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Technology Stocks : CRUS, good buy?
CRUS 129.74-1.2%3:59 PM EST
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To: ptrader who wrote (7478)2/6/2000 11:11:00 AM
From: pokysconductor  Read Replies (2) of 8193
 
Ptrader,

Some results back from last week.

Making the following assumptions:

120 Million units shipped now
180 Million units shipped in 3 years
10% Business share in 1 year (from a design win).
50% Business share in 3 years (from a new design win).
Large Manu. (seagate etc. has 20% of business)
80 Million shares of stock
15% of Revenue = Profit.

A design win in the first year would return this kind of profit.

120M * 0.1* 0.2 *0.15 * $15/80M = 0.07 dollars per win.
(My biggest question is the value of a chip or disk system shipped. This uses 15 dollars per system. That may or may not be even close.)

In a few years that design win would improve to:

180M * 0.1* 0.2 *0.15 * $15/80M = 0.10 dollars per win.

If in 3-5 years the business share increased to 50% than the earnings would increase to $0.5/year per win at $15 per system.

If indeed CRUS wins all four major companies the earnings from DD alone could reach near $2 per share in the next three or four years. At a multiple of 30 x that would add $60 to the share price.

Please feel free to comment and hope in some way this has helped put in rough terms the value of the disk business. My biggest unknown is again the price/value to CRUS of a disk system shipped.

I am working on a list of question around DVD next.

Regards,

Pokyscon.
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