I think they have ratcheted down expectations to $300 million for 2000, or 638 million minutes at $.47/minute. Is that possible? Let's see...a little math is in order. I'll be kind and assume 40,000 handsets in use by end of January. Thus, at G*'s assumed use rate of 160 minutes/month, we get 6.4 million minutes. I have to knock that down to 4 million simply because the 40K handsets are ramping up over the month and are not all in use today. I am assuming that production capacity right now is only 15,000 per month, and that may be generous. ERICY is a no show. Telit is a quiet and slow show. Q continues to perform. So, January gets us another 15,000 handsets. We ramp that to 20,000 in February, and I'll give ERICY benefit of the doubt and go to full 40,000 production in March. So, February could roughly have 60,000 subs at 160 minutes/month, or 9.6 million minutes. If we use 80,000 in March, we add another 12.8 million. From then on, the 40,000 handsets can be put into service each month. If you assume that all 40K are up and running, doing 160 minutes per month each month, you end up with 440,000 subs doing 430 million minutes, or $202 million in revenues. My assumptions, I believe, are aggressive. Assuming all the handsets get out and are up and running immediately might be a stretch. The 160 minutes/month for all might be a stretch. I have not ramped up handset numbers because I am betting that the manufacturers don't jump right in and crank up a second line. I know QCOM would need 3-6 months to start up another line---thus, they would need to know quickly whether to crank it up or not. ERICY needs to make phone #1 before we can discuss ramping up for more.
I will reiterate the need to watch cash levels, cash burn rates, and when it all runs out! Revenue of $200 million is not going to cut it as far as keeping both G* and LOR alive.
At present, I have no position, either long or short, in G* or LOR. |
