William, Earlier I made a projection that we would end up the year at $2 million in revenue (give or take 10%). That looks to be very acheivable now, in fact, we may well exceed $2.2 Million. The way I see it, the 3rd quarter was about $500k, primarily made up of channel banks sales. Now, looking in to the 4th qtr., we have at least 30 Cyclones, a stepped up ordering rate from US Robotics on the Channel Banks, and those unexpected orders from Citibank and National Trust on ATM cards (at a high profit margin) as an added bonus. I believe that the 30 or so Cyclones that were sent out for beta testing were at a very reduced price, say $3k range, so that alone could contribute $100k. My guesstimate would look like this:
D-Mark Channelbanks $600k (Estimated)
Cyclones $100k
ATM Cards $150K
Misc Hardware $ 50K
Services $ 75K
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Total Revenue $875K (Estimated)
If my calculator is working correctly that would put us on track to hit north of my earlier revenue projections and open the door to kick off the new fiscal period, with a bang. If Cyclone proves to be everything that is anticipated, we have the stage set to exceed 97's total revenue in the first quarter alone. Very exciting and very realistic $10 million pace, to kick off the new year, in addtion to having three new products scheduled to come on line in the first half alone, this could be very explosive.
As for earnings, as someone else noted, we start the new year with a clean slate, by taking the entire charge off now. Looking at the $1,000,000 loss for nine months, sans the charge off, that would equal .07 cents per share loss. If I'm correct that correlates into a slowing of the burn rate. Weren't we at .04 cents loss for six months?
Using my earlier projection, that $1,000,000 in revenue should produce about .04 EPS. The $850k projected (above) should bring in about .03 EPS, in turn that could translate in reducing the year end loss to -.04 EPS (sans charge off).
That type of progress, coupled with starting off the year with a clean slate, could put us on a .10 EPS quarterly pace based on $2.5 million in sales. The first quarter would probably carry a .04 to .05 drag against earnings due to ramp up costs, bringing us in at about .05 to .06 EPS attainable for the first quarter.
Using that as a basis of valuation, and extending it out for all 4 quarters that would be equal to .20 to .24 cents x a 30 P/E for the industry, equals $6 to $7.20 per share.
Normally what I do is cut that in half, resulting in a share price of $3.00 to $3.60 valuation. Thus reflecting a trading range from low of $3.00 to high of $7.20. I use this as a guide, and let the developments that unravel place a gauge on where we should be within that trading range. If news comes out of a large contract that would add to the valuation, then I'd just edge it up within that trading ranger, the more positive the news, the higher we should be perceived by the street. As the quarterly results become known, any increase or decrease from those numbers should be used for adjustment.
As a sidenote, never forget about the FNET IPO possiblility and the leverage in valuation that it can bring to the share price of FTEL. With Tom Russell/Franks mention of this, it seems that they are still shooting for an IPO before years end.
My focus will remain on what the venture partners are doing, especially Digital Express, because this could quickly add a whole new dimension to the ballgame. Also how AT&T, Hughes, Sprint, US Robotics, Motorola, Rockwell, and few others react to the Cyclones capabilities. If they should step up the plate, this could get very interesting in a New York nanosecond.
I remain very optimistic and stand committed to Franklins progress.
RB |
