Friday, January 29, 2010

Microvision: New Board Member Perry Mulligan and His Solectron Connection

Perry Mulligan is a perfect choice for replacing the outgoing Board of Director at Microvision. His expertise and industy connections are exactly what Microvision needs at this stage of its growth... that is, a company on the verge of “hyper growth”.

“Prior to joining QLogic, Mr. Mulligan spent nine years in the Electronic Manufacturing Services industry where he held senior executive positions at both Solectron and Celestica. These positions included the role of Chief Procurement Officer and Senior Vice President of Materials for Solectron Corporation, Vice President of customer solutions at Celestica, and VP of Asia sourcing for Celestica. Before entering the Electronics Manufacturing Services industry, Mr. Mulligan held a number of management positions at Nortel in operations, IT and materials management.”

Here’s the link to the Press Release...

These are very interesting and revealing choice of words from the Press Release...

“On behalf of the entire Board of Directors and management team, I am pleased to welcome an accomplished operations strategist, supply chain builder, and manager of large work teams as we rapidly ramp Microvision’s go-to-market strategy.”

"Microvision is clearly one of the most innovative companies in the emerging category of pico projection,” said Mr. Mulligan. “I feel privileged to join this exciting and dynamic opportunity and look forward to working closely with the other Directors and CEO Alexander Tokman and his team, during this next phase of Microvision’s growth.”

Yes, Microvision’s next phase of growth is indeed “hyper growth” and the management will have to deal with the challenges and issues that come with the territory... as early as in the 1st Qtr 2011.

You may ask what hyper growth is...

Unless you sit down and have a conversation with Warren Buffet (who breaks it down to simplicities), you're going to get a million different answers to this question. The point is that most analyst look for "ARG" - Accelerating Revenue Growth. And that’s what Microvison is gearing-up for... begining March of this year.

“ARG is when your revenue growth % is increasing year over year. Investors and savvy analysts like to see positive ARG... because, it's an indicator of good things. Google and Apple just blew the doors off earning estimates, yet didn't get a bump in stock price (actually it went down a little) because of lack of ARG. Then again, ARG doesn't tell the whole story because what company can continue to grow at 400% perpetually?”

Look for ARG and remember, ARG is only probable in the first few years of a company's existence. Sure, you can see it down the road but at that point the real $ has already been made.

There are four characteristics to look for in a hyper-growth company like Microvision...

1. Sustainable sales growth: This is easy to find and makes sense to any investor.

2. High operating margins: The profit from each widget today has to pay for the development of future widgets... and leave enough left over to enrich shareholders.

3. Small capital requirements: We don’t want to see all the profits going out the door to pay off big debts.

4. Scalability: We want a company that can handle many additional users [or sell millions of more widgets] at no extra cost other than the cost of goods.

Growth investing and value investing are two distinct styles of investing that when combined are the perfect reciepe for Hyper Growth... like in the future of Microvision.

When growth is combined with value, the product is GARP, or growth at a reasonable price, which looks for companies that are undervalued with sustainable growth potential... like Microvison currently trading at deep discounted prices and with a promising future ARG that will surely blow the lids-off the chart.

Anant Goel