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Technology Stocks : Echelon Corporation (ELON)
ELON 21.88+10.1%Oct 6 5:00 PM EST
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To: unclewest who wrote (1964)4/30/2000 4:22:00 PM
From: Zeev Hed  Read Replies (3) of 3076
 
uncle, how have you been?

I for one still do not understand the model you guys are using for justifying a market valuations of $1 billion on this company.

The best dream you may eer have is that consumer will indeed adapt the ilonWork and start and put these in their houses (a very big "if" IMHO). New starts are ranging between 1 to 1.5 MM new houses yearly (a good year on the high side, a bad year on the low side). Each unit should yield, under the best set of conditions something like $500/house, so under a scenario of 100% capture of this market, you get sales sometimes in the future of $750 MM.

Of course, under normal circumstance you also must show that the savings per year from the installation of such a system (and by the time this is installed the consumer will pay between $1500 to $2000, and then maybe another service charge for connection, of let say just $10/month). I just do not see the payback for an average house that has total energy costs of $2000/year (and that is high), even if the energy savings can be shown to be 10% of total usage (that will barely cover system maintenance fees). Can you open my eyes and tell me what am I seeing wroing here?

Other issues like privacy and foul ups (the house is no longer under your simple hand control etc.) are marketing issues which I am not even going to address right now. I just do not see the economic case under the "best" scenario.

Zeev
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