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Technology Stocks : e.Digital Corporation(EDIG) - Embedded Digital Technology

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Mar 20 5:00 PM EST

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To: JimC1997 who wrote (8632)	11/28/1999 12:57:00 AM
From: mark cox	Read Replies (2) of 18366

Thanks Jim. I appreciate your taking the time to explain the revenues to me. It appears that we could really have some blow out numbers for the 4th quarter because of a unique situation. With the holdup by the record labels it has turned the digital music market into a race with everyone lined up at the starting line and will all move at the same time. Using Burt's conservative estimates of just 3 OEMs coming to EDIG and their orders being for 100K units each and a wholesale price of $150 each, couldn't EDIG potentially produce revenues just in the 4th quarter of somewhere in the ball park of $45 million? I realize that all of the players would have had to be completed and shipped to the OEMs before the end of the 4th quarter. Another question for you Jim. How will EDIG come up with the capital for labor and overhead costs to Eltech? Will they simply keep it as accounts payable to Eltech until EDIG receives payment from the OEMs? I think I read somewhere that EDIG had that kind of arrangement with Eltech? I found it quite humorous that Shhhhh!! was arguing with you about your estimate of a $2.5 Billion market cap for EDIG. He obviously doesn't know what he owns. In my opinion, the flexibility of the EDIG player to play all known codecs and use all the DRMs, plus the time and money that they can save an OEM is going to allow EDIG to capture a majority of the market. Using 55% of the predicted 1 to 2 million devices sold in 2000. 55% X 1.5 million = 825,000 EDIG players possible next year. $150 X 825,000 = $124 million in possible revenues from just music players next year. Any company in the middle of a hot industry that grows revenues from maybe $1 million this year to over $100 million the next is going to garner a very high PSR. But let's just give it a 20. That would give EDIG a market cap of $2.48 Billion. Add in another $6 to $10 million from Lanier, $xx from Intel and then there are the possible embedded DSPs and other devices and licenses/royalties that we can't even imagine yet. I wish I knew how much EDIG will receive from OEMs for licensing the MicroOS and for royalties from designs. Of course not all of the EDIG players on the market next year will be built by EDIG/Eltech so the revenue totals above will probably be much less because of just license and royalty payments from some OEMs. I also think that if EDIG does capture a majority of the player market that when the G3 phones start incorporating a music player, they are going to use EDIG's design and MircoOS. Now we are talking about 100s of millions of devices. And again with the PDAs which will soon begin to incorporate music devices. If EDIG has the best player then logic would dictate that they will capture a majority of every hand held device that incorporates a portable music player. Can you imagine the market cap estimates we could come up with if we are in all of those players, cell phones and PDAs just with a music player? I can but won't say because it will only sound like I'm insane. Mark

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