A Closer Look at ParkerVision’s Video Business
On February 26, 2004, ParkerVision sold its video division to Thomson in a transaction valued at about $14 million in cash. The sale is noteworthy to the extent that the video business accounted for 100% of ParkerVision’s revenue in 2003, 2002, and 2001, where net losses were ($22.0 million), ($17.3 million), and ($16.6 million), respectively. Since introducing its first video products in 1992, ParkerVision sold for $14 million a business that it spent perhaps as much as $100 million to create and develop over a 12 year period.
International Shareholder Services notes the following about the sale: “If the wireless bet doesn't pay off, the company will have no other business to fall back on; the wireless business has no meaningful track record and its technology may be met with non-acceptance; the wireless business is intensely competitive.” (ISS, 2004)
ISS also says: “PRKR has underperformed both the market and its peer group for the past one-, three- and five-year periods. The company has had losses in each year since its inception in 1989. PRKR has developed radio frequency transceivers based on what it believes is an entirely new electronic circuit configuration and design. The company’s wireless products (including wireless LAN cards, a wireless four-port router and a wireless universal serial bus adaptor) have the ability to function at greater distances, with fewer dead zones, with increased connection reliability, may be manufactured less expensively, and use less power to drive them. PRKR’s video division focuses on live television production systems and automated video camera control systems. The video products are marketed to broadcasters and the educational and video conferencing segments of the commercial market. The video division has generated continued losses and sales are declining, and therefore the company feels that the wireless opportunity is key to its chances at future profitability. PRKR has generated 29 consecutive quarters of negative free cash flow, and its cash flow from operations for 2003 was a six-year low.” (ISS, 2004)
Documentation of the deal states that Thompson is paying ParkerVision $12.5 million, subject to adjustment upon verification of the book value of certain assets, though ParkerVision believes that there will be an upward adjustment of $1.5 million. The upward adjustment limit is $2.75 million. Substantially all of the video products division of ParkerVision will be sold to Thomson affiliates for $12.5 million in cash. The wireless division assets, the general corporate assets, real property and accounts receivable and cash will not be sold. The liabilities of the video products division will remain with ParkerVision. Ten percent of the purchase price ($1.25 million) will be held back by the Thomson to secure indemnification obligations of ParkerVision. (ISS, 2004)
The division, based in Florida, is best known for its PVTV live news production and professional cameraman robotic camera lines. The PVTV technology links traditional news production functions that require multiple operators into a single automated command module built around a Windows NT PC. The Cameraman line includes a range of digital and analog robotic cameras for numerous applications, including broadcast television, distance education, image magnification, and other uses, for which a remote-control, quality, compact robotic camera is required.