POET Technologies (PTK:TSXV) was taking it on the chin Thursday morning, despite announcing its “new go-to-market” plans just yesterday. POET go-to-market strategy is revealed in its latest press release as well as timelines and appears to be in direct response to building criticism over the past few months.
Take a recent Seeking Alpha article titled POET Technologies Has No Poetry for example. Of the writer’s three key points in his summary, number three is: “There is no detailed go-to-market plan or obvious market partner in sight.”
Is it a coincidence that the subtitle of POET’s press release yesterday read: Operations Update Establishes New Go-To-Market Plan.
I think not…
POET Technologies declines after prototype predictions
With talk of monetization and commercialization buzzing around POET Technologies‘ lab-to-fab process for the past few quarters, the company has finally let investors know it has the “expectation of delivering its first prototypes in calendar 2016.”
Yesterday’s news release, titled POET Technologies Bolsters Strength of Balance Sheet and Sets Product Direction; Expects Prototypes in 2016, was put out after market and has thus far had a negative impact on POET Technologies’ valuation. What did POET say or fail to say that turned off some investors?
Executive Co-Chairman Peter Copetti, boldly commented that:
“We start tomorrow’s new quarter with a significantly strengthened balance sheet – with $20.5 million in cash, with only small operational liabilities.”
Click here to read the entire press release.
While that doesn’t seem like a ton of cash for an approximate $150 million market cap company with multiple offices and prototype development plans, Executive Co-Chairman Ajit Manocha boasted that:
“We expect these funds to provide about eight quarters of development runway, beyond the point of demonstrating working prototypes within the next year.”
Click here to read the entire quote and press release.
POET go-to-market strategy hurts share price after prototype update
POET’s shares were off 9.41% to $0.77 per share Thursday, after touching a low of $0.74. This is the low end of the company’s recent trading zone and the lowest level since POET hit $0.69 on September 11th. Its 52-week low is $0.64, hit on August 24th, and occurred on the day the Venture hit its all-time low of 509.
POET Technologies – 3 Month Chart
So, why after such a strong press release with clear timelines is POET’s share price under pressure? Perhaps doubt exists that POET can actually get its prototype complete and to market without raising additional capital. However, that would be in contrast to Ajit Manocha’s “eight quarters of development runway” comment featured above.
POET is in the development game right now and facing many of the same challenges small-cap tech stocks faced who were featured in our latest EBook. In the report we reveal 50 leaders who took small-cap stocks to stunning multimillion dollar buyouts. The companies these leaders run today, including a number of tech stocks, are outlined in this one of a kind rolodex of some of the top entrepreneurs and business minds operating in North America’s small-cap public markets.
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POET gets serious about sales and revenue
It was reported that POET’s “business model is expected to include a long-proven mixture of product sales and licensing; organic growth and acquisition; and direct and indirect sales.”
This is what every tech stock aspires to achieve and one that few ever reach. The Company also reported that it “expects to go to market primarily with partners -both in sales and manufacturing.”
POET’s recent VCSEL Manufacturing Services Agreement with a commercial foundry is proof the company is headed in that direction.
Click here to read the entire press release.
If investors are potentially reading into something negative derived from yesterday’s press release, it might be the assumption that POET’s management has over-promised on delivering in the relatively near-term. Some may think the various timelines given will be tough to uphold, while others might believe the company must be well on its way to make such bold comments. The Company has reported that it is poised to roll out a monolithic opto-electronics process platform…
Ajit, the Executive Co-Chairman, said that:
“The Company’s patented module-on-a-chip process, which integrates digital, high-speed analog and optical devices on the same chip, is designed to be the next industry standard for smart optical components fabrication.”
The Company’s Chief Executive Officer Dr. Suresh Venkatesan, summed up the ramifications of this achievement:
“Put simply, that means we make what’s on a wafer up to 10 times more energy efficient, 10 times cheaper and more than 10 times smaller.”
Click here to read the entire quote and press release.
For those unfamiliar with POET’s core technology, in the company’s own words it is building out an“unrivaled opto-electronics fab process platform enables unprecedented improvements in energy efficiency, component cost and size in the production of smart optical components, the engines driving applications ranging from data centers to consumer products.”
Remember, POET’s integrated circuit devices contain both electronic and optical elements on a single semiconductor wafer and have been developed to help solve Moore’s Law.
Way back in January of 2014, nearly 2 years ago, we first wrote about POET in an article titled POET Technologies: TSX Venture Tech Stock you haven’t heard of. Back then few investors had heard of POET as it had yet to make its run. Below is a short excerpt:
“POET Technologies hopes it can slice off a piece of the $299+ million Military (FY2013 Optoelectronic-Sensor Segment) Dept. of Defense Budget and the $400+ billion in 2013 (Gartner Dataquest) Commercial Semiconductor Industries. The company believes that optoelectronics – its specialty, will be a “coming major force” at some point in the above markets.”
Click here to read the entire article.
September 30th’s press release tells me that POET Technologies is moving in that direction. With the first optoelectronics prototype now targeted for calendar year 2016, investors have a new benchmark for the company to meet. While some have been waiting for years, tech stocks, much like mining ventures take time to develop; this is simply the nature of the beast.
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