28 Program wins **16 Patents**58 Patent Applications
XTouch Metal Mesh Touch Sensors and Diamond Guard Hard Coat Resin (Glass Replacement Technology)
Message: Good post from IV
| Msg 20069 of 20072 at 8/3/2015 2:38:11 PM by |
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Will they report some revenue, contrary to market's expectation?
Last week's PR's were hinting revenue in Q2 from Tier1 customer #1, for the tablet product.
One would assume that the share price fall was due to the market's expectation of reporting a huge loss for Q2 (a combination of one-time merger costs and no revenue).
What happens if they report revenue, contrary to market's expectation? With a huge grain of salt, I tried to connect the dots. It could be totally wrong.
1) Hawthorne: "Production is continuing; they did not skip a beat."
At the acquisition time, ATML's XSense unit was in production. They were filling a tablet order for Tier1 Customer #1 (probably HP). Production was based on the XSense film, purchased at $7.9/meter from CIT/Carclo.
2) Last week's press release: "a milestone of producing the millionth unit."
If the production did not skip a beat in Q2 and if they counted the millionth unit around July 25, how many units were produced to fill the customer order during Q2? How many categories of units (cell phone, auto touch controller, tablet, etc.) were produced? Since the only customer was Tier1 customer for a tablet product, assume they were all tablet sensors to Tier1 customer #1. How many were produced in Q2? Half of a million? At what price it was sold to customer? $5-10/unit? At $10/unit, 500K units would give $5 million revenue.
3) KPMG's pro forma financials at Dec 31, 2014 and March 31, 2015 for XSense as a business unit in ATML and for UNXL, did not show much revenue for the XSense biz unit at March 31, 2015. Does it mean most of the revenue prior to the millionth unit in July was in Q2? Hope the conf call would clarify.
(Also there is a deferred revenue item for $5Million showing up under the liabilities section. Was it the engineering fee from Dell or Intel. When are they going to recognize it?)
4) Hawthorne: "The acquisition would not make sense without the in-house film production."
Perhaps the market did not expect the production to continue since they were going to transfer technology from CIT/Carclo (Cambridge) which would take time as usual.
Since the technology transfer was achieved ahead of time while the production was continuing, one would assume the tech transfer piece was handled in parallel with other tasks on hand. (No wonder they were not paying attention to filling out Form 4's!)
The XSense film from CIT was costing $24/sq meter. The raw PET film costs $2.32/sq or 23 cents/sq ft. A 2 foot film can give about 3 tablet sensors (approximate). Now that they have achieved in-house production of XSense film, the film cost can be much lower than $24/sq meter. If they can get 13-14 tablet sensors from 1 sq meter, how low they can sell ($5/sensor?) to be profitable? Hoping that the conf call will give facts tomorrow so that we can close these gaps.
5) They went one step beyond the "in-house" XSense film production. They incorporated the InTouch technology and branded it XTouch. Branding is vital for marketing. Kodak makes money from their Kodak brand.
How many new patents will come out of this effort? Rebranding and patents will help keep out CIT/Carclo from possible claims, if any, and Kodak's InTouch marketing conflicts?
6) Another hint was they won a pre-production order against a competition. That means XTouch made at the facility was good enough to enter the competition and win. In addition, they are adding the Diamond Guard coating to give XTouch a scratch-free touch surface.
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