Re: it's gonna be a slog
Here is a recent estimate of net based sales of music looking forward to the year 2004:
news.com
(I have seen some similar estimates, but i no longer have the links, so I take this as representative.) The prediction is $4 billion in music sales (looks like their assumption is roughly doubling of sales every year from the actual sales of $47 million in 1997) for music downloaded from the net. Let's add some assumptions:
1) Wavx has a successful deployment and captures 25% of all these sales. This is picking a number out of a hat, but it's hard to believe that there won't be _any_ competing technology.
2) Wavx gets 10% of sales as commission. I take this as a generous upgrade of the kinds of rates that VISA gets on credit card sales. If the commission is much higher, I would then assume the competition would really be knocking on the door.
With these assumptions, we could expect $100 million in revenue by the year 2004 from the music side of the business. Let's put this into some share terms. On 3/31 there were 32 million shares outstanding, 10 million in options and warrants, then add 2.5 million for the purchase of N*able, then sum up and call it conservatively to have reached 50 million shares by 2004 due to recapitalization and employee awards, etc. [later edit: By the way, this is effectively what is meant by a $60 million "hole" due to paid in capital--share dilution] That's $2 per share of revenue, before any expenses, from music by 2004. Of course, much more goes into the company, such as software and videos, maybe that's ten times the size of the music part, but let's put up some numbers. And of course the assumptions can be debated. However, these estimates aren't off the map, and these payoffs are many years in the future. It may explain the modest enthusiasm for the stock. Any comments?
Oliver |
