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Technology Stocks
Neonode(NEON)-With A Soft Touch in My Heart and Other Places
An SI Board Since October 2012
Posts SubjectMarks Bans Symbol
2 1 0 NEON
Emcee:  Arthur Radley Type:  Moderated
Neonode (NEON) is a Swedish company that now has located their main operation in California. Once upon a time, Neonode made cell phones. Although they made a great phone, they could not compete in the highly competitive cell phone market and went bankrupt. They have, however, reemerged and have reinvented themselves. They have patents and expertise in the field of infrared touch technology. The "new" Neonode sells an infrared touch "solution" to OEMs that enable the manufacturer to provide high quality, touch enabled products (feature phones, smart phones, appliances, e-books, gps units, copiers/printers, etc.) for a fraction (less than 1/10th) of the cost of similar featured capacitance products. They decided that rather than selling a few products embedded with their technology, they will sell their technology to anybody and everybody and earn a small royalty on a large volume of products.

And here we are today (October, 2012)...with the announcement of a touch solution for phones that costs about $2 per unit with high volume orders. OEMs will purchase this technology and incorporate it into their phones for less than a tenth of the cost of capacitance technology. Feature phones (1billion sold last year) can upgrade to the look, feel and much of the functionality of a smart phone for $2 per unit. Also, since infrared touch is frugal on battery usage, smart phones (600 million sold last year)can incorporate this technology to inexpensively allow these expensive smart phones to more efficiently function as e-readers. The problem with using current smart phones as e-readers is that the phone runs out of battery power rather quickly.

NEON has over 40 design wins in the 1st 2 quarters of this year(2012). These wins take 6-9 months to determine if the technology is feasible for the OEM and another 6-18 months to implement this new technology into actual products. We should be seeing the fruits of NEON's labor over the coming months with announcements about deals being made from 1st quarter design wins!

The Neonode Smartphone I, solution uses Neonode´s single chip touch frontend IC, the NN1001, developed together with our partner Texas Instruments. The NN1001 connects directly, with a high speed 1.8/3.3V SPI interface, to virtually any microcontroller or application/baseband processor. The touch software can run directly on the application processor, sharing its memory and processing power, thereby reducing cost and increasing performance. This configuration also makes field software updates possible, as the touch driver now is a part of the total operating system.

NEON’s MultiSensing Touch technology is also now included in the Sony Reader (PRS-T2)

NEON has traded above $7.00 this year, however, the price subsequently took a major decline, but this resulted in a recent major insider purchase of the stock at the sub$3.50 level. The charting pivoting point for the stock to move back toward their recent high, was $4.35, and this level was broken on (10-16-12) with nice supporting volume. The stock shouldn’t be considered one to bet the farm, but the need for their type component is growing in the consumer market, each day. E-Readers are here to stay, touch phones and even the auto industry will expand this market (IMO). I own the stock at just below the $4.00 price level, so current run might require some digesting –but holding the $4.35 level with increased volume should bode well for the stock—especially if new design awards are announced in the near future.
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