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Waking up to more selling... I sit here in disappointment and mental paralysis, pondering what the company can do next to drive shareholder value. I personally believe there are levers to pull with the company's IP and further litigation... but one thing is for certain, we better not see the use of the same litigation funders and advisors, the latter of which have probably creamed private investors for 10-15% of proceeds.
One thing is for certain... there is absolutely no need for the company to retain any of the cash they receive. We have been driving organic growth with limited cash on balance sheet for years and as BT put it many times, pre-litigation we had cash runway out to FY25. Should management deviate from this and try to retain cash, I would be up in arms. After this disappointment, I would want to see management deliver on the STM commercialisation before there is any comp uplift or strategic allocation of capital.
Also keep the following in mind, management already paid themselves bonuses / incentives reflecting litigation progress in 2022. BT's salary / all in comp was up nearly 2x in FY22 to ca £500k... In hindsight, this looks absolutely crazy given it is nearly 10-15% of the cash we have on balance sheet. We are set up for a disappointment but management should not be rewarded for delivering an outcome which is "at the lower end of expectations". Now that this case is out of the way, expectations, goals, and management incentives should be rebased to reflect that the company's future rests on commercial production and they should ONLY be rewarded should commercial production be a success. How the hell can the CEO's salary be 25-30% of organic revenue.
Also, keep the following in mind... with Lombard Odier selling down, private investors can now exercise control over this company. It is great to see such an active board and you should continue to make your voices heard.
Still very confusing no matter how you frame it... to even mention gross settlement value (assumed to be a global settlement) and then refer to a jury trial outcome which only relates to past infringement, is outright confusing.
How can they write "as previously guided by the Company.“ and then respond to emails with "WE NEVER PROVIDED GUIDANCE"
Confused and spooked the hell out of people... I guess they had no idea what to actually say given court constraints but just thought, we need this SP lower otherwise more PIs will get torched.
Hi there Hawi,
I think it would be pretty standard for the court to have a mediator involved in the drafting of the settlement but maybe not necessary. Previously, they have used David Folsom and maybe they are still using him but who knows, don't think its hugely relevant. The judge may simply be asking the two parties to report back actively on the progress of the settlement. But if you are asking what I think you are asking, I don't think that this settlement risks falling apart.
Running royalties are not common in these types of disputes. They are all settled with one off payments so an up front payment reflecting a license would be expected and that language didn't come as a surprise.
I would imagine the funder is on a greater of 3x or 30% of the settlement and then there will be contingency fees for the lawyers and other advisors circling. 50% of the settlement going to the funder seems very high. Remember, the funder is in place to fund the lawyers hours, disbursements, etc and so why 20% of the settlement would go to other parties given the standard litigation funding terms requires further clarification. Fingers crossed.
The cash base is great, but a big chunk of this needs to be returned to shareholders. We have been generating organic growth opportunities with little cash on b/s for years, so there is absolutely no justification to retain the lions share of the cash we receive.
I am US-based so if they were to return cash via a dividend, I would love to know your thoughts on withholding taxes etc. Maybe they assist the LOAM folks with a buy back, who knows.
That is my issue... why even refer to expectations if you have never made any public? Particularly when the only finite range of outcomes that were actually on the table (i.e. filed into court) were $70-90m (Dow model up to 2021) to $400-500m (QD uplift model) and these were not inclusive of rest of world or payment (up front or running) for license, it is extremely confusing and it is exactly what caused panic and fear. It actually feels like the goal posts were shifted to brace investors for impact and it was just all conjured up in the last minute.... "we never quantified expectations out but they are going to be lower then the ones which were never put out". It would have therefore been best to never say ANYTHING about potential damages or fair value for the use of IP.
My understanding is that Samsung indemnifies the end buyer but if sued for infringement, those parties would then have to claim off Samsung for any damages they pay... unless we have dropped hands on those claims as well, which would be rather disappointing. If Samsung is walling us off from litigating v anyone they do business with, that would be pretty sour / not worth giving up. Reality is that only real commercial use for QDs is in display at the moment and Samsung controls the market... These sorts of terms won't really be known but you'd hope we are left with some optionality, otherwise we will be doing absolutely nothing in display, everyone will continue to go to Samsung and just buy films/panels off them and they will have a full license.
I am saying that Brian responded to questions about what he meant in the RNS by expectations. I received this in response to a question as many others did. Here he said:
The Company has NEVER given a numerical quantification of the expected or potential damages. We have consistently referred to the potential value, in a successful jury trial outcome, of being "transformative for the Company's prospects and for shareholder value." That is the guidance the Company has given and what the Company would refer to as "expectations"
In a number of public Q&A sessions when asked what "transformative" means - we have responded "transformative when measured against the Company's market capitalisation."
As a couple of reference points - our market cap when we filed suit was c. $75m, when we announced the settlement on Friday it was around $150m and when we were ramping up to production with Samsung back in 2013 / 14 it was nearer $400m.
So in a very real sense the $500m we have heard in some reports is a product of speculation by some investors interpreting or inferring from Company statements.
We have avoided giving narrower guidance due to the number of variables in play, not least of which is the difference between settlement values and jury awards. If the draft settlement value had been outside the range of expectations then we would have had to update the market accordingly.
So, we have gone from sky high expectations to those which have hit rock bottom... the communication from the company is poor at best and I really do feel for some people out there who took much of what was written on this board, by brokers, etc at face value. One defence the company has is that these things were moving so quickly, they were constrained by the court, etc but I think this stems from a long way back. Having said that, they don't have it easy; I am sure this has been an exhausting process and their was also a price for closure. Don't forget that people like Nigel Pickett have real skin in the game and management are only really incentivised through their LTIP, so it will not have been an easy decision.
From where we currently sit, I think there are a lot of reasons to be bullish, namely:
1. I expect more litigation to be launched against other display players including Toshiba, LG, Sony, and potentially others down the supply chain. Given this win and the market's previous understanding that Samsung owned the IP, we may see very quick settlements / licenses being reached.
2. Pre-litigation and pre-STM this company was valued at ca £30m... we have now asserted our patents and they have been upheld by the PTAB. Patents are tradeable and monetizable assets. For me, STM is a free option but one could say that the enterprise value of the business should be at least £50-60m.
3. Orders for commercial volumes seem to be getting there... though as PIs, I would want to be sure that expectations aren't being set too high and to also figure out how material these would be for the bottom line.
4. The QD market is very fragmented in terms of competition and Nanoco will easily have the best balance sheet in the industry and may become an aggregator or simply go out and acquire IP, with a view to enforcing it.
I don't have a whole lot else to say for now but wish everyone the best of luck with this! The bag holder in me really hopes that expectations have been set so low now and that we will see a $250m number (gross) which will restore some confidence.
Best,
Lobo
I personally would have loved to roll the dice with such a strong case, particularly when we had enough liquidity to operate through FY25. Surely, this was the time to bet the company but it does feel like there has been capitulation and this was always my fear; that we would go to the end of the line and with £5m-odd in the bank, any $100m+ pay-out would look too good to turn down. Let's be real, this company has survived on fumes for years, so dangling any sort of real money in front of management and advisors unfortunately turned out to be a private investor's demise (or at least their hopes of the monster judgment / payout).
I would have hoped for a more substantive RNS on Friday or for a trading halt as I do feel for many who have been tattooed (including myself) because of very high expectations that were set and the RNS title itself "Settlement Agreed" as opposed to "Case Stayed Pending Negotiations", because in reality, negotiations are ongoing. The RNS titled 'Settlement Agreed' with expectations already sky high added fuel to the flames, when in reality it probably should have said that a motion to stay had been filed with the companies negotiating a potential settlement. Trading could have been halted for the day and resumed Monday when the court authorised both parties to provide further communication to their stakeholders. It looks like the joint motion to stay proceedings was filed just after mid-night (it was later corrected in the morning) and so with Texas 7 hours behind and assuming the 'agreement' framework had been reached hours earlier, one would have hoped for.
Then, the RNS yesterday added more fuel and fear to the fire... to quote "lower end of expectations" when no formal guidance has ever been provided was obviously done to temper the market but was clumsily executed. We then all received the email from Brian yesterday where he refers to guidance framed around the definition of 'transformative' i.e. a multiple of the market cap the first time he used the words (when it was ca $75m versus his most recent use of it) but the reality is the damages models should have been disclosed as they were 1. Public information and 2. The only quantifiable figures that one could use to set expectations, but were never mentioned by management or the brokers...
Hi everyone,
I am sorry for the disappearing act but life and my business got in the way of my ability to post on these forums or any others. In the meantime, I continued to follow the case in detail. I was always confident of a positive result for Nanoco but this whole thing feels bitter sweet. Unfortunately, the real problem is that expectations were set far too high. I think some pumpers on these boards, brokers, and management are all guilty for this.
On the latter point, we talked very tough heading into trial (deservedly after the PTAB and pre-trial conference wins) and there were numerous references to 'fair value' for use of our IP, globally, by management but we seem to have folded. Lets first recall that the only true form range of expectations that we could work off of were the two damages models that were being put in front of the jury i.e. the Dow model ($70m up to 2021 sales reflecting $6 per TV) and the model representing a share of the uplift from a QD vs non-QD TV (ca $400m). Knowing that there are 40 million of these TVs sold globally to date, that left me thinking the worse number one should take is $250m plus some amount for future royalties and that even if one was to haircut the royalty in half to a paltry $3 per TV, you should be looking at a $200m settlement... Samsung were putting a $10m damages number on the table that a jury would have laughed at. I do not know where we are going to end up but I am personally guessing the company is going to end up with somewhere around $100m USD (net). Anything less then that is simply shocking and a poor outcome, but we are already pricing that bad number in.
I personally would have loved to roll the dice with such a strong case, particularly when we had enough liquidity to operate through FY25. Surely, this was the time to bet the company but it does feel like there has been capitulation and this was always my fear; that we would go to the end of the line and with £5m-odd in the bank, any $100m+ pay-out would look too good to turn down. Let's be real, this company has survived on fumes for years, so dangling any sort of real money in front of management and advisors unfortunately turned out to be a private investor's demise (or at least their hopes of the monster judgment / payout).
Samsung to Replace Division Chiefs, Reorganize Consumer Business
By Sohee Kim
7 December 2021, 00:33 GMT Updated on 7 December 2021, 03:28 GMT
Simplifying company structure by combining consumer and mobile
A Samsung Electronics Galaxy Z Fold 3 smartphone. Photographer: SeongJoon Cho/Bloomberg
Samsung Electronics Co. is combining two of its three business divisions and appointing new leaders to replace its three co-chief executive officers in its biggest management shakeup since 2017.
The reorganization, decided under the oversight of de-facto leader and Samsung heir Jay Y. Lee, will see the consumer and mobile divisions merged into a newly formed SET Division, to be led by Jong-Hee Han. Promoted from the company’s TV research and development team, Han succeeds co-CEOs Dongjin Koh and Hyunsuk Kim, who had respectively led the smartphone and consumer appliances groups. Kyehyun Kyung is stepping in to lead the company’s Device Solutions group, which encompasses its key semiconductor business lines such as memory, logic processors and chipmaking for outside customers.
Samsung Billionaire Jay Y. Lee Apologizes for Company's Past Wrongdoings
Jay Y. LeePhotographer: SeongJoon Cho/Bloomberg
“Today’s announcement shows the company keeps its performance-driven culture,” said Kyungmook Lee, professor of business management at Seoul National University. “It also shows Jay Y. Lee’s willingness to more actively engage in management.”
Since he was released from prison in August, Lee has gotten involved in major decisions for the company and recently traveled to the U.S. to conclude and announce plans for a $17 billion plant in Taylor, Texas. He is currently on a trip to the Middle East, where Samsung Electronics and Samsung C&T are participating in multiple projects.
Learn more about Samsung’s advanced chipmaking plant in Texas
The consolidation of consumer offerings under one umbrella simplifies the company’s operational structure and may help the South Korean electronics giant better compete with U.S. archrival Apple Inc.
“Apple uses one OS for phones, PCs and TVs and its products show seamless integration,” professor Lee said. “Samsung’s IT products, however, lack such seamless integration between phones and gadgets. The merger between its consumer and mobile divisions, which have until now operated independently, may help fix this issue.”
The fact that the merged SET unit will be overseen by someone from home appliances rather than the smartphone business suggests that “the company probably thought the mobile unit needs a lot of improvement and consolidation,” said Daiwa Securities analyst SK Kim. Samsung remains the world’s biggest smartphone maker with 20.8% market share, according to the latest data from IDC.
As part of the reorganization, Samsung also announced that Hark Kyu Park will be its new chief financial officer, having previously held a post in the Device Solutions team.
Samsung Electronics shares rose aft
I think it will just be more back and forth on the same arguments raised by both sides to dates. I don't see how either party would introduce anything new here. From I understand, the PTAB's institution decision is best way to read the tea leaves, at least until the oral hearing.
Sorry I meant something closer to a few cents of dilution / comp for management... 10c is a completely diff story/out of context :)
I am not sure what PIRC base their opinions on.
It would be easy to say that the company is granting an aggressive options package to a company with a weak balance sheet and no revenue but the counter argument is we have hit an inflection point thanks to the dedication of staff who have stayed on board through thick and thin and snatched victory from the jaws of defeat.
If the team pull this off, then I thoroughly believe they should be rewarded. We are in an environment where people in this space (and technical brains) are in high demand and they could have easily jumped ship for safety, but have stayed on to fight a real battle.
If we give up 10c a share to those folks, then so be it, I will pay up for that any day of the weak.
That is my 2c...
BRIEF – PIRC Recommends Nanoco Shareholders Vote Against Resolutions To Approve Remuneration Report
24 Nov 2021 16:34
Nov 24 (Reuters) – Proxy Advisory Firm PIRC:
Proxy Advisory Firm Pirc Recommends Nanoco Group
Shareholders
Vote Against Resolutions To Approve Remuneration Report, To
Approve Remuneration Policy
Proxy Advisory Firm Pirc Recommends Nanoco Group
Shareholders
Vote Against Resolution To Amend Existing Long Term Incentive
Plan
Further company coverage: NANON.L
(Reuters.Briefs@thomsonreuters.com;)
Well if you think about some of the applications we are talking about which rest close to the human body, namely wearables and smart phones, I can see why cadmium free quantum dots become more important in the market. No large consumer electronics manufacturer wants a product liability class action for trying to subvert such a clear health issue... I think there must be performance qualities that drive the use of some materials versus others (depending on the application) but we need some in house inorganic chemistry expert to figure that one out!
They just haven't introduced anything new and so if you look back to the PTAB's institution decision, they didn't find many of Samsung's arguments credible. This means we should get some claims through. The question is what claims and then its just the matter of proving infringement (on at least one of those). I would imagine there are likely to be oral arguments and so submissions will be finalised in February. Then we will have a decision in May. These panels take their time and this one is obviously contentious, with a lot of money at stake, so I wouldn't expect any earlier.
Hey guys - I have been through the relevant document over a glass of wine or two, namely the sur-reply from Samsung, the Crossairt deposition, and the additional declaration from Mark Green.
There are a couple of big sources of debate, the most central being the teaching of a molecular cluster compound. We argue Banin doesn't teach a molecular cluster compound because the atom clusters MUST BE THE SAME as the patents state. To recall, we point to Banin's references to Hutchinson, who doesn't teach our definition of an MCC, as Hutchinson shows a dispersion of the compounds he produced where they have a 0-40% size dispersion in nanometers and we also point to an image (which is effectively these compounds under a high powered microscope for lack of better words, where they clearly look different). The question is, to a POSITA, are these really different. I.e. for a POSITA, is 0-40% dispersion in nanometres disperse or are they really the same. Both sides go back and forth... BC says they are not the same, Samsung and Mark Green argue they are the same.
This is linked to what BC is arguing across a number of prior art defences that you guys have quoted, that no, absolutely not would a person skilled in the art consider those to be the same. This POSITA question also intersects with other prior art issues Samsung is asserting. BC is saying, whilst the prior art and understood limitation may say one thing, there is absolutely no way a POSITA would do X, then Y, then Z (changing a few ingredients in the middle that Samsung would be obvious).
Mark Green also argues quite a bit about how the MCCs are viewed i.e. if some are are sitting on their side, some are flat, or others are viewed from an angle, then they could still be the same.
Its just a lot of back and forth between 'your expert said this, my expert said that'... I can only go back to the PTABs original reply where they didn't see credence in many of the arguments put forward by Samsung... Both experts are clearly credible in their field, but I would clearly tip my hand to BC over that slithery **** Mark Green.
I need to have a few reads of this... I am not sure it will become much clearer but I may be able to connect dots where I think there are conflicting statements.
Either way, we have so many claims at play and reiterating that we just need to get a few through the PTAB, I am still a bull.
Hope this is helpful guys.