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A Rolling Troll Gathers No Moss

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When I last wrote about Parkervision (NASDAQ: PRKR  ) in January, I pointed out management's abysmal 20 year record -- namely, a lack of profits and revenue, an alarming cash burn, and serial dilution. Since then, not much has changed except for the stock price, which has increased 54%. The company still has no revenue or profits, it's burning cash at a faster rate, it's diluted shareholders again, and for these questionable accomplishments, management continues to reward itself.

  1. No revenue or profits

The company hasn't generated any revenue since 2010, and even then, it was a mere $64,000. The company has never generated profits in its 20-year history as a public company and the losses lately are increasing. In 2012, it lost $20 million. In the last 12 months, almost $25 million.

  1. Cash is burning even faster

Over the past 12 months, Parkervision's operations burned $16.8 million in cash -- a faster cash burn than the $13.4 million that I pointed out in January. That brings culmulative cash from operations to negative $264 million between 1993 and 2012. As the company has burned cash every year for nearly 20 years, it's really quite amazing that it still exists. Although it speaks negatively to the quality of the business, it certainly shows the management knows how to raise capital from investors.

  1. Shareholders are further diluted

In January, I pointed out that Parkervision would need to raise additional capital to stay afloat. The company has raised $24 million in capital in the past year, and its cash balance is up to nearly $14 million. That should be enough to keep the company afloat for almost another year, pending a major cash inflow or another capital raise. However, the cost to shareholders is more dilution.  Since the end of 2012, less than nine months ago, the share count is up 10%. In other words, shareholders again are going to see a smaller piece of the pie.

  1. Management keeps getting paid

Chairman and CEO Jeffrey Parker collected $2.8 million in total compensation in 2012 according to Capital IQ. Since 1998, Parker has managed to collect more than $11 million in total compensation, despite limited revenue, no profits, negative operating cash flow, and a floundering stock price. Over the past 15 years, investors have lost about 8% a year in Parkervision stock. That's a  terrible long-term record -- it represents 13% underperformance to the S&P 500.

Foolish bottom line
Of course, the market is a forward-looking mechanism. (Investors in Parkervision are banking on a big patent infringement settlement with Qualcomm.) But if history doesn't repeat itself, it at least rhymes, to paraphrase Mark Twain. Thus, given Parkervision's horrible history of generating shareholder returns, I'd be very leery of investing in this company. Tread with caution, Fools!

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10/24/2016 3:59 PM
PRKR $3.88 Down -0.02 -0.51%
ParkerVision CAPS Rating: *