Impressions of pre-AGM, AGM and post-AGM

The following are my own impressions and conclusions from what I experienced in connection with the AGM. If it was said Suresh, Subhash or Ajit, I will try to ascribe it thus, otherwise, this is how I processed what occurred. By the way, neither Geoff Taylor nor PC attended, and no surprise there.

First of all, I met Kath and her husband on Wednesday evening, very, very nice people and quite sharp (I’m sure I say that cuz they have similar feelings as I regarding POET). I was happy to spend some time before and after the meeting with Kath, spouse and joined by Mazan and another investor and neighbor of Mazan’s who I also met last year (call him “G”); I saw briefly and said hi to Brighttech.

As we sat in the lobby area prior to the meeting, the four of us were joined by Robert Ferri, who was very professional and very gracious. He certainly encouraged us to call him directly with questions. He clearly doesn’t realize what he may be letting himself in for! We talked POET in general and the share price disappointment – it was generally agreed that the THM was the recent high point for the shares and that likely as the result of the THM, people sold some shares, figuring nothing much would occur in the short term (few months). My view is that those who sold were pretty dispassionate and pretty astute – I’m too emotional to be astute. I further figure many who did sell, will likely get back in (or have already), assuming they haven’t blown the money in some fashion in the meantime.

Pre-meeting, but in the small meeting room, G and I talked a bit with Subhash, who just seems to be a wonderful human being (same impression as last year). Here, I’m saying stuff Subhash said, and am comfortable doing so, because he later said essentially the same thing in response to a question during the Q&A. He was explaining to us, in response to our inquiry regarding the VCSEL, how difficult a task it is, and how precise it has to be. He was clearly happy with the detector whose job it is to absorb light, but indicated that emitting light is tougher than absorbing light. They have the ability to produce and sell a VCSEL now, but what they are shooting for is the integrated device – detector, transistors and VCSEL. That is what (to their knowledge) no one else has, and, perhaps, no is particularly close to having. By the way, I got the impression that the detector could be sold alone, but that alone was not going to change anyone’s retirement date.

The meeting was not well attended at all (and that’s too bad, but there was the THM and it very far, costly and difficult for many Canadians to attend). Other than the half dozen or so of us from Agoracom, I don’t know if there was anyone there that didn’t have some very direct relationship with the company, directors, employees, Ferri, etc.

The current iteration of the Poet’s VCSEL is not a big money maker, too generic, I guess – “everyone can make a VCSEL.” So testing continues in Taiwan and Suresh and Subhash both indicated that what remains to be done is an engineering feat, but that physics and concept-wise, it’s there, but is not yet engineered to work the way they want it to work, so as to have the disruptive effect that we all want (“we are past physics, into engineering”). I believe Suresh said that they had experienced some delays due to some unanticipated extra steps they had to take. Whereas certain delays are expected, I was left with the impression that a couple of those extra steps came as a surprise. Just as with the strong, but ignored, undertone last year, I was left with the very clear impression, “disruptive in an area that so many geniuses are working on (and so much revenue is out there to be had) is NEITHER EASY NOR FAST.”

The formal part of the meeting was over in 20 or so minutes. I believe the option issue was the last to be voted upon (other than to adjourn the meeting), and I believe they mentioned it passed “overwhelmingly.” I’m pretty confident it didn’t pass as overwhelmingly as the vote on directors, for example, but I'm trying to give you the exact word used. They did not characterize any other vote as to its passage rate, so it was clear to me that they knew the option vote was the subject of controversy and they were very careful with it.

Then Suresh gave a 15 minute or so synopsis of what was going on, in general terms of course, and he spoke beautifully and fluidly and essentially extemporaneously. That, I believe, is when he mentioned the delays. Now, the good news is that despite the delays, I felt great confidence that our team was going to put it all together in fairly short order. My impression was within months, and not more than 6, and maybe materially less, but who knows what else unexpected they may encounter.

Other than the 600 lb gorilla question of “when” the integrated chip would be ready for prime time – Suresh did not answer that – the only other real “dancing” occurred in talk of the TRAB. I did learn that it was more than three people now, I did learn that GT is still on it, but I did not learn whether or not TB is still a part. Perhaps someone else did.

Suresh talked a lot about the acquisitions, and how they were clearly accretive in his view, and not “distractive” as he felt some may have viewed them. He was quite adamant about this and quite convincing. Denselight is also able to help in terms of finishing up the VCSEL such that the VCSEL, transistors and the detector can be packaged on a single chip and we can rule the chip world. I believe he made that point that with this device working as they want it to, we can not only great GaAs chips, but make silicon chips better, too. Suresh felt that they had the mind/manpower within the company now to get the VCSEL task accomplished (along with their contractor, Wavetech).

Suresh said he is “befuddled” by the share price. He said POET could sign NRE deals now, but management believes that it’s best to wait for the integrated circuit in order to cut far richer deals. He doesn’t want to do a deal for just the detector or a VCSEL. And it is not POET reaching out, but others have reached in.

I will let Mazan come back and discuss potential funding by Singapore interests.

My conclusion: there is still risk that POET will never get to where they and we want them to get, that’s it’s an “if” not a “when.” I have always thought that, however, I do think that risk is at the lowest point it’s been, and our guys are confidently steaming toward the desired conclusion. But I don’t think you can just assume it’s only a matter of “when.” I do think that Ajit, Suresh and Subhash think it’s only a matter of when and no longer an if – but what the heck do those guys know!!

If "it" doesn’t happen, I still think we have a company with viability, but I doubt we will ever see the company reach a billion dollar market cap, unless they come up with something else along the way. Assuming the “it” happens, then it is only a matter of when, and it’s difficult to say when, other than it shouldn’t be too, too long. And if it happens reasonably soon, it seems as though we should still be far in front of the pack.

I’ll leave you with a great story told by Subhash, which he said was meant to show what others in the tech world think of POET, and I thought went a long way to encapsulate what management has accomplished in a year. Before telling that, Subhash was very convincing and genuine when he told G and me how happy he was he’d made this move and that he was having so much fun with POET. The challenge of the new tech, the innovation, and the smallness of the company that brings him so close to every facet of it is a very welcome change for him. A terrific guy, that is motivated more by work and innovation than money.

So, Subhash wanted us to know just how the company has matured and developed over the last year. When he first joined, he said he was “chasing” one of his contacts from a large supplier company. They talked and the guy basically brushed him off, saying they were not interested in doing anything with POET now (too small, too risky, etc), but, of course, asking Subhash to call him when they “had something.” Well, Subhash never did call his contact back, but a little after the mergers were announced, the guy called him and apparently now had some interest in talking.