The phantom car

It's really not in the style of this blog to focus on specific anonymous message board posters. After all, there's rarely any direct proof that these are anything but earnest, if horribly deluded, people who genuinely believe what they're saying.

But every now and then, some of them cross the line, and when one does so in such a grandstanding manner it becomes hard to ignore.

Such is the case with poster "N. Dixon" of Silicon Investor, who is presumably one and the same as "N_Dixon" on the Yahoo boards, and whose writings have been the source for the bulk of this week's entries.

Dixon has been a longtime advocate of REFR on the message boards, dating back to the very early days of the Yahoo boards. Dixon, who claims the "N" stands for "Nancy" (therefore I will use feminine pronouns) claims to be an REFR shareholder dating back to 1992, which, not really surprisingly, featured some of the lowest prices at which REFR stock has traded (on a split-adjusted basis, even lower than this year's lows).

As of late, Dixon has confined herself to Silicon Investor, where she posts away with less voluminous rebuttal than she would encounter on Yahoo. The reason for this "exile" may well be what follows.

It all began with what seemed a joke. Dixon said she planned to ask, at the 2004 REFR annual shareholders meeting, "Which 2005 vehicle with SPD glass do you think is the most attractive?"

She subsequently clarified that she meant the 2005 model year.

Then she went even further: "Already picked out my SPD-Smart equipped vehicle for purchase next year."

And then later: "SPD ALREADY in 2005 production vehicles and in aircraft."

She later added that she believed that the Mercedes GST would include SPD by Spring 2005, but did not specify that this was the car she "ordered".

Dixon went on to take the show to Silicon Investor:

"I'll let you know how I like my 2005 auto with SPD glass."
"I've ordered [my vehicle with SPD]."
"SPD in production vehicles. I've ordered mine!"

Later, with the 2005 model year winding down and no source of SPD film, much less a finished product, in sight, the tale changed:

"I have ordered my car with SPD. I get updates on it. It was scheduled for manufacturing in 2005 so it might be a 2006 model."

Requests for further details, such as make and model of her order, went predictably unanswered.

So apparently we are supposed to believe that Dixon ordered a car without knowing the model year, to be manufactured more than a year later. I'd sure like to know the dealer that would take an order like that.

No, the conclusion is unavoidable that the whole tale of an order of a 2005 model year automobile was quite simply made up out of thin air. And it seems likely than, rather than have to face a derisive mob anytime she attempted to say anything, Dixon retreated to relatively calm waters of SI, where no more than two or three people will be pestering her about it at any given point in time.

Rumors that Dixon has verbally denied being a crook, meanwhile, remain unconfirmed.

A real Hitachi job

Anyway, picking up where we left off, REFR president Joe Harary was telling a theoretically international audience:

"We expect that the next generation film will be available in mass production starting in January 2005."

It is now June, and this has still not happened.

But this is no case of "something went wrong". This is a case of "something was wrong", as in, Harary all but had to have known that the above prediction would not come to pass, and that he in fact had no reason to "expect" any such thing.

Consider this quote from an email dated 1/20/05, more than two months after the Harary Glasstec interview, from Tadao Kurosawa, president and CEO of REFR licensee Hitachi Chemical:

"....Hitachi Chemical Ltd. is one of RFI licensee for SPD emlusion and Film. They have just installed all equipment for SPD coating pilot line in one of our facilities in Japan. And they are trying to coat SPD film as test-run. I do not know exactly how long to take a time for this test -run, two,three months. I hope this test run will be done succesfully not so taking a time. After this completion we will start sampling our SPD film to RFI licensees. This is our current status for SPD project."

Mediocre English notwithstanding, the implication is clear: at the time Harary gave that interview and made the above statement, Hitachi, by all accounts the lead company as far as establishing a source for "next generation" SPD film, did not even have equipment installed for testing purposes(!) Given Kurosawa's additional admission that test runs tend to take months, and it becomes absolutely clear that Harary's January timeframe was entirely unattainable based on information Harary himself had easy access to and quite simply should have known.

You want to get snowed... Ask Joe.

Good questions!

I'll finish up the Glasstec thing hopefully later today (it's short, no worries), but while it's on my mind, I wanted to highlight an excellent post containing some extremely valid questions a REFR shareholder might want to ask at this year's annual meeting, and maybe toss in my two cents on what the answers are or should be.

"Why are we waiting for generation 2 of SPD before licensees are selling product?"

I can answer that one: it's because if someone started selling "1st generation" SPD at this point, it would call into question the whole reason why SPD Inc. folded last year. The current company line is that it was considered foolish to continue selling "gen 1" SPD with the imminent introduction of "gen 2". Of course, "gen 2" proved to be not so imminent after all, but so far REFR has been reasonably succesful in ignoring that fact. A licensee reversing and re-opening the market for "gen 1" film would be a distinct embarassment and might even suggest that there were problems with "gen 2". Definitely not the message REFR wants to send right now.

"Why wasn't a marketplace established with generation 1 in order to a) kick off the market, b) get some maket awareness, c) start people using generation 1 in real world uses, d) start getting feedback from the market on the pros and cons of the product?"

The promoters would argue that precisely this was done, with the various photographed installations supplying the proof. Of course, real shareholders would probably want to see substance in the form of some measure of ubiquity instead of isolated instances that are not too many to individually document on a web page. But I guess "everywhere you look(tm)" means different things to different people.

"Most companies learn from their first generation product and refine it in the next generation. It seems like we have lost years since I heard Robert Saxe say that the next year may be our first profitable year. Why wouldn't the licensees sell what was available to let the world know SPD exists and will be getting better?"

At the company I worked for a little over a decade ago, we had just put the finishing touches on a fine little product that would have served its target market well for years, while we worked on the next-generation product. But then our head of marketing got wind of the new development, and started hyping it to his customers. This, to his shock and surprise, killed sales of the product we had just finished, as customers unanimously elected to hold off until the new product was ready, and turned R&D's life into a living hell for two years as the company struggled to rush the new product through the design and development process.

The point of this sorry little tale being, it's really too late to go back anyway. Who would want to buy film that the company has publicly admitted to be flawed? Particularly at the exorbitant prices being charged.

"We lost all that potential product ramp up time to get potential buyers ready to go. Why won't this happen to the generation 2 product? Why aren't we going to wait until generation 3?"

In short, what's to stop all this from happening all over again? The simple and obvious answer is, "nothing, of course". The promoters' response will be to get all upset that someone dares to look in the "rear-view mirror" for a clue as to what might happen in the future.

"Some of us longs are real loooong loooongs who believe in the product but I am confused why generation 1 hasn't started us up."

And that's a point that's really unanswerable. Early versions of products, especially in the computer industry, may have been pretty weak compared to their present-day forms, but they had sales. People bought the IBM PCjr. People bought 128K Macs. People bought Newtons. Unfortunately, the same simply cannot be said for "gen 1" SPD. How anyone can take that as a good sign for the future is beyond me.

But then again, I'm not a type 3 investor. Nor is our question-asker, I suspect.

Glasstec and the four-month (and counting) gap

Today, another item from the N. Dixon files. (In light of current events, I think maybe I should be calling myself Threep Doat.)

This one is one that I am frankly surprised that REFR's promoters would be willing to still bring up, given what it contains.

The item in question is a videotaped interview Joe Harary gave at the Glasstec industry show last November. This is a direct link to the Windows Media file recording of that interview.

There are three main highlights to the short presentation.

The first is the inevitable demonstration of SPD in action. This, I am certain, has been practiced many times so it is little surprise that it comes off flawlessly. If there is one thing REFR knows how to do, it is demos.

Somewhere near the midpoint of the interview, Harary references a study indicating a growth rate in the demand for "smart glass" over a five-year period. What Harary "forgets" to mention is, the study, and therefore, the beginning of the five-year period, was in 2000, so that in fact the growth he was citing had already occurred. And poor SPD got left out.

The final highlight was towards the end of the interview. The inevitable question of when this fantastic SPD technology would be available arose. Harary, in typical hedging fashion, suggested January as a likely date.

Well, it is now June and next-generation SPD is nowhere to be found. (High hopes remain that a big announcement is being saved for this year's annual shareholder meeting; we'll see.) But worse than that, evidence subsequently arose that indicates that Harary almost certainly knew that a January time frame was an impossibility at the time he gave that interview.

More tomorrow!

Why isn't the (Top)sky blue?

I generally try to limit my postings here to one per weekday so that I don't cross the line into obsession or burnout, but occasionally something will stand out as obnoxious enough that I feel the need to get to it right away. (Besides which, I may not have time for an update tomorrow).

Our good friend Dixon, whom we just met earlier today, is flogging the cover story in the June 2005 issue of BUSRide magazine, which makes significant mention of the Setra S 417, a bus which, among other features, includes a transparent "panorama" roof under the branding of TopSky.

I mentioned TopSky way back in the early days of this blog as REFR and SPD's closest flirtation with legitimacy in the marketplace. The version shown back then had an automatic dimming feature which employed SPD technology. After a couple of months, the whole business faded away, and the supplier of SPD for Setra, SPD Inc., shut down.

Now, it's well-established that, despite allegedly promising noises that the new generation of SPD suppliers are well into the testing phase of SPD production runs, no company is actually producing SPD film on a commerical basis at this time. So how, one might ask, can Setra be making busses with the TopSky feature, without any SPD film available?

The answer is simple. TopSky is, and always was, about the roof itself, not any dimming capability. And it seems to be turning out that bus passengers are quite happy with the transparent roof even without the ability to vary the tinting.

In short, Setra, and its parent, Daimler-Chrysler, are getting along just fine without the assistance of the SPD "industry", and the BUSRide article, much as Dixon seems to believe otherwise, only helps to prove it.

Better luck next time.

In Search Of: the point

The Yahoo! REFR board, REFR's primary promotional outlet over the past year, did the almost unthinkable and actually took much of the holiday weekend off.

Not everyone was enjoying the three-day respite, however. The person posting as "N. Dixon" on Silicon Investor (a name I can't read without thinking in spoonerism terms) was apparently quite hard at work, compiling a voluminous series of postings, in order to prove... well, a point, I guess. I'm really not sure, maybe this person is trying to amass a volume of positive data to counter this admittedly mostly-negative collection of observations about REFR.

At any rate, it's a fine source of material for me, as one of my goals with this blog is to exhaustively look into every bullish argument that has been hoisted to convince investors this company is something other than what it is, a method of transferring wealth from shareholders to company management.

Some of the items Dixon posted yesterday have been covered already, and several others are just echoes of the company line disguised as independent observations.

A few, though, have me scratching my head and wondering just what possible point Dixon could have in mind.

Consider this post: TWO SPD LICENSES[sic] WORKING TOGETHER!!!!

Now, you can look as hard as you like through that post, but you won't see anything about SPD. I guess the theory is that because DuPont holds an SPD license, and Isoclima holds an SPD license, and because they're working together on something, that must mean... I don't know, that maybe the topic of SPD comes up at lunch? Who knows?

(By the way, for those of you complaining that this blog doesn't accept on-site replies, please note that I do read the Yahoo and SI message boards and you are more than welcome to post your comments there. If someone comes up with a sane explanation of the thought process here, I'll be sure to post it.)

What makes this all the more bizarre is that the post is not, in fact, a single press release at all, but actually an amalgamation of a press release and a case study on the DuPont website. The case study is the part that shows DuPont and Isoclima "working together" (though clearly stating in a subsequent paragraph that the material being used is PVB, not SPD). The only reason I can think of for splashing the segment of the press release at the top is for the headline, New DuPont Technology Gives Auto Safety Glass a New "Look", which, if one never bothered to read past it or look at the pictures, might leave one with the impression that SPD could be involved.

So, the bottom line, Dixon has somehow managed to say absolutely nothing and yet still be transparently dishonest. I have to admit, that takes some talent.

More on this source in the days to come.