Jeff, per our conversation last night, I think that there are some important points that need to be made here.
1. ALYD currently does NOT have enough resources to address even the current contracts that have been talked about.
As we discussed earlier ALYD's current capacity is 220 million lines per year, with 22 five person teams. I think that we agreed that current contracts add up to about 1 billion lines, and if we divide that figure by the 220 million capacity / per year, we see that it would take ALYD almost 4.5 years to be able to do these projects at current capacity rates. ** NOTE ** these do not include any new contracts that may be announced in the coming weeks.
2. Now if ALYD doubles there production rate to 440 million lines per year through adding more programmers, it would still take them 2.27 years to address the current contracts alone.
Now if ALYD has 22 teams of 5 people each and they are getting paid an average of $50,000 that comes out to $5.5 million in salaries alone. Now if they double that to 44 teams of 5 that would also double the salaries to $11 million. This also doesn't include the added overhead for facilities and hardware. If ALYD doubles their current capacity, it will have to be used to address current contracts alone. The next 110 people ALYD hires will be working on current projects.
3. TESTING TESTING TESTING ** All project are a slave to testing. no matter how much any Y2K company gets in contracts, 1 billion lines , 5 billion lines, 50 billion lines, they can only convert as fast as testing will allow them. Yes, while it is true that the added amount of lines will eventually lead to greater revenues, but I think that we have to be reminded that there is only 2.5 years left to the year 2000. If the time frame that all this code must be converted in is not an important issue, then what is the big fuss about the y2k problem anyway ?
4. If ALYD's alliance adds another potential 1 billion lines to the pot, and ALYD currently needs to more than double their capacity to be able to address current projects alone. Then we have:
The following makes four assumptions
1. Testing can be done as fast as needed
2. All projects must be done by Jan. 1, 2000
3. ALYD currently has 1 billion lines that must be converted
4. Average salaries are approx. $50,000 per person
Current Capacity = 220 million lines a year
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# of teams = 22 teams of 5 = 110 people
Salaries payable = $5.5 million per year
# of lines that can be done by Jan. 1, 2000 = 550 million
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Doubling of current capacity to meet the need of current contracts
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# of teams = 44 teams of 5 = 220 people
Salaries payable = $11 million per year
# of lines that can be done by Jan. 1, 2000 = 1.1 Billion
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People needed for ALYD to do 2 billion lines of code
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# of teams = 88 teams of 5 people = 440 people
Salaries payable = $22 Million per year
# of lines that can be done by Jan. 1, 2000 = 2.2 Billion
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QUESTIONS THAT MUST BE ANSWERED:
1. Even though ALYD has 22 teams of 5 people, current # of employees adds up to more than 250 people. If there are only 110 people that make up the 22 teams, then where do the other 140 people come in ?
2. Is there a ratio that can be used to see how many support personal ALYD must add for every "team" member that is added ?
3. ALYD has made a point that they are in the process of hiring people. Gruder was quoted as saying that he planned to be up to 1,000 people. Since there are only 30 months left until Jan. 1, 2000 and ALYD has only approx. 1/2 of the people they need to do even the current contracts, at what rate are they hiring people ?
4. For ALYD to do 1 billion lines of code that is involved in the current 19 contracts, then they must be able to do 400 million lines a year for the next 2.5 years. They must be able to do 33 million lines per month. That works out to an average of 1.8 million lines that must be converted per contract. Can that much code be tested in 4 weeks ? (i.e 1.8 million)
5. I think Someone said on this thread that ALYD expected to have approx. 10 million in Revs. by the Q4. They also expected to show a profit. Under current # of employees, If we put aside an average of $50,000 for each member of the 22 teams ($5.5 million), and we put aside and average of $30,000 per person for the other 140 employees,
($4.2 million), we would get $9.7 million for payroll alone.
If these figures are accurate, how is ALYD going to show a profit by Q4, especially if they are hiring more people all the time, and that they can only get paid on a "as you complete" basis ?
6. How much of every line of code converted goes towards overhead ? That is, if they charge .35c per line, then does .05, .10, .15, go towards the overhead ?
I AM NOT AGAINST THIS COMPANY OR TRYING OT RAIN ON ANYONE'S PARADE HERE. I CURRENTLY HAVE CLOSE TO $20K INVESTED IN ALYD AND THINK THAT THEY WILL BE ONE OF THE LEADING Y2K CONVERSION HOUSES. HOWEVER, I FEEL THAT WE MUST BE ABLE TO UNDERSTAND WHAT IS GOING ON WITH THE FUNDAMENTALS OF THIS COMPANY. SOONER OR LATER WE ARE GOING TO GET PAST THE HYPE STAGE OF ALL THE Y2K COMPANIES AND FUNDAMENTALS WILL MATTER. |
