I was asked in a private message about my opinion what would be better for POET, licensing or buyout. And what the benefits of having a partnership would be.

A partnership or many partnerships are needed, because POET Technologies provides only part of the value chain. POET knows how to build POET chips, but the company does not produce them except in the lab, nor does it design microprocessors, nor does it know the specific needs of each an every vertical market. POET needs partnering companies to cooperate in some way to address those needs. Such cooperations could be rather loose like working together for some time on a common project, or more tight, i.e. by founding a joint venture.

Going the licensing path would increase the value of this stock more slowly, because it will take time to finish licensing agreements. This will accelerate over time, but it is clear that not all potential licensees will wait at POET's porch right from the beginning. Consequently POET's revenues from licenses will start low, but grow over time to really tremendous amounts. The share price would reflect these revenues and work its way up to $70+.

In a buyout an acquirer wants the future profits for himself, wants to restrict the technology to himself, or generally wants to control the company himself. So he needs the qualified majority of shares. If he wants to squeeze out any remaining shareholders and delist the company, he needs nearly all the shares to do so. In Germany he would need 95 percent of the shares for a squeeze-out – I don't know about Canada. To get hold of so many shares the acquirer has to make an offer shareholders could not resist and sell. On one hand this would be great for shareholders, because they receive a lot of money immediately and considerably above market prices – especially if there is a bidding war. On the other hand, however, shareholders who sell are cut off from future gains.

What is better for you depends on your personal preferences: much money now, or a multitude of that money, but only over time.

The risk we face is a low-ball offer. Consider someone would offer $10 per POET share, i.e. a quadruple of the current share price. Would you sell or not? If you do, your invested money will quadruple in an instance, but you will never reach the $70+. I am glad we can watch POET exercising its dramaturgy to drive the shareprice up to come at least closer to its true value. The higher the shareprice, the more unlikely a low-ball offer.

Personally I prefer the licensing model with a possible buyout later. Let's say, due to more and more licensees the share price rises to $20. If an acquirer offers the fourfold in that situation, then this would be, oh, $80 – definitely in the $70+ range!

Just my 2¢. Others will have their own 2¢ – unless they are invested somewhere.

Andrea ("Powered by POET")