“Tiny $5 MicroCap Dazzles Cell Phone Titans”

By Travis Johnson, Stock Gumshoe, November 5, 2007

This one comes to us from Christian DeHaemer at Taipan, whose “reliable source” tells him that this stock could go from $5 to $15 in a matter of months … sounds like something we ought to take a look at, eh?

This is an ad for his Volume Spike Alert, by the way — one of many newsletters under his name. It’ll run you $995 at the current sale price if you’d care to subscribe.

If you just want the name of this $5 microcap, however, just read on.

In his words,

“A stunning breakthrough in laser technology could alter the online marketplace for years to come…sending 100 million video fanatics into a frenzy…and launching a tiny $5 microcap to as much as $15…$20…even $25 per share.”

Woohoo!

So what is this little company?

Well, they’re in the laser projection space, which they as much as say in the ad if we read between the lines — the promise is that this company uses it’s revolutionary green laser technology to help combine video, social networking, and cell phones, and make video on cell phones much more compelling by making it shareable without having to have your friends gather around a tiny screen.

So, this is something that leverages the cutting edge in video by cell phone, and appeals to that highly desirable young male gadget freak professional demographic.

There’s a quote in the ad, too:

“One magazine called it a ‘movie projector you can fit in your cellphone’ and added ‘it’s the coolest toy you can’t get — yet.’”

So, clearly there’s a high gadget demand for cool stuff like this — how high is, of course, the $43 billion question.

Oh, wait, the $43 billion is the sales number for the big cell phone company that’s agreed to include their projector in their new phones, according to the ad.

So, what else do we know about this specific company?

Apparently, the green laser breakthrough is the big deal here — they’ve got some kind of cost or production breakthrough that makes it feasible (and you need green for the full color projection).

“By working with some of the biggest names in optics and electronics, this incredible $5 company has reduced the cost and size of the green laser so that it can affordably fit in a cell phone.”

The CEO walked away from a managerial position at a Fortune 500 company to join this firm, and he has apparently telegraphed their future growth by mentioning that “…we’re currently in negotiations with several (cellphone) handset manufacturers, and consumer electronics companies. And we expect to enter additional agreements in the future.”

So that sounds pretty good, eh?

What’s the company?

Based on this information, the Thinkolator spits and sputters a little bit, but eventually reveals that the name of this laser microprojector company is …

Microvision (MVIS)

I’ve actually traded in the options of this stock a few times in the past, and I currently do hold near-the-money options … I think it’s an exciting business, but I’m interested in it because of the level of interest I think they’ll get from investors, not necessarily because I think they’re going to be a great big success in the future. This is a relatively short term guess investment on my part, going out 6-9 months.

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What can I tell you about them? The green laser thing is a big deal — here’s the press release from the company announcing that they had integrated an efficient green laser into their display engine.

But there are two sides of this — several investors have argued that the company is getting far ahead of itself in its promise that this green laser is “cost effective”, including an anonymous hedge fund manager who wrote at SeekingAlpha the day after this announcement came out (he was short the shares, according to his disclosure, and that was certainly the right call from then to now as the price fell from $5 and change to $4 and change. I expect the $5 price in the teaser is from before earnings, which came out on November 1 and brought the shares down a bit.

I don’t personally know whether they’ll be able to develop a built-in projector for cell phones, with Motorola (that big cell phone company that’s their announced significant partner so far, though they also have an undisclosed asian manufacturer on board, too). It seems that their two main products will be a plug-in credit-card size projector for any cell phone, and an actual built-in projector for some high level new phones.

I get the feeling from reading up just a little bit on the business this technology may be a little bit perilous for investors — many companies have gone broke developing cost-effective laser projection technologies, and I have no idea whether Microvision will have the wherewithal to survive long enough to get some big deals on board and some actual manufactured products that people are excited to buy next Christmas (2008, not next month). But, I do think this volatile little company has some potentially significant short term upside in the coming year if they announce some exciting deals — that’s why I’m trading the options a little, but am not comfortable calling the shares a good long term investment for me.

For you, of course, the story may be entirely different. I’d check out SeekingAlpha, they’ve got a few contributors who have written heavily about MVIS (though one of the big proponents over the past year, Ant and Sons, was also a heavy booster of the worst Gumshoe stock of all time, GoFish, the one stock in the spreadsheet that seems desperate to somehow get below $0.)

And if you’re thinking about this as a real investment, where you’re committed to riding some ups and downs with the dream of long term riches, I’d read their filings carefully and try to get a real understanding of how cheap these projectors will really be to produce, and what kind of market you think they’ll really have. There’s a decent transcription of their July conference call that a blogger put up that might also be worth your time (that’s where the CEO quote above came from, by the way), and certainly a look at their latest earnings report (came out last week) would be worthwhile — the press release is here. The stock has been moving downhill since earnings, and this one really moves, like a biotech company, on deals and technological advancements more than on actual earnings (since they’re still losing buckets of money)

Personally, I think the technology is sort of silly, but I won’t make my investing decisions based on that feeling because I also though the idea of a camera phone was idiotic. Clearly, I’m no bellwether for consumer taste or interest.

MVIS has been pretty popular among individual investors all year — and it was also recommended by Investor’s Daily Edge (and sleuthed out here) back in May, at about the same price it trades for now. And maybe you’ve owned it, too — so whaddya think?

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This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.

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