New Microvision chief faces mega-challenges
Seattle Times business reporter
Not all promising technologies make successful businesses. Microvision has produced some notable innovations over its 13 years, but it has constantly lost money.
This year, it's up to Chief Executive Alexander Tokman to transform the Redmond company from what he called a "scientific workshop" into a sustainable business with products customers want.
The company's survival is at stake.
Cash-strapped Microvision has about $17 million to last through the year, but it's burning about $5 million a quarter, even with measures taken recently to reduce that rate. And it has an $8 million note due.
The financial predicament caused the company's independent auditor to question its ability to remain in business.
Microvision will have to find an investor soon to raise the capital it needs to continue operating this year and into the future.
"They have a very serious situation," said James McIlree, managing director at CE Unterberg, Towbin. "It's solvable, but it ain't going to be easy." McIlree does not own Microvision stock, and the company has not done investment banking for Microvision in the past year.
But for Tokman, 43, who was thrust into the role of CEO in January, just six months after joining the company as chief operating officer, the promise of technology is what keeps him going.
"I still have the same belief in the technology that fundamentally could change the way we do things," he said.
That belief is what lured him away from a job he enjoyed at General Electric in Wisconsin, where he was general manager of GE Healthcare's Global Molecular Imaging and Radiopharmacy unit.
Microvision, started through research at the University of Washington, initially developed technology for the military. Its Nomad system is a wearable display that attaches to a helmet. Images are beamed directly onto the retina, allowing the wearer to see digital maps or other information superimposed onto the real landscape.
That product may turn out to have only a niche market, but the technology has new applications to be embedded into automobile dashboards and personal projectors that connect to mobile devices to enlarge the screen space.
As much as Microvision's technology impressed Tokman, the way it was run had the opposite effect. His mission now is to change the company's culture as well as its bottom line.
He became CEO two months ago, when Microvision's board of directors moved to change company management, abruptly letting go former CEO Richard Rutkowski and Chief Financial Officer Richard Raisig.
The company has only about 150 employees, but Tokman found it surprisingly bureaucratic and rigid.
"A company this size should be a lean, mean fighting machine," he said.
Instead, there were a lot of borders between senior management and employees, no one seemed to know what they were accountable for, and they lacked a sense of urgency about stemming financial losses, he said.
Teams worked independently of each other, unknowingly creating waste and redundancy.
And Microvision had taken an entirely U.S.-centric approach at a time when the market for high-tech gadgets was hotter in Europe and Asia, Tokman said.
Following a comprehensive review, he reorganized the company and created a strategy designed to put its business back on track.
Microvision went from working on 30 different projects last year to focusing on fewer than five of the most promising ones this year.
Tokman's boldest ambition is to move from a small number of specialized products to ubiquitous core technology that works inside any electronics display. Borrowing a term from Intel, he calls the concept "Microvision Inside."
"We want to be part of every high-definition image and display product sold in the future," he said.
Tokman, who has five patents himself, seems at once humble and driven. He says he believes in the power of teamwork through his professional life and his love of intense contact sports.
Originally from the Ukrainian city of Kiev, (once part of the Soviet Union,) Tokman moved to the United States in the early 1980s just after high school. His uncle was a political dissident jailed for protesting the Soviet Union's invasion of Czechoslovakia in 1968. When the uncle was released, he and the extended family moved to Boston.
Tokman earned his bachelor's and master's degrees in electrical engineering from the University of Massachusetts. After that, he spent most of his career at GE.
He still hasn't sold his house in Milwaukee, and work demands have put a strain on his long-distance relationship with his fiancée.
Those demands are also cutting into his usual method for stress relief. "I like to punch something ... or be punched," he said. But he says he plans to get back into tae kwon do soon.
"I think he's a good guy," said McIlree. "So far, what he's done seems to be on the right track."
The next few months will be the true test. Microvision has hired an investment bank to help find the capital it needs. Tokman, who pledged to reduce Microvision's burn rate by 30 percent this year, says organizational changes he put in place will produce significant improvements in the last half of this year.
There were at least some positive signs in the earnings report Thursday. Microvision ended 2005 by reversing a two-year trend of declining annual revenues.
"All of us are very excited about the pace of change and the path we are on," Tokman said.
Kristi Heim: 206-464-2718 or firstname.lastname@example.org
|Dollar figures in thousands, except per share; parentheses denote losses.|
Copyright © 2006 The Seattle Times Company