What would a good year look like?
posted on
Mar 01, 2009 02:15PM
How far fetched is the scenario below for next year? It assumes $4,000,000 in product revenue, $400,000 in service revenue, and $32,000,000 in gross patent licenses (let's say that is a total of 8 licenses for $4,000,000 each--about 2 per quarter). Cost of products 80% (20% gross profit), cost of services 40% (60% gross profit), and cost of patent licenses 40% (60% gross profit). These percentages are about in line with the most recent quarter. The other expenses also project the annual totals to be about four times what they were this past quarter. I assume no income taxes in the foreseeable future (loss carryforwards). If my calculations are in the ball park, this would provide about 6 cents per share profit attributable to common shareholders. If this would go along with some new eVu contracts and increasing patent licenses, it seems like the price to earnings ratio could be anywhere from 10x to 30x (or .$60 to $1.80 per share). This could be way high, way low, or about right. I just thought it would be fun to consider what numbers it would take to make this investment move over the coming months. I don't think these numbers are out of the realm of possibility for the next fiscal year. When results are revealed for the fourth quarter of this year, it will give us a good indication of what the patent licenses are going to be, at least in the short term. I think e.Digital will need a fair amount of product revenues along with any patent licenses to really move the multiple. Increasing amounts per license also would help drive the price. Thoughts? Corrections? Other projections?
Revenues: | ||
Products | 4,000,000 | |
Services | 400,000 | |
Patent licenses | 32,000,000 | |
Gross revenue | 36,400,000 | |
Cost of Revenues: | ||
Products | 3,200,000 | 80% |
Services | 160,000 | 40% |
Patent licenses | 12,800,000 | 40% |
Total cost of revenues | 16,160,000 | |
Gross profit | 20,240,000 | |
S&A | 2,400,000 | |
R&D | 400,000 | |
Total Operating | 2,800,000 | |
Operating Income | 17,440,000 | |
Other expense | 200,000 | |
Income (no taxes) | 17,240,000 | |
Preferred stk div | 180,000 | |
Income to common | 17,060,000 | |
Income per share | 0.061 | |
Diluted shares OS | 281,454,506 |