Not sure if anyone followed my posts at Stockhouse yesterday. Maybe it was the air over there but I had developed some new theories about partnerships. Of course much of this discussion was brought on by the Pinetree run-up as Anonymous went to work with steady buying over the last several days. There are some thoughts that someone is taking a run at POET and buying PNP to gain accesses to those shares? I don’t know what to think of that. I felt that there was a greater possibility that a partner was taking an equity stake in POET and that a portion of those shares would be sourced out of Pinetree providing for a significant cash infusion to solve their debt issues.
Of course that leads to the next question of who would want to take an equity stake in POET? To me the better question is what companies would POET want to offer some ownership to.
What does POET need? They have foundry needs and they have continued TCAD needs in PDK 2.0. They also need to increase their engineering workforce either directly or through partnerships.
So we know that POET has continuous needs from Synopsys for the evolution to PTK 2.0. Design kits that incorporate all the optical components along with the electronic components…full integration.
An easy way to pay for this is to offer an equity stake in POET in lieu of payment. This way POET gains the market recognition it needs and now has the leading TCAD with a vested interest in the success of POET technology as well as POET the company. Synopsys being the largest TCAD in the world and having a global foundry and customer base there really is not a downside in terms of business conflicts.
On the other hand if Global Foundry took an equity stake in POET it would be great to have the second largest foundry in the world back POET and great access to foundry services and engineering staff but is there a downside?
I think Adjit would say yes. Ajit was the guy who orchestrated the buyout of AMD’s shares in Global Foundry to avoid customer conflict. He recognized that customers who compete with AMD might be reluctant to do business with GF who was partly owned by AMD. A similar conflict could exist if Global Foundry was provided with some ownership of POET. POET wants to do business with all foundries. Why would they limit their customer’s production capacity by potentially restricting themselves to just one foundry? In the CIC presentation Ajit made a comment that suggested that he has not yet talked to GF. Could be a language thing but I think that is what we heard.
My conclusion is that I think if a deal is being made for a major company to take an equity stake in POET it would be Synopsys with all benefits it offers without any apparent conflict of business interest. Also that relationship is very mature now and any deal involving an equity stake would likely be much more straight forward than what a foundry JV would look like.
Just some thoughts.
Some more thoughts before I refresh my coffee. Why is Sheldon still on the board? When he lost Pinetree many of us thought he would be ousted very quickly. However with the loss of Adam they may need Sheldon’s seat to remain occupied for minimum BoD requirements at least until the new crew arrives.
