I think you are underestimating the growth in net earnings. Gross margins were actually up this past quarter, which arguably won' t continue, however, it does indicate economies of scale are falling into place. I would suggest Yurie can show net earnings of 20% or better on 62% gross margins over the next three years. Why would I stick my neck out believing this?
Minimal overhead in SGA; basically this is one of the strengths of having the alliances with LU, BAY, T, and the infamous Split Rock relationship. Let the big boys burn their big bucks on marketing fluff and let Yurie burn the bucks on R&D and innovation.
(Oh, by the way, to answer one question that came up regarding any impropriety with Split Rock; that is ridiculous. Kwok Li is Kim's co-founder on Yurie and long-time personal friend. The two have known each other since they were teens.) I can't criticize either one for being savvy enough to make their businesses prosper, as long as nothing illegal could jeopardize either company, who should care?
I like your revenue estimates, but would crank up the net margins apiece to around 20% for the same time period. The other thing that could bolster net margins are licensing revenues for their patent or any other patent yet to be issued that could cause Cisco, Bay, et al serious headaches.
Best regards.
|
