Q3/14 10-Q: "... On August 15, 2014, the Company purchased 100% of the outstanding shares of Lumewave, Inc. (“Lumewave”). The acquisition was aimed at expanding the Company’s outdoor lighting business. The purchase price consisted of $1.8 million in cash paid at closing and $715,000 in common stock of the Company distributed at closing. ...."
That's the other issue potential investors have to be prepared to swallow. In their Q3/14 CC, Sege or Slakey indicated they may even go for a larger acquisition if the opportunity is right. However, if they were to spend say $20 M, such an acquisition would very likely result in significant shareholder dilution, and with 43.5 million shares outstanding already, a reverse split would be the logical consequence.
Having said that, while such dilutive measures would lower the PPS cap, I suppose at the current PPS in the high $1's, any strategy that could move ELON into free cash flow positive territory ASAP would raise the PPS quite a bit.
Next, sf_elon, Kenny Scion, and elongverylong show up with a capitulation announcement ...... and me announcing that I go long. Lol. Could anyone of you put in a sell order at say .... $1.62. TIA.
If I were long, I'd hope that Sege would wait until after the New Year with the FT6500 / IZoT marketing campaign, or wait until they have a truly convincing campaign with quantifiable customer references we can believe it. If they don't get this right this time, they'll lose all credibility not only by potential investors but more importantly by their customers. If they get this right, this stock can fly on the pump.
Just in case some weak hands get tired holding their baggie :) Baba?
I doubt anything of material significance will come out from Echelon prior to the holiday season. They've been too busy untangling themselves from the Grid business (NES). Nonetheless, some institution might start sponsoring the PPS in anticipation of the FT6500 and IzOT exiting beta, and Echelon pushing forward with a major marketing campaign .... my crystal ball clearly shows a major pump in H1/15 .... and it also shows a few extreme pumpers coming back on this fine message board. I am still in waiting mode but ready to push the buy button prior to Q4/14 CC.
"SFU shall hold till Jan 15th of next year and then,"
U still planning to sell on Jan 15th. Have fun. U might manage to sell at rock bottom. And me buying. Have more fun.
And back it is to ... $ 1.82 -0.04 (-2.15%). Lol. I doubt, though, folks will remember what I mean :)
It's getting interesting again from here. If ELON's PPS were to continue its decent for a bit, risk/reward certainly shifts toward reward ......
ELON's a different company now, that's for sure. With the downsized company, they have enough cash to burn for at least three years, even in the worst case, and it appears they are working on a few nice PRs .... So I doubt this recent $2.7 dump n' pump was the last one we have seen.
.... but a planned sale with "likely incur additional costs."
Was thinking they hived it off with the S&T deal.
This Echelon-Holley JV was the most pathetic managerial deal I've seen in a long time, and that from both sides, Echelon and Holley. I still remember the State Grid certification pump. Sheesh.
How can Echelon and Holley enter into such a JV which after two years has not sold any products other than into minor pilots? Recall when Echelon realized that the JV won't work, they turned/twisted/spinned this JV into an outsourcing "design center" for grid products. Now Echelon-Holley apparently owns the "design center" but sold all the technology to S&T. Looks like this will be ending with an 80%++ write-off.
Where do they come from?
From Q3/14 10-Q:
We will likely incur additional costs in connection with the sale of our interest in the Holley Metering joint venture.
As a result of the sale of our Grid business, we have decided to sell our interest in our joint venture in Hangzhou, China with Holley Metering, a Chinese company with which we had been developing smart energy products for the Chinese market, as well as certain products for the rest of the world. This process will result in costs, the full amount of which is uncertain at this time, but that will negatively impact our cash flow.
That's true. Institutional investors stayed put in Q3/14
Institutional Ownership ... 23.45%
Total Shares Outstanding (millions) ... 44
Total Value of Holdings (millions) ... $19
Increased Positions ... 846,537
Decreased Positions .... 678,194
Held Positions ... 8,781,306
Total Institutional Shares ... 10,306,037
Read more: http://www.nasdaq.com/symbol/elon/institutional-holdings#ixzz3JcjW6xdI
With more than ~42 million in cash, and the smaller-sized company with OPEX coming down toward $7 million a quarter, fear of BK has certainly moved our for the next two years.
"... My big take away from the CC is that they shipped something like 200 evaluation kits...."
My understanding of these evaluation kits is that they are meant to be installed on each developer and tester machine. The IzoT EVK seems to be a complete IzoT-based development/testing environment, comprising IzoT software, Raspberry-based hardware, and associate licenses. Honeywell, for example, as one of Echelon's larger LonWorks customers, likely purchased a dozen of these EVK's for their developers and testers. This would reduce the number of customers that are evaluating IzoT as of Q3/14 to a fraction of 200.
I'd love to speculate about potential revenues from IzoT, but I don't think we have any information as to how Echelon is going to license this software. In the extreme case, I could even imagine they give it away for free as part of larger deals and they try to cash in on their new FT chips. How much of "additional" revenues that may yield seems impossible to predict from the information that's publicly available.
In general, these IIoT numbers that Echelon throws out in their con calls sound a bit like their 100 pilots in Germany .... two years ago. In hindsight, we know what that meant. They sent a smart meter or two to utilities around Germany, with Greetings from California, and that counted for a pilot. Similarly, at this point, it's hard to predict how these 200 EVK so far translate into potential revenues.
I accidentally came across this announcement of Echelon. There are a few nice resources on McRock's site that can stimulate one's grey matter as regards potential investments.
McRock Capital, the Toronto venture firm that invests exclusively in Industrial Internet of Things (IIoT) companies, has appointed Echelon CEO Ron Sege to its Advisory Board.
“Ron has led some of the most transformative high-growth technology companies during his impressive career. His passion and industry knowledge is an incredible asset to McRock as we partner with entrepreneurs to build world-class technology companies in the Industrial Internet sector,” said Whitney Rockley, co-founder and managing director of McRock Capital. “Ron understands the massive opportunity around the IIoT and the importance of partnerships and alliances as the physical and digital collide in Industrial markets.”
Ron Sege, Echelon CEO
Board members provide business guidance and mentoring to McRock’s IIoT portfolio companies.
Sege is the sixth member of the McRock Capital Advisory Board. The other members are Marzio Pozzuoli, founder and former CEO of RUGGEDCOM, part of Siemens; Harry Zarek, Founder and CEO of Compugen Inc.; Peter Williams, CTO for IBM's Big Green Innovations Incubator; Mike Fister, CEO of Enecsys; and Peter Van Deventer, co-founder and managing partner of Integrity Global Management.
More information about McRock Capital is available at www.mcrockcapital.com.
"... Sold to CSCO before XMAS at $8 or so ...."
Perhaps in your mental world ...
There's a new opinion article of Martin Vlcek on seekingalpha.
"... Echelon’s stock continued to fall and until I see a clear sign of a sustainable top-line growth, I continue to recommend staying on the sidelines. ..."
That's my opinion too.
"... To further the penetration of the lighting controls market, Echelon acquired LumeWave, with its innovative outdoor lighting control system and strong US customer base ..."
ELON's Q4/14 revenue guidance doesn't really support this proposition.
"... Cash burn going forward after 4th quarter drops to 2 million a quarter ..."
Non-GAAP loss per share ... ($0.04) – ($0.08)
GAAP loss per share ... ($0.06) – ($0.10)
Ultimately, ELON will need to break-even on a GAAP basis though. They can't burn shareholder equity forever. If we take Q4/14 expectations as the run-rate, ELON lacks revenues for 24c to 40c a share, that is, $10.44 M to 17.4 M based on 43.5 million shares, just to break-even on EPS,
Another observation is that LumeWave contributed nothing in Q3/14. Why? And judging by ELON's Q4/14 revenue outlook between $8.75 M and $9.75 M, the LumeWave acquistion will generate very little going forward.
"... the focus on their bread and butter technology and the prospects for the future being again a cutting edge silicon valley tech company. ..."
Without a significant partner that provides the device verticals for ELON to plug in their chips, it'll continue to be a tough ride. My guess is that Sege is working tirelessly to sell the whole shebang, and this is what keeps the PPS in the high $1's at this point. I doubt they'll get more than $3 a share though.
No comments on Q3/14? Looks like our ELON board troopers got shell-shocked and had to leave the battlefield, or start babble insanity. Anyway ...
- whopping 1 analyst asking questions
- quarterly y-o-y decline of IIoT revenues from $9.7 m to $8.5 m
- gross margin slightly lower than expected: 54.5%
- outstanding shares increased by 200K to 43.5M (looks like someone got a bit of a bonus here :)
- it appears Lumewave did not contribute anything to revenues
- Revenues $8.75 - $9.75 (it appears, Enel will contribute again very little again in Q4/14; is this what we should take into account going forward?)
- Non-GAAP Gross Margin: 55% to 57%
- Operating Expenses: $7.0 - $8.0; coming down as expected;
- Non-GAAP loss per share: ($0.04) – ($0.08)
- GAAP loss per share: ($0.06) – ($0.10)
- Cash Burn: $7M to $9M for Grid expenses; cash in Q4/14 will be around $42M then
They are still quite a bit off to break-even Non-Gaap.
... only for those of you who are still interested in Echelon's best-of-breed smart meters.
Anderson is the new CEO of NES....
“This change will allow us to devote 100% of our resources to enhance our existing solution platform and grow through the sale of smart grid applications”, said Michael Anderson, CEO of NES. “Our OSGP based solution is gaining significant momentum within the industry, our customers are hungry for our new applications suite and the synergies associated with our VAR partners like LG CNS, S&T and Schneider will enrich our ability to provide value to our existing and future customers.”
What immediately caught my eye is NES' support for OFDM ... first step into Prime and G3-PLC communications.
"... Patagonia is also designed to support multiple communications mediums and protocols, including OFDM PLC and various wireless options. Current plans are to launch the availability of OFDM PLC option on Patagonia’s Grid Appliances within the next year. ..."
Very cool. It'll take two years, but this can become a huge business for S&T. S&T is doing it right. Like it :)
Echelon (NASDAQ:ELON)‘s stock had its “hold” rating reaffirmed by research analysts at Canaccord Genuity in a report released on Thursday. They currently have a $2.20 price target on the stock, down from their previous price target of $3.75. Canaccord Genuity’s price objective would suggest a potential upside of 16.40% from the stock’s previous close.
ELON's has to increase their non-ENEL revenues by at least 50% to support $2.25. If Sege can't show up with a big-time partner that has the device business for ELON to plug in their chips, Canaccord will soon have to "reaffirm their Hold Rating" again, but then with a price target of $1.25.