On its own, TRKN needs sales of about $34million/quarter in order to breakeven with their current cost structure including interest. They achieved this sales rate in 1996 as separate entities, and it could happen again as early as early 1998, but if it doesn't happen soon, it won't happen at all. Interest expense will get too large, sources of funding will dry up, and prospective customers will be afraid to order from them for fear that they won't be around to support the equipment (if they aren't already). Thus they are rapidly approaching the point of now or never - they must have some big sales soon. That is why the recent stock action is heartening, as the implication is big sales (or a buyout).
In regards to the number of shares outstanding, I believe that the correct number is currently more like 18m, but it is a bit hard to figure with all the financing action. Also the shares recently issued at $6.75 allow the purchase of some additional shares at that price, and the notes are convertable at $16 but the conversion price could have been renegotiated.
A final note is that I think you slipped a decimal point, and even for NVLS which has the highest stock price at about $115 it would take more like 1.5-2million shares to do the buyout.
I do agree with you last point, however. I agree that the TRKN technology would be more valuable to a larger more established competitor than it is as a stand-alone company.
Good luck, and thanks for the post,
Carl |
