Beaten down stock of the week: Microvision, Inc. (MVIS)
Why we like it: Best technology for the #1 problem in consumer electronics. Why is it beaten down ? Read on to learn more.
Who are they ?
The company is “the world leader in the development of light scanning technologies for high-resolution display and imaging systems.” In plain english, they develop products that are a generation ahead of anything we have now in LCD, CRT, or Plasma with a focus on portability and mobility.
The #1 problem in consumer electronics that I alluded to in the opening is the clash of two big trends. The first trend is the miniatrization of all of our devices ( think ipod Nano and the Razr phone ). The second trend is that we are all using these tiny devices for multiple functions such as email, photos, video, web surfing, etc. The problem is that these tiny devices have tiny screens, and the experience of browing the web, for example, on your brand new phone is usually pretty terrible. Even the big devices such as the treo only provide a 320×320 viewing resolution — not exactly HD !
Here is where MVIS comes in. Their killer product is an RSD device called the Nomad. “The Nomad Display System is a wireless, head-worn, see-through display that overlays computer based information over the real-world allowing hands free, head-up access to any digital information anytime – anywhere.” Again in plain english, this device paints the image onto your retina in full color and high resolution ( VGA now, and XGA soon ) red-only monchrome with a future version supporting full color high resolution VGA/XGA — to simulate a very large image/video, and even allows this image to be translucent. No more looking at tiny LCDs, or looking down at your mini device. Plus you can walk around with this device because you are still able to view the outside world and the “screen” simultaneously with varying translucency.
here is a prototype that i’m sure someone at Apple could do a better job with :)
So who is testing and exploring using this product ?
1) The best surgeons in the world are testing this device at the Mayo Clinic, so that they can focus on the patient and have all the vital sign data overlayed on their eyes instead of having to look down at the patient, and then up and to the side to look at 4 or 5 LCD monitors.
2) Service people who are working on sophisticated engine repairs for Honda are testing this and have seen a 40%+ productivity boost.
3) The military. MVIS has multiple contracts with the US Military for the VCOP ( Virtual Cockpit ) program to assist pilots in consuming the multiple data screens they must keep up to date with.
4) auto manufacturers who want to build in heads-up display into their cars & trucks
Are lasers beamed on to the eye really safe ?
If surgeons at the Mayo Clinic are using it and feel comfortable with it, then it’s safe.
Why does the stock trade at $2 a share down from a 52 week high of $6.53 ?
Because in my view, it’s being treated as a mature company, where as the value truely lies in long term growth once the R&D group for MVIS has productized this device into every cell phone, cam corder, Xbox console, heads-up car display, and more ! The team’s goal is to get the price down to $30-$50 per device in large quantities. At that price you could see many manufactures building this into their various products.
Why else is the stock down ?
Lat two years worth of numbers have been weak. Microvision’s revenue in 2003 was $14.7 and again $14.7 million in 2005. Not exactly explosive growth. During that 2 year time frame operating losses were nearly $95 million. But the balance sheets are in better shape. MVIS has a nearly $50 milion market cap and essentially no debt ($8 million of debt and $8 million of cash).
Competition ?
There are companies working on portable LCD style devices, but MVIS owns all the IP on RSD based technology.
Stock Target Price:
0 or 100 within 5 years. Seriously. This is a long shot stock. If everything works out as it should, we’ll see at least a 50X valuation increase within 5 years. If a competitor catches up or the R&D never develops a proper, inexpensive cheap product — then we’ll see this company go out of business and their IP will be picked up at $.02 on the dollar.
Who else is talking about MVIS ?
Airplane pilots love this product: “But for everything Nomad’s augmented vision system is, what it can be is nothing short of revolutionary. Imagine cockpits of the future where the instruments are all “virtual,” realistic 3-D images overlaid directly into the pilot’s field of vision. ” source
Doctors love it ( from wired.com april 3, 2003 ):
“Nomad does seem like it would interfere or distract you, but really it’s easier to shift your attention slightly to the left or right of your vision field, than to have to look up or away from the patient while in the midst of surgery,” James said.
James says the data looks like it’s being projected onto a “big, transparent TV screen that’s floating in space about an arm’s length away from you.”>
Doctors at the Mayo Clinic will be testing Nomad in many medical procedures — from cardiology to cancer treatment.
The Mayo clinic is not the only medical facility to test RSD technology. The Stryker Corporation in Kalamazoo, Michigan, the Cleveland Clinic Foundation, and the Wallace-Kettering Neuroscience Institute in Dayton, Ohio are also testing Microvision’s RSD technology.
“It made me feel like a very cool cyborg surgeon,” said James. “And I’d like to use it outside of the operating room. I bet it would be fun.”
More info:
Do we own this stock ?
Yup. Been accumulating this stock for a few years now.
That’s it. Agree or disagree ? We’d love to hear from you in the comments. Have a happy 4th of July !
7/4/2006: Update #1: the current mobile Nomad version is red-only
4 Responses
Stay in touch with the conversation, subscribe to the RSS feed for comments on this post.
Hey Pick of the Week,
I saw your article on Microvision. I worked there for several years and still follow it. You would want to do some serious analysis before throwing money at this company.
1. Your article says the Nomad is full color. It’s not. All versions are red only.
Nomad ND2500 Military version:
Display Color Monochrome red 658 nm 0/-4 nm at 25°C,
Grey Levels 32 shades of grey (i.e. brightness level of red).
They have red laser diodes and blue laser diodes. They are waiting for green laser diodes. The smart money says they will be out of business before the wait is over.
2. The full color displays are not mobile. They are designed for cockpit displays and pull 1000s of watts. They do put out a stunning, realistic, full color picture. They are good for viewing tv/movies, gaming or computer displays. But they go for about to $100G. I’d love to have one.
3. This company does not ‘develop products that are a generation ahead of anything we have now in LCD, CRT, or Plasma with a focus on portability and mobility.’ They have spent over a decade trying to develop a product.
4.This company has lost more engineering talent just due to disillusionment than any other company I know. John Lewis wrote the article in IEEE Spectrum. He now works at Microsoft.
5.One of their biggest problems is that they can show a really good display. They get interest and they get investment. It has kept them from having to really produce the goods. For the first 10 years they were run by a couple of non technical marketers who didn’t understand that the technology wasn’t finished. They would say anything to raise money. Rick Rutkowsky is out. Stephen Willey is still there. The old CFO is out. The new CEO has little time to turn things around.
6. The technology is just a display component. To be useful in those applications you described, a complete hardware and software system would have to be developed. They have never been able to interest any systems integrator in their technology.
Just a little ‘heads up’ about displays.
I loved my time there, but they don’t have a culture of quality and engineering excellence. All hands are bailing as fast as they can.
Keep in touch,
lzrtech
thanks Izrtech. All good points, and great to get a perspective from someone who used to be on the inside.
This is definitely a high risk stock, and your comments help illustrate why :)
A few points.
1) “1. Your article says the Nomad is full color. It’s not. All versions are red only.” Correct — the current version is red-only but the color version is amazing but not mobile — and work is being done to shrink it down to fit in the mobile Nomad version. I updated the blog post to reflect that — thanks.
2) re: management. They have really been weak and have been misguided as of late. That must change for this company to have any shot.
I do like the addion of Jeanette Horan to the board. Hopefully they’ll get more product focused soon as she is currently Vice President, Worldwide Information Management Development and General Manager, IBM Silicon Valley Laboratory. Given IBM’s focus on mobile computing, I see this as a big validator of the MVIS tech.
cheers.
Is there a chance that MVIS could be an acquisition target? does their 10 years of experience with this technology make them a valuable target to a larger vendor that might want to enter this space? i think that at some point, heads-up displays are going to catch on, the question is: will it build on this technology or come from a different directoin?
MVIS market cap has never been this low (48M), and at some point wouldn’t it be cheap enough for someone to gobble up instead of let it die?
Continuing the Discussion