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Message: What would a good year look like?

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
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