2/6/2006 4:06:00 PM
BOTHELL, Wash.–(BUSINESS WIRE)–Feb. 6, 2006–Microvision, Inc.
(NASDAQ:MVIS), a leader in light scanning technologies, today
announced key aspects of its 2006 business strategy and an
organizational realignment and restructuring. In a separate press
release issued today, the company announced its preliminary financial
results for 2005.
“We are pleased to announce Microvision’s turnaround strategy and
actions including key elements of the 2006 operating plan which we
developed over the past few months by conducting a comprehensive
assessment of Microvision’s business strategy, performance,
organizational effectiveness and culture,” said Alexander Tokman, the
newly appointed President and CEO. “We had some significant wins in
2005; however, the Company needs improvement in a number of areas.
“2006 will be a rebirth year for us because we are implementing
the fundamental business elements that separate successful from less
successful enterprises. First among those are letting the market and
customers drive our business priorities and investment decisions. We
have developed and have begun executing a detailed operating plan that
is intended to instill focus and accountability for everyone within
the organization. Our 2006 priorities are to:
1. Grow product revenue and margins;
2. Focus on a vital few OEM product development growth
opportunities, particularly in automotive head-up display (HUD) and
two consumer display applications;
3. Substantially cut the burn rate and reduce the net operating
loss by 30%;
4. Improve quality and customer satisfaction; and
5. Realign and restructure the company to improve organizational
effectiveness and culture.
1. Grow Product Revenue and Margins
“In 2006 we expect to double bar code scanner revenue and improve
its gross margin by at least 15 percentage points. In the third
quarter of 2005 we positioned ourselves for a stronger fourth quarter
by improving our marketing and sales effectiveness through new channel
development, increased focus on improving product quality and
performance by the R&D team and improved supply chain management. As a
result, the fourth quarter of 2005 was our strongest bar code scanner
quarter ever as we shipped approximately 70% more units than in any
previous quarter in 2005. We expect further FLIC volume growth in the
first quarter of 2006. Our marketing and sales strategy and growth
opportunities are focused around four primary segments: mobility,
healthcare, small business/ household, and traditional automated
identification and data capture (AIDC) markets.
“Our assessment has shown that the original Nomad introduction was
not as successful as planned due to the lack of targeted segment
selection, less than desirable product performance and weak
commercialization strategy. As a result, at the end of fourth quarter
2005 we modified our Nomad go-to-market strategy, moving away from the
‘feet-on-the-street’ sales approach to targeting a few strategic
accounts with opportunities for higher sales volume. The new strategy
emphasizes: (a) identifying targeted applications; (b) understanding
the customer’s workflow for these applications; (c) quantifying the
value proposition and return-on-investment (ROI) to the customer; and
(d) developing effective sales tools to communicate the value
proposition and ROI. In the meantime we focused the R&D and supply
chain teams on addressing several performance improvement areas
identified through customer feedback in the second half of 2005. These
and other efforts are expected to help us considerably in 2006 by
turning the product’s large negative gross margin into a positive gain
for the product. We believe this overall approach to Nomad will result
in a better market acceptance. At mid-year however, we intend to
evaluate the longer term viability and true market potential of Nomad
in its current configuration.
2. Focus on Vital Few OEM Product Development Growth Opportunities
in Automotive HUD and Consumer Display Applications
“In 2006 we will focus our OEM product development strategy and
execution on what we believe to be our three largest opportunities
that we identified through our recently completed market analysis in
the second half of 2005: automotive HUD; personal projection display
(PicoP(TM)); and color eyewear for consumer and business applications.
As a result, we are targeting an increase in the allocation of our R&D
budget for these programs to approximately 42% from 15% in 2005. We
will also accelerate the development of a modular architecture for an
integrated photonics module (IPM) that we expect will enable future
exciting product opportunities, including the following:
Head-up Display (HUD)
— Our goal for this year is to sign an OEM agreement with a
strategic Tier 1 partner to enable the development and
productization of the head-up, windshield based color display
for automotive applications. Microvision’s technology offers
three distinct advantages over the competitive solutions: (a)
typically more than 10x higher contrast which results in a
better visibility under demanding operating conditions; (b)
almost 2x more compact form factor which is critical to
automotive manufacturers in managing HUD integration into
tight passenger cabin spaces; and (c) lower overall cost of
installation due to Microvision technology’s unique ability to
electronically align an image to different windshields.
— To fully enable this important effort, we have created, funded
and engaged a cross-functional business, R&D, manufacturing
and sourcing team. We have been in ongoing discussions with
several Tier1 suppliers and we are working to have at least
one of these suppliers commit to our unique solution during
Personal projection display – PicoP(TM)
— Confined into a hand-held form factor, Microvision’s unique
high-resolution, high-contrast, low power display technology
will enable two types of applications. For consumers, it will
offer an alternative solution to the ‘2 inch screen’ of their
cellular handsets, PDAs and media players. For enterprise
users, it will offer an alternative to carrying or needing a
bulky projector for business and sales presentations.
— We have invested engineering resources in the fourth quarter
of 2005 to develop a feasibility demonstration model of the
PicoP(TM) that was successfully shown at the recent Consumer
Electronics Show (CES). Based on positive feedback received
from the show, we commenced a formal cross-functional program
team to aggressively pursue strategic OEMs and to focus on
risk retirement of several technical requirements for this
— Color eyewear is the ultimate goal for head-wearable displays.
We have identified and will evaluate several potential
architectures to determine which one will best meet the market
opportunity with the lowest technical risk for one or more of
the following applications:
— Transmissive color mobility eyewear for light business,
web surfing and phone messaging applications;
— Occluded color display for video and streaming media
— Occluded color wide field of view display for immersive
— In 2006, we will invest business and R&D resources to
determine which one of our potential solutions best meets the
We expect to continually evaluate the business opportunity in this
market segment and evolve our business strategy accordingly.
We expect to continue our strong relationship with the US
government to develop display solutions for military and non-military
applications. We enter the year in a strong position for new
government contract awards, and look forward to continuing our work
with this important strategic customer.
3. Substantially Reduce The Burn Rate By Reducing The Net
Operating Loss By 30%
“We are targeting a 30% reduction in our net operating loss for
2006 from 2005 (excluding the impact of the adoption of FASB 123R
‘Accounting for Stock Options’). This is expected to be accomplished
primarily through improved products gross margin and reduced operating
costs. We plan to achieve better gross margins on products through
better pricing and discounting strategies, lower product costs and
improved product quality. We have started to implement the business
restructuring plan discussed below to significantly reduce our
4. Improve Quality & Customer Satisfaction
“Based upon our detailed quantitative customer assessment of
product performance, transactional quality and post-sale support
completed in the second half of 2005, we have initiated product
quality improvement activities through the implementation of more
rigorous and customer focused processes. We formed a customer support
team and implemented an issues escalation process to provide timely
and effective support to our customers worldwide. Concurrently, we
focused the R&D team to address Nomad and FLIC product quality gaps.
Quality and customer centricity are hallmarks of my experience at GE,
and we will be instilling those strategic imperatives at Microvision.
5. Realign and Restructure the Company to Improve Organizational
Effectiveness and Culture
To improve organizational effectiveness, focus and culture we are
implementing an organizational realignment and restructuring program
which includes the following actions:
— Reorganized the executive management team and made it leaner.
50% of executive management (including Marketing, Sales and
R&D) have been or are being replaced and 30% of executive
positions have been eliminated through consolidation.
— Reduced the overall workforce by approximately 10% primarily
in the Nomad sales and manufacturing and executive teams.
Overall SG&A costs are expected to be reduced by approximately
25% in 2006 versus 2005.
— Consolidated the marketing and sales teams to streamline
activities and go-to-market strategies in the Americas and
Europe to focus on key customer segments including:
enterprise, consumer, industrial and government. We will
announce shortly the leader of this combined group.
— We will be placing stronger business and organizational focus
on exciting international opportunities in Asia. As a result,
Steve Willey will assume the role of President, Marketing and
Sales for Asia. Mr. Willey has developed strong business ties
to the Asian market for consumer applications and he will be
responsible for driving strategic relationships as well as
product and contract revenue in the region.
— Created a new strategic marketing group, headed by our former
SVP of Business Development Todd McIntyre, who will assume the
role of SVP, Global Strategic Marketing and Business
Development, to drive the global platform strategy and focus
on applications across all key customer segments worldwide. In
this expanded role, Mr. McIntyre and his team will also be
responsible for driving key strategic customer relationships
across the globe.
— We are reorganizing the R&D team to: (1) substantially reduce
the number of R&D programs from 30 in 2005 to under 10 in
2006; (2) institutionalize new cross-functional product
development discipline predicated by proactive involvement of
all key functions at the onset of product definition and
development. This discipline is inclusive not only of meeting
critical product performance requirements but also product
cost, quality and schedule requirements; (3) focus on the
development of an IPM that will accelerate our embedded
solutions strategy; and (4) improve and grow the critical
skill mix. We are pursuing new product focused leadership to
head this critical team.
— Introduce strategic sourcing discipline aimed at insuring that
we identify and qualify all critical component suppliers early
in the product development cycle.
— Most importantly, we are implementing cross-company
initiatives to create a culture that promotes customer focus,
cross-functional cooperation, quality mindset, transparency
and accountability. We are establishing accountability by
driving the company’s goals and objectives throughout the
organization. We will recognize and reward those who meet and
exceed their goals and drive the Company’s success. We will
cultivate and promote people who lead positive change.
“In summary,” concluded Tokman “we are putting in place the
necessary foundation that will put us on a path to achieve the
recently updated Microvision’s vision ‘to become an indispensable
source for illuminating information and a profitable enterprise with
sustainable double-digit growth.’ We look forward to discussing our
plan with you in more detail during the upcoming conference call.”
Microvision will host a conference call to discuss its 2006
business strategy, an organizational realignment and restructuring and
preliminary financial results on February 7, 2006 at 12:00 p.m. ET.
Participants may join the call by dialing 866-510-0707 (for U.S.
participants) ten minutes prior to the start of the conference.
International participants can dial 617-597-5376. The passcode is
91241103. Additionally, the call will be broadcast over the Internet
and can be accessed from the company’s web site at
www.microvision.com. A telephone replay of the call will be available
to February 14, 2006 and can be accessed by dialing 888-286-8010 (for
U.S. participants) or 617-801-6888 (for international participants).
The passcode for the replay is 12273773. Also, a replay of the
conference call will be available on the company’s web site.
About Microvision: www.microvision.com.
Headquartered in Bothell, Wash., Microvision, Inc. is the world
leader in the development of high-resolution displays and imaging
systems based on the company’s proprietary silicon micro-mirror
technology. The company’s technology has applications in a broad range
of military, medical, industrial, professional and consumer products.
Certain statements contained in this release relating to growth in
product revenue and margins, unit sales, product development, product
applications, expense reductions and operating results, strategic
partnerships, and benefits of ongoing reorganization are
forward-looking statements that involve a number of risks and
uncertainties. Factors that could cause actual results to differ
materially from those projected in the company’s forward-looking
statements include the following: our ability to execute on our
operating plan; market acceptance of our technologies and products;
our ability to obtain financing; our financial and technical resources
relative to those of our competitors; our ability to keep up with
rapid technological change; government regulation of our technologies;
our ability to enforce our intellectual property rights and protect
our proprietary technologies; the ability to obtain additional
contract awards and to develop partnership opportunities; the timing
of commercial product launches; the ability to achieve key technical
milestones in key products; and other risk factors identified from
time to time in the company’s SEC reports, including in its Annual
Report on 10-K for the year ended December 31, 2004, and its Quarterly
Reports on Form 10-Q.
CONTACT: Microvision, Inc.
Brian Heagler, 425-415-6794
Matt Nichols, 425-415-6657
SOURCE: Microvision, Inc.