Lumera 2008 Annual Stockholders Meeting 12/04/08
CAVEAT
I am an amateur investor and human. Mistakes will be made. The official sources are the Company and the SEC. When in doubt as questions of them, me and the others who attended.
PRE-MEETING
This was going to be a sad day. No matter the spin, Lumera was being acquired/merged because it never succeeded as an independent public company. I arrived an hour early and was the second one there. The first one was the hotel worker who arranged the food and drink table. It was a half hour before any company employee showed up. There were only 45 chairs and by the time the meeting started, less than half were occupied.
The few familiar investor faces gathered in the back to talk about what could have been and what may be. I am always impressed at the depth of research some people conduct. Of course, we were all standing there with major losses in our portfolios.
The ex-CFO joined the group and answered a lot of our Q&A prior to the meeting. (I'll paraphrase those responses and include them below with the rest of the Q&A). Even he said that the meeting would be perfunctory.
FORMAL MEETING
The official meeting only took nine minutes. Scripts help. Basically, everything passed with about 60% of the vote.
QUESTIONS & ANSWERS (paraphrased for my convenience)
? I asked about the other 40% of the votes and they said it was mostly shares that weren't voted. There were only 400,000 NO votes.
? GigOptix's history is about as long as Lumera's but they have concentrated more on complete units. Lumera has great tech. GigOptix has customers. GigOptix also has impressive management skills.
? Beginning cash position will be best approximated by looking at the Q3 report for cash and cash flow.
? Lumera shareholders will own roughly 50% of the new company.
? 1 to 8 stock split will help, but be insufficient for, getting the company listed on normal NASDAQ. Growth is required to work back up from the "pink sheets".
? Bothell will remain with about 20 people. Modulators will be ready for market in June.
? The company continues to look for a buyer for Plexera.
? Lumera's tech advantage is the same as it ever was. Superior and proprietary materials properties allow the highest electro-opics performance with no moving parts. No one else can do 100 giga bits per second. But the market isn't there yet. The 40 gps market is small but growing at 90%. The 10 gps market is large but crowded.
? Sales timing will be dependent on budget cycles, replacement strategies, and the overall economy.
? GigOptix will basically provide the package that is improved by adding Lumera materials.
? Lockheed Martin uses 20 gps equipment.
? Management is excited about the prospects.
? This economy is expected to be less severe in terms of telecommunications.
? They are aware of China in terms of representatives and customers.
SUMMARY
GigOptix has better management skills and customer base. Lumera has superior technology but couldn't make the business case. Together they hope to become very successful. The depressed economy and stock price are tough hurdles.
MY CONCLUSION
The short version: I can't lose much more. I might as well hang around.
The long version: Despite the assertion that management is excited about the merger, I wasn't convinced. I hoped to meet GigOptix management to begin understanding them and how they may run things. A presentation from them would have helped. But I get the impression that they weren't enthused enough to attend. It is signs like that which can tell me more than the several hundred page document describing the merger.
The market and the tech look good; but then, they always have. Maybe this will make the difference.
It is sad to see such potential fade and falter. The stock performance is only one measure of that. I am a champion of new ideas and think that the world gets better by trying new, more efficient things. I'd like to benefit from that financially as well. Millions of dollars and years of peoples' lives chasing such ideas. Many times they don't succeed, or at least, not at first. This story is duplicated too often. How many world-changing ideas were mis-handled?
I'll continue to hold the shares, and might even buy more if they show sufficient progress, but that may take years. In the meantime, the new company will have to create credibility. That intangible is non-trivial without sufficient revenues. Here's hoping (a terrible investment strategy) that they succeed.
DISCLAIMER LTBH since shortly after the IPO. |
