
Southwell Partners – Analyst
Are you on schedule with them?
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
Oh, yes.

Wilson Jaeggli
Southwell Partners – Analyst
Okay, so nothing's really slipped here?
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
No, in fact I'm sure some of the folks from my Company listening to this are rolling their eyes right now. Because no matter how fast you go with a customer, they always want it faster. I know I asked for it today, but you should have delivered it yesterday. Honestly, they've been a pleasure to work with. But they have their own very aggressive goals and we're jumping to that tune. And I think that you would find they are very happy with what we've been able to do in the timeframe we've been working with them.

Wilson Jaeggli
Southwell Partners – Analyst
Is this a product they're working on, is this a product they've sold to the military or they're developing for future bids to the military?
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
That I can't share with you. I wish I could.

Wilson Jaeggli
Southwell Partners – Analyst
Okay. All right. Keep it up.
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
Thanks, Wilson. Thanks for your support.

Wilson Jaeggli
Southwell Partners – Analyst
Thanks.
 

Operator
And we'll go next to Daniel Lewis with Jim Partners.

Daniel Lewis
Jim Partners - Analyst
Good afternoon, Jeff, Cindy, how are you?
 

Cindy Poehlman
Parkervision, Inc. – CFO
Good, Dan, thanks.

Daniel Lewis
Jim Partners - Analyst
You alluded earlier to carriers getting involved in the discussions.
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
Right.

Daniel Lewis
Jim Partners - Analyst
And firstly is it really one carrier who's mostly involved in this?
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
No, there's several. We're trying to kind of get awareness more globally. We work with carriers that are literally around the world.

Daniel Lewis
Jim Partners - Analyst
And you alluded to carriers providing incentives of being willing to spend some money. Is that one carrier who made the offer or more than one carrier?
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
There are several carriers who have a history of doing that. I'm not going obviously mention who they are, but who have a history with more emerging technologies that they find interesting and are stepping up saying let us help nurture this into the marketplace. Did more than one make that offer? We have more than one carrier who's making offers, both to going into OEM with us and to help sponsor some of the financial cost to get something like this into a product.

Daniel Lewis
Jim Partners - Analyst
When you say financial cost, are you talking about --
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
The design in cost.

Daniel Lewis
Jim Partners - Analyst
Not talking about supporting the on-going royalty.
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
No, no. Anybody who's going to design a new product is going to sit down and say well it's going to take me X number of man-hours and time and get this designed in and cost X amount of dollars.

Daniel Lewis
Jim Partners - Analyst
You talked about the carriers providing incentives. As big as they are, you'd think that they have the ability to not just offer incentives but -- not just the carrot but the stick.
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
Well, different carriers are more aggressive versus others who are a little bit more passive, Dan. I will say this, I think, universally all carriers have an appreciation that putting together a handset is not a trivial business. They have a lot of respect for the OEMs who do it. It's a balance, definitely I think handset OEMs recognize that ultimately the companies that we all are working for are the carriers because they own the networks if you want to be in the handset business anyway. On the flip side, it's a big investment to be in the handset business and the carriers only have so much leverage as to what a handset company or their OEM chip suppliers are going to do. We think it's very useful to have carriers who are willing to go with us in one fashion or another and try to encourage OEMs, that if you put this technology into your products, I'll be more proactive in promoting them on my network because I want my networks to be used. I've invested a lot of money in 3G, I want to be used to the fullest extent.

Daniel Lewis
Jim Partners - Analyst
So the incentives not so much that they would subsidize the MRE's as it is I would give you favorable marketing placement?
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
No, no it is subsidizing RE's.

Daniel Lewis
Jim Partners - Analyst
Okay. Shifting gears a little, to what extent are you providing solutions to the OEMs directly versus to what extent are you working with other manufacturers of technologies and chip sets to be a part of the chip set solution?
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
Well I'm not sure, I think I understand your question. Are you asking -- say that again.

Daniel Lewis
Jim Partners - Analyst
In other words, let's say you're talking to X particular OEM and would you be a stand alone solution for what you're offering?
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
Well we're a piece of the solution, right. To make a whole transceiver,, base stand solution is a modem, a transmit PA solution, a receiver, other supporting components, et cetera. So we're going to be working, it depends on what company we're talking about. Some companies take a proactive role in how all those pieces of the puzzle are designed and what technologies they use, other companies push that responsibility more to their chip set suppliers, but influence, have a strong, strong influence in what goes in there.

Daniel Lewis
Jim Partners - Analyst
So you might be collaborating with the Anadigics' of the world in one instance with -- I mean -- .
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
We could be collaborating with IC suppliers of the handset companies or we could be working directly with them or a combination of both.

Daniel Lewis
Jim Partners - Analyst
Okay. And in your judgment, are the handset OEMs evaluating one set of solutions for the future and then at the same time they’re working with an alternative solution which does not include you? Can you just elaborate on their decision tree and how they’re thinking about this?
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
Well, they're always looking at whether the traditional solution's evolving to. And they're expecting the traditional solutions to continue to evolve to some extent but they're also on the lookout and they have organizations that are on the lookout for things to kind of take a leap in some performance metric or multiple metrics. And typically that's how we've gotten engaged in dialogue with these guys and they're always making those comparative analysis, I imagine.

Daniel Lewis
Jim Partners - Analyst
Are you aware of any alternative solutions that are being considered and what the OEMs are saying back at on you like this is--
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
There isn't anything I'm aware of, Dan, that competes with us. I was in the market or I've been told was coming that gets to the kind of benefits that we've described.

Daniel Lewis
Jim Partners - Analyst
Okay. What do you view as the risk to the OEMs of not being first?
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
To the extent that we get finally get a deal done with a major player, they're going to have the best wideband CDMA or whatever3G standard they use talk time in the industry and I think that's going to become very attractive to the carriers that they sell to and I would certainly hope that that gives them a nice share of market competitive advantage and maybe margin advantage on their competition.

Daniel Lewis
Jim Partners - Analyst
So do you believe that the distinction for that handset manufacturer would be that they would curry favor with the carriers primarily or mostly would be that the consumers would appreciate it?
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
I think yes and yes. I think both. And I think that hopefully the carriers will push the -- hey we have the longest talk time handsets and you don't have to take much of a talk time hit to use our 3G network and by the way, it's still a cost effective phone and all the good things that I think our technology can help people support and I think it will be supported both by the carrier and by the OEM.

Daniel Lewis
Jim Partners - Analyst
Okay. The language that you had in the press release, you used the words finalizing agreements, that implies that -- one might infer from that that finalizing means that you've completed most of an agreement and, one might infer that, what should we or what should we not infer from that language?
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
Buck for the bull if you can't build a bridge. When there's a material event because we signed, I promise you will all be the first to hear it all simultaneously.

Daniel Lewis
Jim Partners - Analyst
Okay. Okay? All right, good luck.
 

Jeff Parker
 Parkervision, Inc. - Chairman, CEO
Thanks for your support, Dan.
 

Operator
And that concludes the question and answer session. I'd like to turn the conference back over to Jeff Parker for any addition or closing remarks.


Jeff Parker
 Parkervision, Inc. - Chairman, CEO
Folks, thanks again for your support and for following our progress and we look forward to future calls yet this year and you know what we're working toward. I don't think there's any mystery there. We're working toward our first commercial design win, that's our donut everything else is the hole and I appreciate your support. Have a great evening. Bye-bye.
 

Operator
Thank you everyone. That does conclude today's conference, you may now disconnect.