EXCLUSIVE: POET CFO Says $430M War Chest Fuels 'Three C's' Strategy To Win Hyperscaler Deals

• POET stock jumped over 20% in pre-market trade on Wednesday, on track to cross a nearly five- year high.
• The company’s CFO told Stocktwits the company’s $430 million cash position underpins its “Three C’s” strategy of capacity, capability, and credibility.
• He said the company’s $430 million cash reserves serve as a signal of long-term stability to large customers such as Foxconn, Luxshare, and Marvell.

POET Technologies (POET) chief financial officer Thomas Mika said the company’s $430 million war chest gives it the “Three C’s” it needs to convince hyperscalers to come on board.

“It gives us capacity, capability, and credibility. It’s really important for our customers to know that we’re going to be there for the long term. With a lower amount of cash, they might conclude otherwise,”  Mika told Stocktwits in an exclusive interview with Michele Steele. 

POET’s stock rallied more than 20% in pre-market trade on Wednesday, nearing an almost five-year high. The stock was among the top trending tickers on Stocktwits at the time of writing. Retail sentiment around the shares on the platform rose to ‘extremely bullish’ from ‘bullish’ territory over the past day. Chatter remained at ‘extremely high’ levels, with Stocktwits data showing a nearly 2,500% jump in message volume over the past month.

POET’s ‘Three C’s’ Are Key To Winning Hyperscaler Deals

Mika said that POET currently has the capacity to assemble approximately 1 million optical devices per month, with a target to scale that up to 5 million, then 10 million. According to him, the gap is not just a production number, but the qualification threshold at which hyperscaler procurement teams will begin serious evaluation conversations.

“What we have to demonstrate in order to sell our products to hyperscalers, even if we're selling as a component supplier to another company, is that we can actually manufacture,” Mika said. “It's not until that time that you can demonstrate that a hyperscale customer is really going to interact with you because they need to be confident that once they commit to your product, you're going to be able to supply them.”

The POET CFO said capacity centers around its employees. He explained that POET has been adding to its employee base “very rapidly in the past quarter.” It has brought in-house the engineering and manufacturing talent that previously required external partnerships. The goal is vertical integration of human capital as much as physical components.

The third C, credibility, is how POET’s cash pile serves as a sales asset. The $430 million signals to Foxconn, Luxshare, and Marvell (MRVL) that POET will still be operating when it’s time to ramp volume. “With a lower amount of cash, they might conclude otherwise,” Mika said.

POET Isn’t Planning Any Acquisitions

Mika stated that POET does not see acquisitions as necessary to build a competitive moat. “We already have a moat. It’s our technology,” he said. Instead, the company is focused on selectively acquiring capabilities or components to improve margins and reduce dependence on external suppliers.

“Our whole thesis is to semiconductorize the assembly of these devices. We build them 500 at a time, not one at a time. We use semiconductor capital equipment for everything from wafers through to assembly through to test. So we have an inherent advantage in both labor and capital that should make our gross margins look more like semiconductor gross margins.” 

 — Thomas Mika, Chief Financial Officer, POET Technologies

POET’s stock was hit by a short seller report last week, but the shares are on track for a three-day rally culminating in a 60% surge this week. The rally has put POET’s stock back in positive territory year-to-date. The shares have gained more than 170% over the past 12 months. 

Read also: EXCLUSIVE: POET CFO Confirms Orders From Marvell – Waiting To ‘Hear Back’ From Foxconn, Luxshare

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