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2004 Revenue Expectations for ParkerVision

 

For the fourth quarter of 2004, we expect ParkerVision to report revenue of $0.2 million to $0.3 million, with net income of approximately ($5.0 million), similar to what they reported for the third quarter of 2004. Our discussions with sales channels in the WLAN consumer product industry suggest that ParkerVision will not generate substantial sales in the fourth quarter of 2004. More specifically, ParkerVision does not sell much product in any of its distribution channels, mainly because Linksys, Netgear, D-Link, and Belkin control the market.

 

The WLAN market is so heavily dominated by these competitors that an analyst from Wachovia Securities who covers Netgear said in February 2005, “I didn’t know ParkerVision competed in this market. We visit electronics stores regularly, and have never seen them on the shelves.” To draw the comparison, on the CompUSA website, for example, ParkerVision offers 3 wireless networking products, compared to 43 from Linksys, 43 from D-Link, 35 from Netgear, and 26 from Belkin. While ParkerVision sells 1 Router and 2 Ethernet Cards on the CompUSA site, Linksys sells 8 Routers and 19 Ethernet cards, in addition to 4 Access Points (Hubs), 4 Antennas, 2 Media Players, 3 Print Servers, 2 Kits, and 1 Wireless Home Security product.

 

ParkerVision sells its 1 Router and 2 Ethernet Cards on its own website and on web sites like TigerDirect, Amazon, CompUSA, and in retails stores such as CompUSA and Micro Center. In February 2004, we talked to several sales reps at both of these stores. A sales rep from Micro Strategy said “I don’t believe we carry anything by ParkerVision or SignalMax but let me check.” She said they had the SignalMax Router and USB Adapter, but added, “I’ve been here quite some time and I didn’t even know we sold ParkerVision or SignalMax. I personally have never sold one. Most people buy Netgear, Linksys, or D-link.” Similarly, a sales rep at CompUSA said, “We don’t carry ParkerVision or SignalMax. This is the first time I’ve heard anyone ask for it. We mostly sell Netgear, Linksys, D-Link, and Belkin.”

 

Clearly, strong competition from Linksys, Netgear, D-Link, and Belkin contributes to the lack of awareness (and sales) for ParkerVision’s products. As ParkerVisions admits in its 2003 10-K, filed on March 15, 2004: “The wireless division operates in a highly competitive industry. The Company’s WLAN products compete with product offerings from a number of companies with established brand recognition and distribution channels. Some of these competitors offer their products at prices similar to or lower than that of the Company’s products. The Company believes Linksys, Netgear and D-Link collectively account for over 50% of the North American market for consumer wireless networking products and Cisco, Symbol Technologies and Proxim/Orinoco dominate the enterprise market for wireless networking products in North America.”

 

ParkerVision began selling its first D2D-based products, a wireless local area networking card for use in laptop computers and a wireless USB adaptor for desktop computers, in the fourth quarter of 2003, and later added a wireless four-port router with shipments beginning in 2004. In 4Q 2003, ParkerVision generated revenues of $21,000 from its wireless products, mostly through its own newly developed website and through TigerDirect.com, an internet-based retailer specializing in high tech electronic merchandise. ParkerVision notes in its 2003 10-K that “the average selling price of the wireless local area networking card was $75.50,” but at the CompUSA web site and stores, ParkerVision’s SIGNALMAX USB1500 Wireless USB Adapter sells for $79.99, SIGNALMAX USB1500 Wireless PC LAN Adapter sells for $79.99, and SIGNALMAX WR1500 4-Port Wireless DSL/Cable Router sells for $99.99.

 

In 2004, ParkerVision generated revenue of $0.1 million in 1Q 2004, $0.3 million in 2Q 2004, and $0.1 million in 3Q 2004, with net income of ($5.4 million), ($2.0 million), ($5.0 million), respectively. Projected annually, ParkerVision’s nine-month 2004 sales of $516,000, amounts to roughly $700,000 for the entire year. If ParkerVison matches in 4Q 2004 its revenue performance for the first three quarters in 2004 combined, ParkerVision will record revenues of $1 million for 2004. Based on our discussions with sales channels, however, we expect ParkerVision to report revenue of $0.2 million to $0.3 million for 4Q 2004 and annual sales of no more than $0.8 million for 2004.