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Microcap & Penny Stocks : QSOUND LABS INC - - QSND - - ACER GROUP - - IBM
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To: HeyRainier who wrote (716)6/23/1999 10:49:00 AM
From: John Kessinger  Read Replies (1) of 857
 
Rainier - thanks for the beef - you've given us a lot to chew on.

My reaction to the web toll road metaphor is "More pennies from heaven". This is consistent with the current commodity driven revenue stream model in place with Aiwa and Real Networks which brings in less than a $1M of sales per quarter - that's less than a good shoe store.

Question to David Gallagher: How many million devices does Aiwa have to sell in order for QSound to receive $1M in royalties? Same question on the iQ: How many copies of iQ have been sold to date and how much revenue has the company received from this software program? Another concern: Have iQ sales begun to level off?

Product line #3 (I'm going for the hat trick): How many Thunderbird sound cards have to be sold in order for QSound to receive $1M in revenues.

It appears that the virtualspin deal is very different in that QSound will now receive SUBSTANTIAL upfront revenue when they add new merchants or when they sell upgrades to existing merchants. I'm sure that this software isn't priced like a copy of Quicken. Also, with each customer there's an opportunity to sell a slew of add-on components and services. Q's Affiliate Direct, which addresses the number one issue - getting buyers to the web site, does appear to be the missing piece for virtualspin's e-commerce suite.

It will be pivotal that QSound and Virtualspin LISTEN to the customers and provide them with great service and support - otherwise they'll soon be saying - "Gee, I should have gone with IBM."

Of course, Cetera also represents a fundamental break from the past because Q will be receiving $50/$100 per hearing aid. Everything else to date has been dribs and drabs - a pure commodity-driven financial model that requires huge volumes of sales to generate meaningful EPS.

My take on QSound: Virtualspin and Cetera will be the main profit drivers over the next few years and largely influence the share price. I do think these two products have the potential to lift the stock toward $10 by next year. All of the other products will play minor roles. It's the 80/20 rule: 80% of sales and earnings will come from 20% of the products. That would be fine by me.
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