First, I'm not too happy about the software delays on the Las Vegas
warehouse. The majority of big budget IT projects actually fail, and
in the case of state run IT projects, they fail big time. But they
should have built in some money recouping measures from Celerity if
Celerity messed up the project. From my past information, the
requirements for the warehouse were very specific and Celerity had a
contract. As long as DISK didn't start changing the specs, Celerity
should be accountable. At the very least, DISK should push to get
some % of sales of the future Celerity product since their debugging
is at the expense of DISK.
I understand what is happening, but I'm very unhappy when it affects
both top and bottom lines on a company I own. The press release says
management "anticipates" sofware resolution by August at the latest.
But so far, their track record has been bad in anticipating when the
software will be fixed. It's already slipped several times now, and
management should roll their sleeves up and really take a hard line
with Celerity. There should not be any additional sugar-coating with
the investors. If Celerity continuously predicts resolution 2 months
in the future and then fails to meet that (which has already happened
several times), there is a SERIOUS problem with their risk assessment
and estimation processes. DISK management needs to address this
through legal means if necessary to make sure further slips will
result in compensation.
The numbers for top and bottom line are a good 500k to 1 million
above their estimates so I'm pleased with the numbers. I'd have
liked to get a reading on projected revenue for this quarter but I
guess everything is now dependent on this stupid software bottleneck.
That said, DISK is still in a great market that might even accelerate
in growth. So far, most of the rental stores are just stocking big
name items where DISK has little penetration (e.g. just Terminator
and Dances with Wolves). Once DVD really takes off, we should see
the rental companies ordering more DISK exclusives as the rental
inventory expands.
If we tank in stock price, I will use it as an accumulation
opportunity. I've already been hanging in for quite some time now,
and I will continue to take a long-term outlook and not try to guess
short-term ups and downs. I suggest those with little confidence in
management and shorter term outlook sell. DISK may go down with the
selling, but I think anything at this level or below is a good price.
My estimation on DVD revenue for upcoming year is a little more
conservative than the $200 million speculated before. I think DVD
will grow at least at previous rate, particular in DISK's niche as
rentals move beyond blockbusters. So I think we do at least another
192% annual revenue increase...
Here are my notes on past revenue:
DVD LD/etc
Q4 16,593 6,444
Q3 15,943 6,772
Q2 6,600 7,200
Q1 6,500 10,600
Here is my complete hand-waving, no factual basis estimates on 99-00:
DVD LD/etc
Q4 48,120 2,000
Q3 47,031 3,000
Q2 19,470 4,000
Q1 16,000 5,000
-----------------------
Total revenue 99-00: $144.6 million
Anyone care to guess where our earnings will be given this kind of
top line growth?
-Bill |
