Re: Meeting Monday, sept14..Can't wait for...Vivek..excited
in response to
by
posted on
Sep 11, 2020 12:51PM
And, Mr Dede published a note yesterday (same $1.50 target) highlighting the new agreement and the company's novel "news" policy - let's hope they feed the policy Monday AM:
Announcement yesterday confirms focus of late-August AGM
meeting: the evolution to product development. A string of recent
events not only calls attention to POET's developmental progress,
but also corroborates what we see as POET's most vital claim
laid out clearly at the August 26 annual general meeting (AGM):
POET has evolved from an R&D, technology development company,
to a product company. While vaguely alluded to late last month,
yesterday's customer announcement confirms a new agreement with
an as yet unidentified European optical device manufacturer for
400G capacity optical engines that comprise the key component in
transforming electrical signals to optical signals in communication
networks specifically within a data center environment where thousands
of high-capacity servers might be networked together. Most data
centers are still on the upgrade path to 100G ("G" as in gig, not
"generation"), where 400G marks a two-generational step forward
from current deployments. Recall, POET is working with China-based
Sanan to commercialize its version of both 100G and 200G data
center connectivity devices. The recent AGM discussed progress on
that front too, and we expect POET to have working product fielded
at Chinese end customers in the third quarter next year (where we
explicitly agree with POET's AGM outlined roadmap). Although specific
financial details remain scant, we see the new European customer
announcement simultaneously validating POET's technology and our
bullish perspective. We had less confidence POET would see the fruits
of its labor in collusion with its China-based partner as the company
owns less than 50% of that JV formed with Sanan. It appears that the
new deal is structured in a more familiar fashion, where limited nonrecurring
engineering (NRE) funds drive the minor alterations in POET's
Interposer platform to perfectly meet the European company's functional
specifications, and contracted pre-specified sales are collected later.
POET's European customer should have a 400G product complete with
POET components reach the market mid-year next year; meanwhile,
POET claims it could have two other related 400G products in the
market by the end of next year: (1) 400G light engine; and (2) 400G
FR4 receiver. A 400G FR4/DR optical engine showed on POET's AGM
roadmap as well late August, but it may not become commercially
available until 2022. Important in all of this discussion we think, is the
availability of multiple products next year, substantiating our $10M sales
estimate, and perhaps leading to a conservative view of it.
Novel heavy-handed news machine. In effort to solidify constituents'
understanding, we understand POET may become more prolific in
reporting its advancements through regular press releases. We suspect
the improved news flow to call attention to the completion of its full
commercial metamorphosis while we expect the dollar consequences to
arrive in due course. We make only minor adjustments on our estimates
near term, while holding our 2021 sales estimate static at $10M.
The European contract release, we suspect, is merely the beginning
of a continual broadcast of POET's improved commercial standing
to include, we imagine, progress reports on the many Interposerrelated
deals POET has worked on over the past 12-18 months—given
Interposer's disruptive capabilities—as well as updates on its Sanan JV.