Allen, this question from Peter was asked when the Lily Pond was first introduced back mid-December, your reply is below, but I still have questions re: base and incremental royalties, and what the Lily Pond actually represents.
Question from Peter - "I therefore assume that the combined lily pond royalties are only those royalties over and above the royalties from WIND's traditional business."
Your answer - "You are correct. The lily ponds, AS PRESENTED, only represent a portion of WIND’s current royalty business. What you don’t see yet is how the lily pond model is blended into a forecasting model for WIND as a whole. That will come later, once we, as a group, get the lily pond model shaped up."
Allen, analysts are forecasting EPS of .74 in FY02, to what extent do you think analysts are factoring in the incremental royalties as projected in the Lily Pond? Or, are the Lily Pond royalties purely incremental, and analysts are projecting off base WIND royalties and other income only?
I don't mean to hurry your forecasting model along, however it is plainly obvious, a serious inflection point in revenue and profitability could occur in FY02 if the Lily Pond royalties are purely incremental.
Incremental royalty income would flow largely unfettered into earnings. $70 million in incremental royalties represents another .75 -.80 in earnings.
Seems too good to be true, it seems to me analysts must have some of this number built into their forecast.
Any insight would be most appreciated.
Regards,
Rinks |
