Hello Janybird:
Thank you for indicating the assumptions for CCSI's $330M 'market' size estimate. I believe the potential market for CCSI is substantially smaller than this CCSI marketers estimate.
I also work under the heuristic that with the right product at the right time in the right place--in other words, executing properly a new business development correctly from the company side, externalities still cause odds of success to be one in three even if the company does everything right. Business development (where there are existing competing products or substitution products, which is the case for CCSI) at the least, knocks out the likelihood of excess premiums for returns on product investment. And CCSI has not shown a track record for more than a decade in color technology for growing business, but seems more on the track of a perpetual wannabe using OPM (other people's money). I don't have a decent estimate for the likelihood of a company in that position, but compared to new business development done properly, the likelihood of commercial success would be lower and something that a new business development professional would not advocate that their firm delve into such an area.
Another rule of thumb is that in 70-90% of the cases, the first company to commercialize a new technology fails to make the premium dollars. The follow-on commercializers who did not take the product from prototype based on phenomenon to the first commercial product, are the ones most likely to make the money on the technology. Because photometry is old technology, I don't think CCSI is in the leading class in this respect. This is a page out of technology management as a formal discipline.
Two more comments on CCSI's technology management--my impression of their development efforts is they were textbook--straightforward, with no apparent elegance--the 'advantage' being throwing money and people first, which is no advantage at all and the primary cause of technical product failures in the market place, when there is a significantly need to be filled by a technical product; secondly their technology management shows an absence of strategic technology management. CCSI still has a lot of company in the US in that respect, something US firms are learning to overcome from the arrogance gained in the 50's and 60's in that respect. Lacking strategic technology management leaves them blindsided to competitor and substitute technologies. The upshot being, if they can prove there is a market, those who manage technology well may take it away from them through more effective technology management methods (excellent development, technologically superior choices, better positioning in the market including the important distribution channels issue for devices like this--which are the capabilities to be found in several larger companies--even in one that I have known in the past).
I believe my minor short position will pay out. There may be some spells of longs and shorts making money through trading. I am not much into timing and second guessing effects. In the long run I expect to make a significantly better return than market on average (I shoot for positions with potential to triple annually, but with 50% volatility).
Best regards,
m |
