Projected Sales/Earnings for Lumenon
Pat: Here are my best guesstimates:
It is expected that Lumenon's new factory will be functional no later
than January, 2001. Production is targeted at 500 chips a day,
ramping up so that during fiscal year 2002 the production rate will
be 1,000 chips a day.
What we do not know (and most likely Lumenon does not know either)
is what the channel count per chip will average by that time. Groome
Capital in their forecast uses an average of 32 channels. I will use
a very conservative forecast of 8 channels per chip average.
Today, the reported selling price per channel for packaged DWDMs
is around $450 to $500 a channel. But that price is expected to
drop significantly (after all that is the point of the PHASIC technology).
With that in mind, let's try some numbers:
1000 chips a day X 240 days a year (allowing for vacations/holidays)
= 240,000 chips/year.
Let's use a yield of 80%, so that Lumenon now has 192,000 8-channel
chips to package and sell. In my mind, there is no doubt that Lumenon
intends to package the chips.
So, 192,000 chips X 8 channels @ $300/channel = $460,800,000
Now comes the fun part. Remove the appropriate charges for COGS
(cost of goods sold), R&D (research and development), and SG&A
(selling, general and administrative) expenses.
The cost of each chip is reported to be somewhere between $50 to
$100 a chip. Using the higher figure gets the COGS:
192,000 X $500 = $96,000,000
For R&D, I will be very generous since I know we are dealing with
propeller heads here: Give them $10,000,000 a year.
For SG&A, Groome Capital estimated $31 million in expenses for
fiscal year 2000; I shall use $40 million.
So let's see how we stand, before guessing how many shares
will be outstanding.
Product Sales $460,800,000
Cost of Goods Sold (96,000,000)
Research and Developmen (10,000,000)
Selling, Gen. And Admin. (40,000,000)
EBIDTA $314,800,000
Depreciation (5,000,000)
Amortization (5,000)
EBID $309,795,000
Interest income 3,000,000
EBT $312,795,000
Taxes (38% eff. rate) (118,862,100)
Net Income $193,932,900
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How many shares will be outstanding by the end of fiscal 2002?
Groome guesses around 37 million. I shall assume that there will
be 40 million shares.
Earnings per share for FY 2002 (ending June 30, 2002): $4.85
Personally, I'll be very happy if Lumenon achieves half that amount,
just as long as it trades at 100 times earnings! |
