-----------quote---------
Why has RGFX been more successful in penetrating the foreign market than domestic market?
-----------end quote-------
We don't have anything like europe does. UK has ColourPass, Germany & others have Raster Graphics GmbH. There is also OCE which uses Raster Graphics under its own name and accounted for 4.8% and 10% of '96 and '95 revenues respectively (This contract expires in October - look for margins to improve afterwards).
All the US has is the direct marketing approach. If someone wants a LDFP, they call up the local VAR and compare printers with each other and then choose a printer that is in their best interest. I beleive the revenues that we do get from the US are from the educated customers that realize that RGFX has the products that are in their best interest. RGFX is addressing this.
Check this out -
In FY96, 95 and 94, RGFX spent an average of 15% of revenues on sales and marketing. Last quarter, they spent 18.3%. Now once they reach saturation, they can return to previous levels of 15%. Now lets substitute the regular 15% for the 18.3% and we get 2.117 million instead of 2.595 million. Add this extra cash to earnings and we have 1,798,000 of $.18 eps for the quarter.
Now I'm sure that RGFX saw this coming and used the opportunity to spend all this extra cash on marketing, probably close to the end of the quarter.
For FY98 I see revenues of 90 million (conservative, using estimates given by the company themselves) and margins of 11-13%, maybe even higher, depending on market conditions (dollar weakens, etc). EPS of $1 or more is not impossible before any misc charges.
I tried to find the size of the US market in comparison with the rest of the world but I couldn't dig anything up. I'm trying to get my hands on the 1996 Wide Format Digital Print Report by IT Strategies which should have all kinds of information on this.
I did manage to dig up some misc. crap though.
LFDP was about $900 million in 1996 and estimates are for 45% growth through 2000. Included in this number are both printer sales and consumable sales and the breakdown is 31% growth per year for printer sales and 100% growth per year for consumable sales.
These numbers DO NOT include the CAD markets. Using number from 1996, we can see that RGFX had 4.4% of the market with only ONE high-end product. With the P1000 and the P5000, I believe RGFX can double (again, conservatively) their marketshare by '98 and maybe even more by 2000. If the LFDP market reaches the estimated $4 billion in 2000, every 2.5% will translate to $100 million in revenue.
Thisgs look better and better everyday.
Darren |
