Dennis, my "working assumptions" on gross margins in the first year are 50%, quite generous for a new product launch, particularly one in which the manufacturing process has more than 20 different steps, each with concomitant yield problems. I would not be surprised, and would consider it quite an achievement if they get only 35% to 40% gross margins in the first year. Of course, I can be over conservative on this and we will soon know what kind of profit margins to use in models, once they deliver the first $10 MM or so of goods.
Zeev
PS, as for my "conservatism on the price post the removal of the floorless, go back to the beginning of the year when people kept asking why I was still interested in the stock, like in GATE and ANCR, I said then that once the floorless is removed, an explosive price ascent in a healed floorless is where one can go fishing for double baggers. Now that I pocketed this double bagger, I have stepped aside to see additional developments. I believe that there is still a possibility that in a major market decline (which I expect to start anywhere from late January on for a good six weeks), the gap between $9 and $10 might be closed, of course, it is also possible that like ANCR, VLNC will never look back from here. |
