Is MicroVision's Future on Its Own or Under a Larger Outside Company?

Technology

Published: May 12, 2020 11:40 am

Even as consumers are buying ever larger television screens for entertainment, there is also a niche industry around miniature projection displays and sensing technologies. The two industries may seem miles apart, yet they can easily coexist. The question that remains about the micro-displays and sensing technologies is whether they will remain niche products or grow into a much larger industry.

MicroVision Inc. (NASDAQ: MVIS) has been producing ultra-miniature projection displays and sensing technology for some time now. While it is a leader in the field, the company’s first-quarter 2020 earnings report showed that revenues fell to $1.5 million from the $1.9 million in the same period of 2019. The company’s net loss for the first quarter was $4.9 million, compared with a net loss of $8.1 million a year earlier.

To technology investors, that may not seem like a rapid growth story at all. One issue to consider is that a larger company may end up with MicroVision’s technology. The company is currently exploring strategic alternatives in an effort to maximize its shareholder value. Whether that is a sale of the company, a sale of some products or a venture remains to be seen.

MicroVision has been very active in recent days, with shares more than doubling to $1.10 on May 4, with subsequent highs at $1.82, and its highest closing price has been $1.30. That is all after closing as low as $0.17 during the selling panic in March. Its current market capitalization is just $142 million, after the large stock price gain.

The Pico projector has matured along the way, and MicroVision’s PicoP scanning technology as an ultra-miniature sensing and projection solution is targeting a large spectrum of potential uses. The PicoP engine is roughly the size of a business card and is only several millimeters thick. It shows enhanced image quality, with an HD picture that is represented to be always in-focus.

Its applications are potentially endless, in office settings or kitchens, for displays and so on. MicroVision also has a substantial portfolio of patents (more than 500 issued or pending) that are related to laser beam scanning projection and sensing.

The future structure of MicroVision remains unknown. This company has faced hurdles in the past, from risks of delisting to ongoing capital raising efforts. Its annual meeting is set for May 19, 2020, and it is even pursuing a reverse stock split that will be voted upon.

MicroVision has faced choppy sales numbers over the years. It generated $14.7 million in sales in 2016, which fell to $10.9 million in 2017 but then popped up to $17.6 million in 2018, before falling to just $8.9 million in 2019.

MicroVision already has transferred responsibility for component production and has sold production assets. This, in turn, lowered its operating costs and its working capital requirements. The company also previously initiated a 60% reduction in its workforce and has announced cuts on nonessential expenses.

In February, MicroVision said talks to sell its interactive display module failed, and that initially took out half of the company’s value. Both H.C. Wainwright and Ladenburg removed their Buy ratings after that news on February 26.

The company then announced in March that it was actively engaged with multiple interested parties about licensing its intellectual property and other strategic alternatives. Sumit Sharma, MicroVision’s chief executive officer, recently said along with the latest quarterly report:

With the help of our financial advisor, Craig-Hallum Capital Group LLC, we have approached a global list of targeted companies and are diligently exploring all options including the sale of one or more of our module product verticals and related technology or a potential sale of the company.

MicroVision shares were trading up 19% at $1.00 on Tuesday, and the 52-week trading range is $0.15 to $1.82.