Saturday, November 21, 2009

Microvision Announces Pricing of Public Common Stock Offering

Press Release
Source: Microvision, Inc.
On 9:41 am EST, Thursday November 19, 2009

REDMOND, Wash.--(BUSINESS WIRE)--Microvision, Inc. (NASDAQ: MVIS - News), a global leader in light scanning technologies, today announced the pricing of an underwritten public offering of 6.7million shares of its common stock at a price to the public of $3.00 per share. Microvision has granted the underwriters a 30-day option to purchase up to an additional 1.0million shares of its common stock to cover over-allotments, if any. Microvision expects to receive net proceeds, after deducting the underwriting discount and estimated offering expenses, of approximately $18.7million from the offering, or $21.5million if the underwriters exercise their over-allotment option in full. Oppenheimer & Co. Inc. and Thomas Weisel Partners LLC are the joint book-running managers and Craig Hallum Capital Group LLC is acting as co-manager for the offering. The offering is expected to close on November 24, 2009, subject to customary closing conditions.

Microvision intends to use the net proceeds of the offering for general corporate purposes, including, but not limited to, working capital and capital expenditures.

The securities described above are being offered by Microvision pursuant to registration statements on Form S-3 previously filed and declared effective by the Securities and Exchange Commission (SEC). This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities in the offering. The offering may be made only by means of the prospectus supplement and the related prospectus relating to the proposed offering, copies of which may be obtained, when available, from Oppenheimer & Co. Inc., Attention: Syndicate Prospectus Department, 300 Madison Avenue, 4th Floor, New York, NY, 10017, by telephone at (212) 667-8563, or via email at

Here’s the link to the news from this morning…

The market reaction to additional 7.7 million shares issued, assuming over-allotment option is exercised, to raise $21.5 million in funding has been lot more violent then the 10% dilution [from additional shares] would suggest. To the naked eye the dilution looks like 10% from additional shares. However, when you look at the offering price of $3, a discount of 27% from the closing stock price of $4.11, it makes sense why the stock would drop so much… almost approaching the $3 dollar mark.

That is the management sin of doing a secondary public offering at deep discounts, like 27%, and then pays $1.6 million in fees to secure funding. Obviously, I’m not aware of the circumstances or reasons for the kind of a deal that the management made with Investment Bankers [and brokers] involved. However, one thing is for sure, that the existing shareholders have been diluted─ more than what the management intended to do, but also the unsuspecting shareholders were left at the mercy of unscrupulous financial wizards from Openheimer, Thomas Weisel, and Craig Hallum. And by that I mean the unscrupulous ways of stock manipulation and shorting against the anticipated delivery of stock [6.7 million to 7.7 million shares] from Microvision treasury.

That’s the American Investment Banker, Venture Capitalist and a Broker at work to rip out the heart and soul of a young and promising company in exchange for maximizing their take of the loot. You guessed it! The deep discount of 27% and $1.6 million in fees was, obviously, not enough.

Is that the American way?

I guess so…just look around you and you will see who caused the systemic global financial meltdown… Lehman Brothers, Merrill Lynch…etc… etc.

I’m sure you get the picture…

“The good old boy network of financial wizards at Wall Street”

Isn’t it?

We know that given the opportunity, the Investment Bankers and Brokers would do what we suspect them to do to make an extra buck. What we don’t know, however, is how na├»ve and financially unsophisticated the current management at Microvision really is?

It seems like, that the MVIS stock has been manipulated by shorting [from $5.70 to $3.70 in two week period] coming into the announcement of public offering and then covering the short position [from $3.15 to $3.27] after the announcement. The only entities that can do this sort of manipulation would be the parties involved in the public offering. Assuming that Microvision management kept a lid on the details of public offering… the only other parties to the deal would be Oppenheimer, Thomas Weisel and Craig Hallum Capital.

At the close of the day, on November 19th, the MVIS closed at $3.27 [down 84 cents for over 20% down] on a trading volume that is over 7.35million shares [representing about 10% of the float].

What a mess!

Microvision management could have been much smarter in how they handled the secondary public financing of the company. It does not take a rocket scientist to sell 7.7 million shares at 27% discount and pay $1.6 million in fees to raise $21.5 million in total… assuming the option to 1 million shares over-allotment is exercised.

Looking at how 7.35 million shares traded on November 19th, the day of announcement, it is apparent that a “Stock Rights Offering” to existing shareholders could have been easily subscribed. Stock rights offering is a very common practice in London financial markets [and Asian countries] and is the most preferred mode of financing among conservative and financially savvy CFOs/CEOs.

Do a Google search on "Rights Offering" and you will find hundreds of companies doing it... right here in the US. A stock rights offering is a very basic and simple way of funding... something that the 40+ year old CFOs/CEOs find too simplistic in light of their shining MBA's and Six Sigma Black Belt certifications.

Over the last two years, all the financing that has taken place at Microvision makes you wonder about the financial savvy and financial negotiating skills of that in-charge.  These are very blunt and critical words… but I say it as I see it. As an investor in MVIS stock, with hard earned money on the line, I don’t think I need to be pussy footing around the financial management savvy of the current management and worry about their fragile feelings.

So, having said all that, which sounds more like venting my frustration, where we go from here?

First, let me advise you to do your own due diligence. And if you’re due diligence tells you to hold your position in MVIS and possibly add at these discounted price level... then do so?  Because that’s exactly how I feel in-spite of all that has taken place over the last two trading days.

Next, the bottom line, as I see it, and then a few words to explain why I feel that way…

“Microvision story is very compelling and it remains the opportunity of a lifetime… there is no doubt about that. Personally, I would hold my current position─ except for what I may have to sell to cover my margin calls, and then in the future add to my position when and if my finances permit me to do so.”

I am certainly disappointed in the management’s handling of this public offering… that exposed the unsuspecting retail investors to the unscrupulous ways of Wall Street wizards. I am not surprised that this offering has had such a negative impact on the MVIS stock price. When a company gives 27% discount to the Wall Street wizards, you would expect the stock price to eventually gravitate towards that offering price… $3 dollars in this case.

In my humble opinion, the long-term outlook for this company has not changed. I say “my humble opinion”, because the market action of November 19th and the resultant financial impact on portfolio valuations can make even the strongest of believers question in what they truly believe… a sure sign of humility.

In hindsight, maybe there was a better way to do the financing. Maybe there was a better way to manage the SHOWwx launch. Maybe there was a better way to announce the OEM partner names. Maybe there was a better way to announce the purchase order from the global mobile phone carrier.

That’s just too many “maybe”… but then again I'm not with the company, so I really don't know what’s causing this muted enthusiasm while giving away the store at below wholesale prices.

I don’t think that Microvision's management is inept, or trying to compromise the interests of the company or the shareholders, and I certainly don't think they have any ulterior motives. If I thought that, I would not have invested in this company for the long term and just traded for quick profits… or just sold every share and walked away. If anyone here truly thinks that's the case, I would encourage them to do the same.

Pico projection technology has a big future, and Microvision's laser PicoP display technology is the best platform for delivering applications to an enormous global market.

Additional capital was needed… there is no doubt about that. Now Microvision has that capital… at least for the next year or so.

It is disappointing to see the many thousands of dollars in portfolio value disappear in the short term.  However, the long term potential and the opportunity of a lifetime stays intact.

Consider this…

• Stock prices go down as well as up─ and we had a nice ride up, from 77 cents to $5.70, and now a rough ride back down to $3.32.

• Stock prices may resume again when we hear that Osram has started shipping the green lasers in quantities, product is being sold by Mint, Uniden, Vodafone [name not yet officially disclosed], and as we start to get some more information about the embedded version of laser PicoP display engine and its applications.

• The fundamental story has not changed. Microvision has the killer app for consuming mobile content, and all signs point to that market expanding at a huge pace.

• We're not there yet, as evidenced by the continuing need to raise funds, but we're headed in the right direction as we get closer every day.

Some of us, I’m sure, are still sitting on a huge gain for the year. The extra profits that we had after the late August run-up, and before the recent drop from $4.11 to $3.32, is the value that was in the portfolio that you didn't have back in early August.  When the portfolios swell in value, the gains feel great…and the losses make you anxious, but I have a lot of confidence that we haven't seen the last of the gains.

So that's my take on the current funding… and a few words of comfort from experience.

Excessive dilution, stock shorting and manipulation are all very sickening… but it's something we have to deal with and learn to understand as the ways of the Wall Street West.

You and I can criticize management for the way the public offering, to raise $21.5 million in funding, was done but none of us really knows the full story.

So, give the management the benefit of the doubt, do some due diligence, and look at the future potential of Microvision stock investment with a fresh perspective.

If you see, what I see… you should hold your current position and add to it at these low prices… if and when your finances permit you to do so.

[If some of the words look a bit familiar towards the end... then you have read Paul Anderson post on Yahoo Message Board... just like I did.  Our writing style is not much different... so here is the credit to you Mr. Anderson before you get bent out of shape.]

Anant Goel