"The need for new financing is nothing to worry about. And the need is not a sure thing yet.
Wave has several ways to raise capital.
1. N*Able may be profitable sooner than we know. They may already be profitable. Wave may have bought cash flow from an ongoing, profitable venture.
2. Wave may sell other licenses. ITG was licensed for one part of the world. I believe there are other parts that are uncommanded by a licensee at this time. Maybe someone can fill in the details here.
3. The recent additions of MyPublish, Wave-Direct and other sites that work without hardware will begin to create revenues.
4. Additional financing may come in a non-dilutive form such as a lending facility.
5. IPO of 20% of inTelecast. Need I say more?
If Wave ends up going to the equity markets, it will probably be positioned for partner investments. I doubt we will see another offering like the last.
With all that is going on, including possible new avenues that we don't know about such as new technology, my guess is that the flow of announcements continues at the same rate. Wave will never go back to being the company it was one year ago.
Finally, watch shortly for set-top boxes. Revenue may be right around the corner! "
"
Boston Roadshow Notes
Sorry for the delay; I had a commitment tonight. I have not had time to go through the 200+
posts, so their will likely be redundant info here. I am posting only info that I think is new or
very interesting. The info is in no particular order.
I counted 44 people at the presentation, including 7-8 Wavoids. Several more came in after
I counted, and the hotel had to set up another table to handle the unexpected guests.
There were no badges, so it was difficult to determine the affiliation of the analysts. I did
overhear one woman say she was from Goldman Sachs.
Steven did an outstanding job, although I would have preferred that he emphasize the basics
and hit the patent advantages. I would also have skipped the Hauppage/golf demo: it was
confusing even for Wavoids to follow.
Steven:
Major Embassy volume early next year (~late Q1).
There will be NO PCs with Embassy on the motherboards for this Christmas season!
"It will be a peripheral Christmas." [See my notes below on the delayed chips from ITE and
SMSC, which I feel are the likely cause for the motherboard slip.]
inTellicast will begin alpha testing this August.
Wave has more opportunities than it can handle. N*Able adds critically needed resources,
in addition to technology. N*Ables core is Embassy compatible and cuts 9 months off the
development schedule.
We will be in CPQ PCs, but only in the keyboard [not sure how fast data can be
pushed through a keyboard connector and cable, but it can't be very high: serial port!]
Wave is working closely with IBM, who will not announce anything until a product is ready to
ship.
Game vendors are willing to develop exclusive Wave-based games for volumes as low as
0.5-1 M units.
There is no problem ramping up the back office as volume grows. The number of bits
required per transaction is quite low, the operation is outsourced, and there are plenty of
data processing houses begging for work.
Wave is/will forego quick revenues in order to secure content providers and partners. Once a
critical mass is reached then revenue will be turned on.
Our valuation should be between that of Yahoo and AOL.
Key PC OEMs are working on Embassy motherboards now. However, they are wary of
battery-backed silicon (i.e., non FLASH), and prefer Atmel technology.
ITE has had problems with its foundry, whose logic/FLASH process can't deliver what the
foundry originally expected it could. Furthermore, ITE is using its own processor, rather than
the preferred ARM processor. Note: N*Able uses the ARM processor.
SMSC: if I heard Steven correctly it sounds as though SMSC is hesitant to go to fab. This is
a surprise because I was under the impression that SMSC had large customer demand for
the Embassy chip. Can anyone clarify this?
Steven notes that "Wave is an annoying customer" to the silicon vendors. They are trying to
achieve 50 Mb/s I/Os, as opposed to ~115 kb/s for Smartcard technolgy. The higher speed
is required to do on-the-fly encryption/decryption.
I get the feeling that Wave is relieved at having Atmel and N*Able technology to implement
Embassy, as opposed to relying on ITE and SMSC. We should see the results of the
attempt to program Embassy on N*Able's processor in about 2 weeks. Perhaps this is one
reason that WAve now feels confident enough to gear up the PR machine.
[As an IC engineer I know that combining a CMOS logic process with a FLASH process is
difficult and results in process tradeoffs. The complexity of the process also means that it
trails the logic-only process by 1-2 generations. However, I/O speeds of 50 Mb/s were
achieved years ago in a logic-only process. Hence, I'm uncomfortable with the lack of results
at ITE and SMSC. Furthermore, a logic/FLASH process is the only way to achieve the
density necessary for a "$5" chip. Atmel's technology will result in a much larger chip. If
anyone has more info on this situation I would appreciate hearing it. This is the only cloud on
the Wave horizen for me.]
Secure VPNs look to be a big application for Embassy. An example is secure email for a
group that is spread out geographically. Steven gave an even simpler example of a 2-point
secure VPN: You have a video monitor in your child's room, and want to keep tabs on him
(and the babysitter) while you're at work. Clearly you don't want the rest of the office to see
your kid running around naked. Solution: an Embassy chip in the video camera and your
PC to secure the link.
Embassy can be used as a V-chip to control the rating, time, and duration of the programs
your kids watch on TV.
I got the strong impression that many network "appliances" will have Embassy chips in them,
and that eventually there will be far more than one Embassy chip per person on average.
In short, a great presentation, high confidence in the management team, but the Embassy
delay will probably result in a slower stock price appreciation than many had expected. "
"Wave knows me by my password and my credit card #s
Right now I have separate accounts with the chip and the great stuff network, but in the future, I'm sure they will be able to reconcile the account into a single database so when I type in my password it can read my various accounts the same way my e-trade account has linked my trading and IRA accounts.
Just got some friends to buy more and one new after showing them how it worked. Now I have 24 hours to play the trophy game tomorrow.
Hope the above helps a little. My take is that it's a no problem issue that will be worked out. If it's a problem, it means people are multiply installing and using the chip so it aint a problem"
"After using Wave Direct, I assume that if you had several chips on one PC from periphals/motherboard and also other wave enabled devices in your name on other boxes (STB, portables etc.) all billing to the same credit card account that the at least monthly Wave Net reconciliation process would bring all of them up to date. I admit it does get confusing when you think about adding and deducting from your account. However, from what I can figure it can be done. Seems like there is potential for misuse and fraud of some money , but I guess the loss is limited because of the reconciliation once a month.
I was wondering why my PC connects to Wave Direct when I try to use a wace enabled CD now even when I have money in the account on my chip. I use a cable modem so it is automatic. I was wondering if the same is done if you have a telephone connection. Can anyone tell me? I thought once money was in the account it was not necessary. I assume it does this to reconcile first. I am not sure.
I have not heard whether or not did not Wave intends to share revenue with periphal dealers (ex. Haup, actiontec, Plllex, dongles etc. ) or just box makers. It would seem like they would. Splitting the revenue ten becomes more difficult and less profitable to these manufacturers if they all split a fix percentage.
I would like to get more info on this as it has alsways been a question I had. "
"I'm understanding it goes sompn' like this:
56% to Content provider
11% to PC or Board OEM
4% to Distribution Partners
4% to Technological Partners
25% to Wave "
"Don't know if these were already covered but I found these two points very interesting. Steven was saying that a smart card could store "keys" (my decription) and each "key" basically would unlock a service or software that you have the rights to since you've either paid for it in full or you've paid your montly subsription. The two examples he used with this is that lets say you pay to subscribe to the Playboy channel (his example, not mine!) at home. Then you go away on business and the hotel you are staying at does not offer the Playboy channel through their STB. Using your smart card, you could tell the STB that you have the right to view the Playboy channel thus allowing the Hotel to offer services custom to their guests. This is great because the services travel with you. You pay per month for cable but it dosen't go with you. It will soon!
The other great thing was that he said AOL could easily get involved with online music without having to build any infrastructure. They could simply offer it along with thier service which you pay a montly subscription fee. Then your smart card would store the fact that you have access to online music, at some other site, because your montly AOL fees have been paid up. Imagine that! I can offer you services and get paid for it without having to really do anything as far as programming or hardware are concerned. All I have to do is strike a deal with someone who has already done the work and BAMM!!! Instant success.
Now who out there still wants to sell?"
