[Business plan or Scratching the Surface]
<<<do you agree that AMTX's stock value is tied to its ability to sell
Amati-manufactured-and-labeled components, or do you think significant share price growth can happen based only on MOT, TI, NEC, and probably ALA, ADI, & G.SIE royalty streams?>>>
I count on licensing paying for R&D. The core business will be manufacturing ADSL/VDSL components.
When you ask if there can be significant share enhancement based only on MOT, TI, NEC, ALA, ADI and G.SIE [and to that I add ERICY], do you realize the combined 1996 revenues are $185 billion? By way of comparison, if you combine CSCO, ASND, CSCC, USRX, COMS, and BAY you get $11.33 billion.
My only point in saying this is to emphasize the fact that the world's telecommunications giants are licensing Amati's technology and they appear to be convinced there's a market out there. I would never argue the viability of a business model based on licensing fees only. I've run numbers based on Dataquest figures, using Westell's claim CAP will get 30% of the market and DMT 70%, and come up with approximately $40 million in licensing fees between now and 2000. This is using the minimum 5% per chip figure where with the C6X I've heard as high as 30%. It's also using a conservative 12.5 million xDSL shipments. The market could be far larger and the percentages of DMT to CAP far different. Also the licensing fees could be off by several percentage points. Setting all other calculations aside, remember the Dataquest figures leave 587.5 million lines still untouched in 2000 --- in other words, the surface barely scratched.
Remember, too, I've only discussed licensing fees. The real business is manufacturing modems and other ADSL components.
These are rough calculations. Don't take them as anything but figures drawn from the air --- another form of thinking out loud --- and all because you used the world "only" after listing the top telecommunitions companies in the world. :) I could have added Nortel, since they are licensing, and Newbridge Networks because of their alliance with Siemens, but I think it's too early to know their DMT plans in each case. Fujitsu and AT&T are also missing.
jrector, have you run any calculations based on the $400 per modem figure? There are so many ways of approaching the task: for example, we could discard the Dataquest figures and use telco estimates, which I believe would give a far more optimnistic picture.
Cheers!
Pat |
