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Q and A with Patriot Scientific CEO Rick Goerner
posted on
Wednesday, 04 June 2008
As President and CEO of Patriot Scientific, Rick Goerner knows about positioning a company for future growth. Here he shares his vision for expanding one of San Diego’s leading up-and-coming M&A companies.
Interview by Jessica SarrabizSD: Patriot has transitioned from a product-based technology company to focusing solely on licensing technologies to now looking at other growth areas for the company. How has this evolution changed Patriot Scientific as a company?
Goerner: Patriot’s business model has continually evolved over the past six years based on opportunities in the market. Started initially as a company focused on design and manufacture of advanced microprocessor chips, Patriot developed a strong patent portfolio of microprocessor IP.
One can think about Patriot’s move forward to building a products based operating company again as analogous to the Dubai model: How can we leverage today’s oil revenues for a stronger future? Moving into the next phase of Patriot’s corporate development, we plan to build on the cash flows generated through our MMP™ portfolio licensing business. Patriot intends to “invest” those cash flows to build an operating company with sustainable growth of revenues and profits through merger and acquisition activities. Target market areas for M&A include networking, wireless and software. These efforts once again provide the opportunity for Patriot to re-profile its resource team toward more business development, marketing and technology capabilities.
bizSD: You’ve talked about investments to grow your company. What types of investments is Patriot looking to pursue as part of your second revenue strategy? Are you looking at M&As?
Goerner: Patriot’s future blueprint contemplates building the next phase of our corporate development in three ways:
Selective expansion of our IP portfolio by acquiring new IP:
We have identified several patent portfolios to expand our MMP™ portfolio licensing efforts through TPL, our exclusive licensing partner. These IP portfolios involve microcontroller, power management, embedded memory and mobile networking IP.
Pursue minority investments, undertaken as a strategic investor, in certain early-revenue or technology ventures:
Patriot now owns 30 percent of Talis Data Systems, a local San Diego firm. Patriot also owns 46 percentof SSDI, a Carlsbad manufacturer of secure cabling enclosures for the government and defense sectors.
Evaluate opportunities for full M&A, utilizing the Company’s capital resources (stock and cash):
Patriot’s strong cash position, public company posture and significant market capitalization value give us a very solid negotiating position, especially considering current credit market conditions.
bizSD: You have brought in changes in management, including getting Donald Schrock on board. What are the implications of these changes for Patriot in the San Diego and global markets?
Goerner: The San Diego area is ripe with technology opportunities for us to explore from an M&A perspective. Mission one is to build the organizational infrastructure to support that effort. Internally, we have added Paul Bibeau, Vice President of Business Development. Paul has extensive marketing and operations experience in the semiconductor area. We added Don Schrock, ex-President of Qualcomm’s CDMA Division to the board. Don brings more than 40 years of semiconductor business experience to Patriot’s board and, as you know, led Qualcomm’s growth of its chip business from $50 million to over $1 billion in revenue. Don oversaw the integration of several acquisitions into Qualcomm during his tenure. Don was on the board of the Fabless Semiconductor Association, an industry consortium of the semiconductors suppliers, including Broadcom. Don brings industry contacts that are invaluable.
Patriot will expand, locally, as necessary to support the changing face of its business as progress is achieved on the M&A front and we look to expand on the technology perspective of our board through the next year.
bizSD: What can we expect to see on the innovative technologies horizon over the next year?
Goerner: I believe that we will continue to see the convergence of computing, communication and multimedia in all aspects of our lives on a multitude of platforms both mobile and home/consumer. Ease of use and quality of services will become product differentiators. The early 2009 deployment of digital TV will launch the TV industry into the digital age. Internet commerce will continue to make inroads into our everyday lives from pizza delivery to advertising, ordering and shipping of consumer goods.
Posted by Jessica Sarra | 29 Comments
Comment Posted by George m. on June 11, 2008
50 + days since the last MMP license... what happened.. TPL on vacation??
Comment Posted by Mike Allan on June 09, 2008
Here comes .19 cents...
Stick a fork in this one. Rick is clueless how to turn around this company. He probably hasnt even showed up the office yet...
Comment Posted by Jerry M. on June 09, 2008
I hope the SEC is looking at this company. I have made several written complaints in the past... but heard nothing from the SEC.
Comment Posted by Keith Huggins on June 09, 2008
Now .23 cents... the death slide continues.....
Im out.. bought in at .40 cents and out at .24 cents. I bought into the hype... live and learn.
Good luck to others here...
Comment Posted by John Sullings on June 09, 2008
Stock down to .24 cents... embarassing
People are leaving the stock... people are tired of the same story...the carrot on the stick... the "increased" MMP license rap, all phoney...
Rick are you in the office or playing Golf today??
Comment Posted by Philip Glazer on June 09, 2008
Cannot understand what is taking so long for PTSC to acquire other companies and obtain stable revenue production? Why has the pace of portfolio licensing slowed? If there is a reverse split, it will be a disaster.
Comment Posted by Hartwig1 on June 06, 2008
Bob Bassett, Eric, Ralph Burquist, Temmer, Jack Durkan, Mike, Thurston Howell, Fedup, Pedro, Mary Fung Koehler, 2 Buck Chuck, Peter Perris, Cliff Dodge, George Becker, LLantar, Ernesto, Mike Allen. Maybe we have together 10 Million shares. Lets do something. Here is my e-mail. hartwig928@gmail.com
Comment Posted by Hartwig1 on June 06, 2008
CEO Goerner bought 200,000 shares on 4/15/08. Since than the stock dropped 20% !! How can we trust his ability to invest OUR money if he is not even capable to invest his own money in a company where he has a better inside than he will ever have in another company. The only way to change it is that we shareholder come together and put other people in charge. To pay dividends vs. taxes. I have control of about 1,000,000 shares. Everybody interested in doing something and not only complaining here is my e-mail. hartwig928@gmail.com.
Comment Posted by Mike Allen on June 06, 2008
Red flags everywhere on this company.
PTSC looks to be nothing but a shell. They dont license the MMP, the private company TPL does. PTSC owns 48-50% of the MMP, but they have no control over the licensing or marketing of the product.
PTSC has diluted their shares for the past 5 years..
Swartz and Lincoln made a killing on this stock with the warrants & dividends PTSC paid out for their relationship with this GA investment group.
Only God knows how many other converitble notes & warrants are held by others that have cashed out.
Aside from the BOD, PTSC has no employees ( except maybe a recepionist).
52 week low and sliding. How low will this go...
Reverse Split-- the investors are already heading out the exits.
Who will the last one to turn off the lights here??
Interesting company....interesting balance sheet/cash positions... but with the stock tanking... ill trust the market rather than some INTERIM CEO.
The new CEO buying shares, sharebuy backs.... all carrots on a stick to keep the donkey moving. The really insiders are cashing out while the suckers are buying blindly..
whose probably only job is to keep the carrot in front of the donkey....while the others walk away with the loot....
Comment Posted by Ernesto on June 06, 2008
Stock continues to slide......... management does nothing
52 week low.
US Postage Stamps are a better investment than PTSC stock.
Rick joined PTSC 3 months.... what does he have to show for it??? One hiring and a couple shareholder letters....
Rick what do you do all day? Seriously...
Comment Posted by LLantar on June 05, 2008
It appears to me that there are at least 4 reasons for a declining stock price. 1) We are in a bear market and small caps get hit the worst and they have a patent challenge at the USTMO 2) Shares outstanding got too high from previous non-performance and miniscule buy-backs will not help. That is a waste of shareholders money as it really mostly assists executive stock option plans - I believe management needs to continue paying a dividend to be credible, maintain discipline and give back to loyal shareholders. Demand a dividend. (They have bought nice positions in SDDI and Talis which may have some potential down the road. That is an action taken. What do you want for a company with $20MM cash?) 3) They need to get off bulletin board as there truly is too much manipulation and they must get natl mkt or Amex listing which will require a reverse at this stage of the game. 4) Whomever signed a discretionary agreement with Deutsche bank for this company for auction rate securities should be fired immediately. That person knows nothing about exactly what he should know about. That $10MM still in limbo is overhanging the stock price and may take some time to recover which is priced into the stock for M&A. I don't believe you can borrow against this collateral at this time and why should they have to? Investors are patient yet always questioning, and demand accountability 24/7. Whiners are speculators that are always losing trying to trade for pennies or bad mouthing for a short position. Learn or lose.
Comment Posted by George Becker on June 05, 2008
Forget about share holder diviednds. Use the incoming cash flow to grow the business. Set up a R&D department to improve the existing patents and extend the life of all patents. Any patent rights sold should include royalties now and in the future. PTSC has the electronic world by tail and appears the company is not fully leveraging the patents potential cash flow.
Comment Posted by Cliff Dodge on June 05, 2008
Go to work (Rick) and give us the truth, nothing but the truth.
Please no reverse split!!!!!!!!!!!!!!
Thank's Cliff
Comment Posted by peter perris on June 04, 2008
BizSD, thanks for the interview with Rick G., though honestly, it would have read the same if the outgoing CEO had given it anytime during his brief tenure....
Question to BIZSD: Did PTSC pay for your services?
One thing that would have been nice to have mentioned in this piece is that Rick has recently purchased shares in the company.
Of course, those securities were purchased at much higher levels than todays share price.
But, as we know, that is to be expected with PTSC....
Welcome to the club, Rick.
Comment Posted by jack durkan on June 04, 2008
Thanks San Diego Biz for conducting this interview. This statement is directed specifically at Mr. Rick Goerner. "The San Diego area is ripe with technology companies for us to explore" you stated, Mr. Goerner. In my opinion, you and PTSC have had long enough to explore the San Diego area and you need to get on with a meaningful acquisition. As a major shareholder in PTSC, I am extremely tired of hearing this same message for 3 years now. When are you going to jump into the mix? PTSC has not been action oriented whatsoever. Mr. Goerner, I am gravely concerned you are getting into the same situation as previous CEO's with nothing to back up your "plans" for M&A or anything else. What in fact have you done with the tens of million's collected previously from the MMP? The previous CEO, Jim Turley reported tens of millions were garnered previous to the Texas decision with the Japanese companies that resulted in a winning accomodation by all parties involved from previous press releases from PTSC? You can't acquire an acquisition with ten's of millions of dollars? Again, I repeat: the lack of an ACTION oriented company is destroying the image of a company that could be a great holding company that was espoused years ago by David Pohl. PTSC shows no aggressive, assertive focused approach. Both of the previous CEO's espoused the same things you have stated over a 3 year period. As the interim CEO, will we as shareholders be seeing the exact same thing from the next CEO that replaces you if you are interim? The goals you have established are great but over the past 3 years, none of these goals have been realized. I realize you have been in the job for 4 months. This is a wake up call, Mr. Goerner. Please walk the walk. Your "talk" is fantastic but .... it is only talk. The Share price will rise with an effecive acquisition that you can oversee. This connotes ACTION. The current board has enough horsepower to determine a marketable product/company that is required in the technology community. I am very tired of reading we plan to do this and we plan to do that. "DO" never happens. The urgency of Now has never been clearer and for PTSC, it is an imperative.
Comment Posted by 2 Buck Chuck on June 04, 2008
This guy R. Groener is one smart man, Hiring Donald Schrock is a genius play. We now have a couple of smart men running the show and have been in the battle before, the chance is theirs and they'll get the job done. Patriot's board is crap but with a little help they will pull through. Think about it, you only need one good leader and we now have two, give the board a push in the right direction and they'll have to perform of be gone! Look what Bill bellachek did for the N.E. Patriots, a great leader he is, he led them to be a dynasty, that could happen here. In my opinion were on our way, the ducks are in a row, let it happen and we'll all be well rewarded!!!!!
Comment Posted by Mary Fung Koehler on June 04, 2008
I've been a shareholder starting with 20,000 shares in1999 at 45 cents/sh when Ptsc had essentially no income and a patent dispute. The stock hit over $7 in early 2000.I sold some of the 50,000+ share in the $6 range an unfortunately kept buying back in as the price dropped.
what kind of CPa do you have who allows ptsc to pay so much in income taxes which should have
been rewarding your long time shareholders or at least purchased some company already listed on nasdaq or the other exchanges? It is insane to keep us on the OTC bb and worst of all on the pink sheets. I am a lawyer and see no reason why you can't let us know when or if ptsc will receive any fund for the settlement of the JVC, panasonic , etc. lawsuit. I don't understand why the stok is so long when the company has been repurchasing shares.. Do they only go to reward the board?
Comment Posted by pedro on June 04, 2008
Revolving door for CEO’s at this company PTSC. A long history of making claims without fulfillment. As a shareholder, it has been hard to see Wall Street turn away from this company but I no longer can blame anyone for this company has not earned any trust. They offer excuses and “just you wait” promises of a brighter future but as many other responses have noted, the share price reflects, truly reflects, what the world thinks of PTSC management and BOD. Because they have failed in their many attempts to make something of this company, and they have squandered the millions they received, they are now discussing a reverse split. Perhaps they honestly feel by increasing the share price, they have done their job. And no doubt, a reverse split will, at least temporarily, raise the share price. Yet we all know, it will not help the retail shareholder. Many longs remember the hype that sent PTSC from a buck to seven dollars. That bubble burst relatively quickly. The next wave of overzealous enthusiasm came with patent signings. However, as I have stated, PTSC squandered this money. Despite the history of PTSC, this is a great stock for new time investors who want to double their money. From twenty six cents to fifty cents should be easy enough. For those who bought in to the story being given by anyone of the many CEO’s, Wallin, Pohl, Turley and purchased shares over a buck, these folks got duped by either incompetency or corruption or both. One might think that having patents on virtually all modern day chips, would insure a very attractive market capitalization. One would think that 400 million shares was not too many shares when you own half of the MMP. Probably should interview Johnson, Leckrone, or Swartz when discussing PTSC and PTSC’s future
Comment Posted by Eric on June 04, 2008
Rick:
How about getting the shareholders and investors excited by announcing a TARGET REVENUE / EARNINGS per Quarter?
Does PTSC have goals or targets to reach?
Does PTSC compare one quarter vs another ? Is PTSC hitting their quarterly goals... if not why? If yes, does the bar need to be raised.
I assume there is some kind of planning/budgeting... why cant this be shared with the investment community?
How about removing the INTERIM CEO and become full time CEO..... then maybe we know that your not just keeping the sit warm for someone else... collecting your severance and on your ways... (eg. turley)
Comment Posted by fedup on June 04, 2008
RG should go into politics with that ability to say so much without saying anything at all. Why has there been no licensing since losing the 584 appeal or hardly a mention of licensing? Why has stock fallen from .94 to .26 since the big settlement with JVC, Matushita and Panasonic that they were so pleased with? How long are they going to continue to allow a private company like TPL to negotiate confidential settlements for them? How low does the share price have to drop before they reconsider their philosophy of keeping shareholders completely in the dark?!
Comment Posted by Thurston Howell Factor on June 04, 2008
Thank you bizSanDiego for the exposure of the public information already provided. Mr. Goerner has assume the CEO position only since March 1, 2008 and set the course stated. The current condition of the business and share price is a direct result of poorly handled disclosure of recent past events of MMP transaction and in particular litigation, ongoing litigation and Patent re-exam. This poor performance lay directly with previous CEO management and members of the BOD who continue to reside. Does Mr. Goerner really have a shot at making a go here or is he the next CEO puppet? With no transparency of MMP performance in matters of great importance, we all await here on Gilligan's Island awaiting his rescue. He has run into a buzzsaw...so let's cut some wood.
Comment Posted by Mike on June 04, 2008
The only time there is transparency In the company is when the finacier wants to sell some shares and then calls his boy carlton johnson that sits on the board of ptsc to issue some press releases (in my opinion) .ptsc managment cant be trusted as long as the finacier has his own lawyer running the show in my opinion..thier is a NDA in the settlements that only a select few know what it is Mr. carlton johnson you have a patent that is like haveing a patent on water and the stock price is at .26 cents Mr carlton johnson you couldnt run a paper route in my opinion I would have been fired a long time ago if i worked as ptsc management does I probably would have quit from embarrasment if i was on the ptsc managment team .all in my opinion .
Comment Posted by jack durkan on June 04, 2008
"Mission One" is critical for SP rise immediately. "The Natives" (investors) are restless and for good reason due to the fact that essentially nothing but the MMP, now under review at USPTO is actually the work of another company, TPL and has provided the only sustained revenue in recent years. The company is in real trouble if M&A doesn't occur sooner rather than later. Dependence on the MMP has proven catastrophic in the recent past with a reduction in share price from .94 to .26. There appears to be excellent people on the BOD but until they get the ball rolling it might as well be the 3 Stooges running the show as all the shareholders have heard for 3 years is that 'itsa' coming. It needs to arrive ASAP. This is a tragic scene for long term investors.
Comment Posted by Temmer on June 04, 2008
Promises and more promises - but never any results. Please ask the questions Bob and Eric proffered and also ask about the possibility of a crippling reverse split, which Goerner hinted at in a recent letter to the stockholders. Ask some serious, probing questions. Don't let him get away with fluff and fantasy propaganda. I'll be watching.
Comment Posted by 12ralph12 on June 04, 2008
The last comment sums it up very well, they have thousands of stockholders that are just blowing in the wind, with no public release of information in sight.
We trusted GWB and you see where that got us.
Ralph Burquist
Comment Posted by Eric on June 04, 2008
How about ask the CEO why the stock is trading at .26 a share? I thought CEOs are suppose to increase shareholder value??
-- How many full time employees work at PTSC.. besides the BOD.. ( dont count SSDI or Talis not 100% owned by PTSC)
- No direction.. no shareholder transparency....
TPL controls this company...
Where is the increased momentum of MMP signings?
Nice softball toss questions...I hope PTSC didnt pay for this interview...
Comment Posted by Bob Bassett on June 04, 2008
PTSC has gone from a $0.10 a share company to a $2.00 a share company back to a $0.26 a share company over two years. Free fall during last year. No transparency by the company to shareholders, no plan, no products, no direction, three CEO in six months. Spent more money litigating infringement case than settled for. Poorly run company. Gave almost all revenue to venture capital group from Georgia. There is a story behind the story. Why don't you ask Goerner the hard questions? Many would like to know the answers.
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Comment Posted by Michael Boes on July 23, 2008
Trust me this stock will be back in the .50's by the end of September. Buy now ;)