IMMR

[David Randolph]

But we should expect the worest to happen as long as we are in a stock market

Very well said Garoh, very well said

IMMR's results were a positive surprise, for me at least, because when I read that management said that "eventually in 2007 we'll be profitable" I thought they would report a loss in Q2, but no, a 1 cent profit per share on $8.6 M in revenues. Expectations were for a loss of 2 cents per share.

But that's not really important for this company, since what matters is the future. I heard the conference call, which was extremely interesting.

Here are my highlights:

1 - Nokia agreement is confidential. Management just said the agreement provides IMMR with minimum quarterly payments that will start in Q3 2007, that it has an incentive for Nokia to deploy IMMR's technology in hundreds of millions of phones, because the more phones, the less royalty payments will Nokia have to pay to IMMR. They expect new phones, using IMMR's vibetonz technology, to start shipping in the first half of 2008 (that's earlier than most people thought, because in an interview to Reuters, the CEO said he expected "substantial revenues from the mobile business in 2009"). Management expects more than 50 million Nokia phones using ts technology over the short term ... as for the long term they expect hundreds of millions, that is, probably most of the 400 million mobile phones Nokia sells each year.

2 - Court decision on the Microsoft litigation probably in September 2007.

3 - Management talked about "substantial revenue" in 2009 because they think their technology will generate a lot more revenues than just the ones provided by the mobile phones sold ... this if, as they expect, the technology gets to be widely used. They say mobile games, SMS and other mobile phone applications may use IMMR's technology and therefore will  have to buy a license from the company.

The potential seems to be huge, but we'll just need $1 per Nokia phone sold to justify a $4 B market cap company, that is, 10 times more than the current market cap. The company also has LG Electronics and Samsung as their licensees.

I'll keep holding IMMR.

[David Randolph]

Even if the US economy enters a consumption led recession, Nokia will still sell 400 million or more mobile phones throughout the World in 2009, when IMMR will probably receive about $1 for each phone sold using its VibeTonz technology.

So ... if everything goes well IMMR will have what, $500 M in revenues in 2009 or 2010? (also considering the company's other businesses). This will translate to at least $250 M net income (considering a 40% income tax rate and $50 M in annual costs), so we're talking about a $2.5 B market cap (considering the average multiple will contract between now and then, from about 16 to about 10, which is very pessimistic). The company's current market cap is $417 M.

Of course, there are risks to the forecast, but I was reassured after the latest conference call that my reasoning is correct and I'm prepared to hold IMMR through all ups and downs between now and the future.

[David Randolph]

Nothing new on IMMR yesterday, I'll keep holding this one for the long term.

[bourbonstreet_crawdaddy]

HI David,

I think that when IMMR breaks out in the next day or two, that the stock is absolutely going to explode through the roof. This technology is going to drive such massive revenues and profits for IMMR in the next 3 years, and it is clear that the stock is severely undervalued.

I don't see any reason why IMMR shouldn't be $50 right now, given the big deals that they have in place, and since the technology is proven and is being rolled out as we speak.

This technology and this company is like a dream come true for me. I feel like we are a part of a story in IMMR which has the potential to be SO HUGE!

Thank You so much for finding this amazing company, and for including it in the Main Portfolio. I believe that IMMR will bring the Main upward and onward in the very near future.

Only time will Tell

Have a Fabulous day David!

Bourbon 

CHEERS!!!!!!

[la-onda]

just FYI:
insider selling:
http://www.secform4.com/insider-trading/1058811.htm
could be the reason for todays price action
cheers
O.

[David Randolph]

HI David,

I think that when IMMR breaks out in the next day or two, that the stock is absolutely going to explode through the roof. This technology is going to drive such massive revenues and profits for IMMR in the next 3 years, and it is clear that the stock is severely undervalued.

I don't see any reason why IMMR shouldn't be $50 right now, given the big deals that they have in place, and since the technology is proven and is being rolled out as we speak.

This technology and this company is like a dream come true for me. I feel like we are a part of a story in IMMR which has the potential to be SO HUGE!

Thank You so much for finding this amazing company, and for including it in the Main Portfolio. I believe that IMMR will bring the Main upward and onward in the very near future.

Only time will Tell

Have a Fabulous day David!

Bourbon 

CHEERS!!!!!!

Gee, you're really enthusiastic about IMMR Bourbon, but hey, you seem enthusiastic about everything in life

just FYI:
insider selling:
http://www.secform4.com/insider-trading/1058811.htm
could be the reason for todays price action
cheers
O.

Yep, but just 30,000 shares, not very significant.

Now, there was a form S-8 filed with the SEC yesterday after the close that will probably harm IMMR in a serious way today. We're talking about 3,303,232 new shares here, which will add to the existing 28 million shares, so, about 11.8% dilution

The stock may very well dive by this percentage today due to this news ... but I have something in the back of my mind saying this was already known ... nah, that was another issue, the redemption of debentures.

Why does IMMR need another $52 M? I certainly wasn't expecting this dilutive move, since they had so much cash in the balance sheet.

This shaves some of the potential for the stock (and probably will provide an ugly sell off today), but since the long term potential is still huge, I'll continue holding IMMR for the long term.

[bourbonstreet_crawdaddy]

Hi David,

Wow - I am not so enthusiastic about that Major Dilution, but hopefully it will be good long-term. I am interested in the details of the form S-8 - it seems to be shares being issued in accordance with the Immersion Corporation 2007 Equity Incentive Plan.

Can you explain if this is a Private placement, or if the shares are being issued to the President and CEO as compensation?

Thanks as always and Keep Smiling 

Bourbon

[David Randolph]

Hi David,

Wow - I am not so enthusiastic about that Major Dilution, but hopefully it will be good long-term. I am interested in the details of the form S-8 - it seems to be shares being issued in accordance with the Immersion Corporation 2007 Equity Incentive Plan.

Can you explain if this is a Private placement, or if the shares are being issued to the President and CEO as compensation?

Thanks as always and Keep Smiling 

Bourbon

That's an excellent question Bourbon, but there's no answer in the form S-8. I'll dig the issue over several SEC forms for the next update, I'm running a bit late today, sorry.

But I was positively surprised by IMMR's resilience yesterday, falling just 0.85% on the day ... I was afraid it could be a lot more. This tells me IMMR won't go down much further from this point. It is actually a safe stock to own (well, safe as stocks in general goes), even though the usual valuation metrics like the Price to Sales Ratio or the Price to Earnings Ratio seem to reveal a very overvalued situation. IMMR will hold up based on future expectations, that will probably materialize, irrespective of the business cycle. And, the way I see it, even if IMMR is valued at 10 times earnings in 2009 it may still be a $2 B company, more than four times what it is now.

I'll keep holding IMMR for the long term.

[la-onda]

fyi:
Goldman Sachs Now Owns 14.1% of IMMR 

http://immr.client.shareholder.com/EdgarDetail.cfm?CompanyID=IMMR&CIK=1058811&FID=769993-07-885&SID=07-00

cheers
O.

[David Randolph]

Thanks for all your help La-onda

It seems that the 3,303,232 shares registered with a Form S-8 in August 8th were sold to Goldman Sachs, as reported Friday after the close, in the following form SC-13G.

Goldman Sachs now has 14.1% of IMMR, and it's nice to have institutional ownership.

Technically the stock closed the gap at $13.85 and it seems ready to start pushing higher.

I'll continue holding IMMR.

[David Randolph]

The market enjoyed Goldman Sachs' investment in IMMR, as the stock rose 3.2% on a day the S&P 500 went slightly down. I'll keep holding IMMR.

[David Randolph]

In a birthday party of one my kid's cousins I saw the kids were very excited playing a Sony Playstation game which used IMMR's technology. It looks really cool.

Other than that there's nothing new for IMMR today, I'll keep holding the stock.

[David Randolph]

IMMR can go up or down a lot but nothing will change the prospect of possibly about 600 million mobile phones possibly being sold annually using its technology, starting in 2009.

That will bring about $300 M in annual profits for the company and will make it worth at least $3 B, not $393 M as it is now.

I'll keep holding IMMR for the long term.

[David Randolph]

IMMR dipped very hard over the intraday but then it closed down just about 2%. Lucky buyers down there. I'll continue holding the stock for the long term.

[David Randolph]

Nice 3.1% advance for IMMR. I know I'm losing 31.4% on this stock, but I think that can change pretty quickly, as the stock trades on expectations, not actual numbers. And these expectations are intact since the stock printed $20.68 in mid July.

Over the long term, say, three years from now, I believe IMMR has the potential to be worth something like $4 B to $6 B, that is, 10 to 15 times more than the current market cap, just by analyzing the company's business model and current contracts with licensees, especially with Nokia.