Zitel's Value: $ 0 or more likely $ 35 to $75+?
Projection of multi-million dollar profits based on one-tenth of a penny margins on telephone traffic in a past life may qualify me to doodle some with Zitel numbers. Let's see . . .
At a Gross Revenue of $ .65 per LOC, direct expenses of $ .015 per LOC, and a royalty payment to MD of $ .325 per LOC, Zitel will have a Net Revenue Before Indirect Costs of $ .31 per LOC. To keep it both simple and CONSERVATIVE let's assume (spare me the joke Wex) that
Zitel's indirect costs are more than offset by the increase in value of their 33% investment in MD. Let's not forget taxes, God forbid. At a conservative 40% for taxes, the $ .31 per LOC is reduced to $ .1885.
Now Class. How many lines of code must Zitel process to justify a value of $ 35.00 with the CONSERVATIVE assumptions that not another dime was made after 12/31/99 (<- note the pre-MD two-digit representation) and that the other operations are worth at a minimum $ 5.00 per share.
Let's see. (15,000,000 shares * ($ 35.00 - 5.00) per share) / .1885 net per LOC after taxes = 2,387,267,904 lines of code. Sounds like alot doesn't it. Really, that's twenty-four organizations with 100 million lines of code.
To justify $ 45.00/shr., 32 organizations w/100 million lines of code.
To justify $ 55.00/shr., 40 organizations w/100 million lines of code.
To justify $ 65.00/shr., 48 organizations w/100 million lines of code.
To justify $ 75.00/shr., 56 organizations w/100 million lines of code.
Unrealistic. Maybe, if you truly believe that according to the Short Sermon, Gartner is part of the scam.
Bonnies (beginning to understand why they have NO CONVICTION) Guy |
