Re: Example of a useful year-end letter to shareholders
posted on
Jan 07, 2018 10:09AM
In general material news is any information associated with the company’s business that could influence the share price. It is however often not that clear cut and subject to many exceptions. We can cite a few examples with this company.
When POET ran into operational issues associated with contract work being performed at Anadigics during the takeover. It was a time of uncertainty when shareholders were nervous about whether the work being performed at Anadigics could continue or whether POET would have to start over again somewhere else. They did start over again at a new facility well before the market was advised. The technology was transferred to Wavetek under NDA months before we learned of it as per the following statement:
Poet reported that it is encouraged by the promising initial results of its wafers sourced from its epitaxial wafer partners processed in the Wavetek facility using Poet's proprietary technology, which has recently been transferred under a non-disclosure agreement between Poet and Wavetek. The agreement addresses all current manufacturing requirements (including vertical cavity surface emitting lasers) in Poet's continuing commercialization initiative.
Why was the market not told about this much sooner? Why was there a need for a non-disclosure agreement?
When they announced the contract with Anadigics (which was limited to the VCSEL) in Aug 2015 they did not even begin the technology transfer until the fourth quarter so it becomes interesting to contemplate how soon after that transfer took place did they begin transferring the platform to Wavetek such that initial results were available at the end of January?
More recently we can point to 3 product related news releases that were issued consecutively over a 3 day period to catch the attention of the participants at the China International Optoelectronic Exposition. Consider the importance of these devices to POETs business plan which would be very significantly impacted by new product development. One could argue that POET withheld material news from the market but it was clearly timed to benefit POETs business which would ultimately benefit POET shareholders. Two principals rank very high in the rules that govern premature disclosure. Almost everything this company does is confidential in nature as it is such a highly valued and competitive industry with technologies that can make or break business models. This provides significant latitude for companies to guard information so long as no one benefits by having knowledge of material information that is withheld. Non-disclosure agreements are common place.
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