My Energous Commentary Following March 8, 2017 Quarterly Report

Energous (WATT)I’ve been an investor in Energous Corp. (NASD: WATT) for nearly four years and after listening to the call and talking with my sources close to the company and its largest investors, I have more confidence than ever that the fabless semiconductor company will someday be worth a billion dollars. In fact, if it was private and not subject to the fraud and manipulation by shorts that I’ve exposed in my posts on Seeking Alpha, I think it might already be there.

I believe the After Hours action was similar to what happens when a negative “fake news” Seeking Alpha article comes out: the folks trying to manipulate the stock pound it down artificially the moment an article (or a quarterly press release) comes out so there’s optics that things are bad. The goal is to create a panic. (This strategy is effective or they wouldn’t keep doing it.) They began shorting stock today the second the press release came out. But smart investors know the real news happens during the call.

My sense is that Steve Rizzone’s over-the-top confidence on mid-range FCC approval is a bit of a tell….Veteran CEOs like Rizzone are rarely this confident if they don’t already KNOW. I have a feeling that Energous already has some sort of “pre-approval” by high ranking officials and the official thumbs up is just a formality. He was extremely confident — there’s no need to show so much optimism if it isn’t in the bag.

Energous has nine Near-Field and six Mid-Field and Far-Field opportunities representing more than 165 million annual devices Rizzone described as in the “design in” phase, “which means a prototype has likely been developed for a specific application of the WattUp technology and there are one or more target platforms or end products that have been identified as integration candidates…

“Finally we have six Near-Field and one Far-Field opportunities in the design win phase, which means the WattUp technology is now in the customer’s product release cycle. Potential annual shipments of WattUp enabled devices in this cycle is well over 4 million devices.”

Note that these prospective unit figures DO NOT include the tier 1, which I believe to be Apple (NASD: AAPL). Rizzone said they would never make any statements or projections or any comments about anything re: the tier 1. “There are no design wins from the strategic partner that are considered,” Rizzone said. “We don’t comment or characterize our strategic partner in any of these discussions and so their particular status would not be included one way or the other in any of these categories.”

It sounds like the partnership with Dialog Semiconductor is progressing well, and they will be shipping chips in the next 3-4 months. And by 2H of this year, the #s from product sales will start becoming meaningful. IF they want more growth capital, they can get it from Ascend or other strategics whenever management wants without ever having to go back to the market.

I would’ve liked to have seen less cash burned in Q4 and higher milestone payments and/or engineering services revenues. And I wish they would have been shipping chips in Q1 and products shipping in Q2. Instead, Dialog’s Near-Field WattUp chips will start shipping in Q2 (Energous will begin recognizing revenues then, too) and products built with the “Mini-WattUp” will be out in Q3. I’m looking for mid-range WattUp-enabled devices in Q4. Integration into the Apple ecosystem, a possibility for Fall/Holiday 2017, would be the cherry on top.

They could make a movie about the fraud that’s been perpetrated by the shorts on Energous. Anyone with ANY questions about who’s telling the truth — the company vs. the shorts — should listen (or read the transcript) to the last several minutes of Rizzone’s prepared remarks before he opened it up to Q&A:

“The management team and members of the Board of Directors appreciate the support of our partners and empathize with our long term investors given the volatility of our stock. However we have an advantage in that we see daily the progress made and the continual reduction of risk associated with the opportunity which those outside the company cannot see.

“We see first-hand the productive relationship we have with the FCC how far we have come and how close we are to the actual certification of a power at a distance transmitter, a reality which many believe and still believe to this day is impossible. BUT certification of a far field device is absolutely not impossible. We anticipate in all likelihood it is actually close at hand.

“We see the very real advantages in footprint and cost the WattUp Near-Field technology presents over the inductive alternatives. We don’t compete with inductive because we don’t have to. In the markets we are concentrating on the alternative technology simply cannot provide the size, cost, rotational freedom and ecosystem path from contact to distance charging the WattUp technology can provide. We also clearly see the TAM numbers in the markets we are actively participating in representing tens of millions to hundreds of millions of devices, each an opportunity for a WattUp chipset.”

As I previously said, ultimately, I think we’re staring at a billion dollar company, with of course my standard disclaimers around risk and volatility: Do not put your rent money into WATT.

I am long WATT and believe patient investors who can stomach the volatility will be generously rewarded.

 

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