Pat: By asking if Molex would rather have $200 a share are you suggesting their manufacturing relationship isn't their primary objective and their real reason for investing is to participate in a hot sector--- and they'll bail when the party's over? I was basing my comments on Molex's partnership being a sincere desire to have the products Lumenon is developing. Now I'm confused. As for intellectual property, from my reading of the documents, they license from two other parties.
No, I was suggesting just the opposite; Molex will benefit much more if they can continue to market Lumenon's products over a period of many, many years rather than succumbing to the lure of a high take-over offer. As for the intellectual property, yes, Lumenon does license the right to commercialize the technology, but you must realize that Dr. Najafi and Dr. Andrews developed the technology while they worked at those schools. They are the intellectual property; the licenses are worthwhile, and needed, but are only a stepping stone for Lumenon's future success.
Pat: The SEC document clearly says Molex has the right of first refusal if the company sells any shares. That means they can buy any shares being offered and over-ride any decision Lumenon makes. The Sheldahl deal is a good example of how even a 22% position can give enormous power.
You need to stop saying that Molex can block any deal that might come along. That is simply not true. Molex can own at most about 30% of the stock of Lumenon. If the remaining stockholders were to vote to approve an offer then the ball is then in Molex's court. Molex really has only two options: Exercise its right of first refusal and match the offer, or 2) accept the offer. Molex can not legally prevent an offer being made, nor can it ignore an offer.
Pat: Are you saying OEMs are co-designing different chips, ones that Molex has no rights to? I've assumed they have access to the Molex chips (for design purposes) but can't imagine any OEM wanting access to them considering Molex's control. Now, if LUMM is designing different chips, this is new information and it would be helpful to know when they'll be completed and ready for volume shipment.
Well, yes, of course Lumenon is working with other OEMs to develop customer-specific photonic chips. However, it may be quite some time before we hear of contracts for these chips. The reason being that Lumenon will not announce who they are working with, nor will they announce what they are designing, nor will the customers since they prefer to keep their needs and plans somewhat secret, or at least keep the information from their competitors. As for timing, I can not imagine any contract being finalized until well after the time that the new factory has been up and running, and the kinks worked out--mid-2001 perhaps?
Pat: I take it you're referring to DWDM products that aren't included in the Molex agreement. What products are these? What percentage of their business do they represent? What are their estimated ASPs? Are they shipping now? If not, when will they ship? But my concern is with the Molex-controlled products -- the 8-channel (and above) chips. Can an OEM buy these as-is, without being designed in? If they can't, what is the time-frame for the design process?
Unfortunately we do not know much of what you ask here. However, for custom designed chips Lumenon has repeatedly stated that they can design a chip within days and actually produce a chip within weeks. True, that chip may need further reworking, but to get a working sample to a customer in two weeks is an incredible turnaround time in the industry.
Pat: "In time" is too vague. Considering Molex's control, I'd like a statement from the company saying X number of OEMS of X market-cap are at a given stage of development on a given product, and name the stage and product.
Part of the problem with making announcements such as you are requesting is that some will view that as pure hype. Until a contract is signed, sealed, and delivered I do not think Lumenon will issue any statement about what they are working on for specific customers.
Pat: Clearly if you're willing to engage in this debate, you have time to work out some numbers. It's easy to say revenue will sky rocket in FY 2002, but it's also possible the company won't make it to 2002 if their relationship with Molex doesn't turn out as they hope.
Yes, and no regarding the time to work out some numbers. Since I am not a securities analyst, nor am I an accountant, nor am I an industry insider, many of my presumptions would be subject to doubt. However, I will use some published numbers and post projected sales as soon as I do find some spare time.
Pat: Based on all my reading, it seems quite clear that Lumenon and Molex both want the company to become a real operating enterprise and that they both believe the Molex business will be enough to make them successful during the first critical years. If Lumenon seriously wanted other OEM business, they wouldn't have agreed to give Molex the control they did. Now, you indicate the Molex agreement is not written in stone. Are you suggesting the agreement can be broken? If so, when would this be likely to happen? Such a change would certainly have to be reported to the SEC and if I were a shareholder, I'd want to know if this really is a possibility. The thought of headlines stating Molex and Lumenon have terminated their agreement is a bit unsettling.
Again, I am merely pointing out that the original agreement was done some time ago, things have changed, things have progressed much farther and quicker than either party may have anticipated. Consequently it would not be out of the realm of possibilities that the terms of dealing with each other may change also. Yes, I do believe that Molex's continued nurturing of Lumenon, as witnessed by the recent second closing, among other things, is a clear sign that Molex wants Lumenon to be wildly successful commercially. If they were to change the terms of engagement I would not be expecting any announcement terminating any agreements, rather I would expect to hear of an expansion of the agreement, or a modification of the agreement. Not being a lawyer, I'm not sure that this would absolutely have to be reported to the SEC, perhaps someone more knowledgeable about law could provide the answer. |
