CD REVENUE DISCUSSION (Revised 10/15/97)
From: JDN Sep 22 2:46PM Reply #2929
Info nearly blew my mind.
In the 9/4 8-k, among other things, TPRO gives an estimate of the ADDITIONAL business they hope to pick up as a result of Wonderware and Square D alliance. They say 20,000-30,0000 units and $7,000 per and a 55% gross margin. Using 25,000 average at $7,000 comes to $175,000,000 @ 55% = $96,250,000. (ALL IN JUST 2 YEARS). Since this is ADDITIONAL business I suspect very low overhead attaches to it. Go read it for yourself. This is really impressive.
edgar-online.com
From: Jack Zahran Sep 22 3:09PM Reply #2931
55% Margin from labor aspect of additional services that the CD sale will generate. The actual margin for the CD is not mentioned. This means that on top of the CD sales, TPRO is expecting revenue from additional services that the CD will create. Too, no mention is made as to the revenue that will be generated from the sale of new
equipment.
The total profit generated from the CD will be greater than the margin of the CD. I also have a hunch that the Margin from the CD will be more than 55 %. Please re-read the filing and verify if my understanding of it is accurate.
edgar-online.com
From: JDN Sep 22 3:31PM Reply #2932
I reread the 9/4 8-k, very carefully. I agree the wording could be better for understanding. However, I tend now to believe that you are correct. This only makes it even MORE mindbogling. IMHO there is no possibility that the labor costs of CD's could even begin to approach 55%. A friend of mine who has a business that supplies CD's to upgrade legal departments libraries told me that once the software is first developed the cost, excluding sales commissions, for CD's is about $5.
From: JDN Sep 22 3:31PM Reply #2932
I reread the 9/4 8-k, very carefully. I agree the wording could be better for understanding. However, I tend now to believe that you are correct. This only makes it even MORE mindbogling. IMHO there is no possability that the labor costs of CD's could even begin to approach 55%. A friend of mine who has a business that supplies CD's to upgrade legal departments libraries told me that once the software is first
developed the cost, excluding sales commissions, for CD's is about $5.
From: Jack Zahran Sep 22 7:42PM Reply #2953
55% of additional services that the CD will create on top of the profit from the CD sale which I now understand is $5000 (71%). This is really positive. management projects that this access may result in sales of 20,000 to 30,000 multi-part units at an average price of $7,000 each over a two year period. Services related to these projects, generally billed at $100 per hour with a direct labor gross margin of 55%, are expected to generate additional revenue for TAVA.
From: JDN Sep 22 6:05PM Reply #2945
Go back and reread that 9/4 8-k. We got a 175,000,000 BONUS over the next two years PLUS I predict full capacity utilization of all the engineers they can lay their hands on. NO WAY am I SHORT term, even a little. (I'm too greedy, haha). Shots like this just dont come along that often.
From: Fred Ragan Sep 29 7:15PM Reply #3231
Also noticed comments about Wonderware and 15 to 30,000 CD sets. @ $5000-$7000 pick a number, times 80 -90% gross return. Don't forget to divided by 8.8 million shares. BIG numbers. It can start slow and still add very fast and remember, the CD's are only the entry point!
From: RDavidson Sep 29 9:47PM Reply #3246
As the % of TPRO income shifts more toward the labor component (and shortly CD) gross margins will increase, and substantially more cash will be available for staffing.
Recent redemption also helps as cash buffer. I don't think that a particular quarter's earnings, barring a bust..., are as important as increasing sales, keeping an eye on margins, and putting all of Wonderware, Fluor and Square D people out into the field with a trunkload of CDs each. I think many clients of TPRO aren't going to start major projects till cal.'98. CD assessments over the net will be the best way in the world to prime the pump, while showing client in b&w what problems they have.
From: Jack Zahran Sep 29 10:00PM Reply #3247
We are talking huge. TPRO's management is conservative and they even slipped in "like popcorn popping" when referring to the Y2K CD market. Jenkins couldn't help himself and spilled the Merk discussions. You could just feel the forced restraint. They couldn't help repeating that hourly billing for Y2K work was significantly greater than their other work. And future acquisitions would be accretive; they have made very successful acquisitions to date.
From: C.K. Houston Sep 30 9:24AM Reply #3270
Change in product mix and increased profit margins are EXCITING!!
Current Gross Profit Margin for Entire Company: 34%
............Material: 7-19%
............Labor...: 55%
Y2K will have very LITTLE material ... will be CD & Labor
CD-Rom Gross Profit Margin: 80-90%! "Like popcorn popping"
Alliances (Wonderware, Squre D, Fluor, PacifiCorp) pushing CD thru their sales force! These guys have a GREAT incentive for getting this CD out to their customers - fear of litigation down the road. Fluor Alliance gives them Executive Level Selling opportunity. TPRO is at the very early stage of discussions with Allen-Bradley (Global Technical Services) and Rockwell. But, they are in discussions. One of the alliances (can't remember which, off-hand) has already sent letter to ALL of their clients about Y2K assessment & remediation. The CD is the key element in assessment.
From: Gerald Underwood Sep 30 9:30AM Reply #3271
With gross profit on CD revenue at 80-90%, IMO this will be the MAJOR MAJOR factor in total revenue.
From: TokyoMex, Oct 6 1997 9:43PM Reply #149
Target date is Oct 15th but I also noticed CEO giving himself a room by saying "Middle of Oct to end of the month" on two ocassions. One at the Roth Crutten conf in NYC and another during the conf call.
The significance is as follows; Immediate market is for 100,000 cds at 7K a pop at 80% GM, which will be all offered by Wonder, S2 and TPRO. As for Fluor, I am not quite sure on their CD arrangement, since Fluor alliance is much more loosely worded than the former.
The impact of the CD on the TPRO revenue has been well defined by Red Chip, Houston and reposted by Bouncy Funk, and you can reference it at the TPRO research site.
The singular driving eps up will be from the CDs as mentioned by the management and it will affect the bottom line ASAP. Hence I feel the MMs who are recently covering are watching with apprehension as well as those who are already in i.e., Soros Small Cap, Fidelity, Whale, Crutten, DH Blaire,Everen, Renn and Meyerson.
We also have Emerald Research results as well as Emerald Fund adding TPRO to their new y2k index fund and I do indeed hope we can pick up major houses such as Merril, Mont, Alex and JP Morgan.
The interests are there and they are nibbling at it now and thats why the CD is so impotant to our growth strategy. CDs will assess and TPRO will remedy. It will save a whole lot of manpower in terms of marketing and field assesment. It will also place TPRO CD tool as the forerunner of the factory floor /front line embedded code defining simple solution respected by the peers and customer base.
I bet you they are all eagerly waiting for it as we are. Furthermore they will be happy to spend louzy 7,000 ( two nights at the Scores) to see if their factory will blow up on that fateful day . Cha Ching !!!!
From: Karl Drobnic Oct 7 1997 10:45AM Reply #3658
CD Revenues: Originally, TPRO announced $10,000 as the average price to do an assessment (pre-CD). TPRO then announced the CD and said TPRO would receive $7,000/CD. Then the discussion went to a split between TPRO and the alliance partner: $5,000 to TPRO and $2,000 to the partner. As of the Sept. conference call, the idea of using the CD to get the foot in the client's door surfaced (the Netscape strategy of giving away browsers to gain market share). On the conference call, TPRO mentioned that beta testing was going well. I think "excellent" was the word used. It looks like TPRO is playing a mind game. Continue to lower the potential price of the CD in the pre-launch stage to discourage competition. Then, when it works, triple the price. After all, what's a monopoly for?
From: RDavidson Oct 7 1997 11:58AM Reply #3666
Looks like TPRO CD should go platinum quickly. Assuming it works, it's the only sensible way to get a quick assessment of the factory floor- one of those products that "you can't afford not to have ". The CD should be the next best thing to a printingpress. BTW, how is every plant going to get all of their non- compliant chips changed in time? ...start running the math and there are a lot of these guys to R&R
From: Gerald Underwood Oct 12 1997 1:12AM Reply #3943
I don't know about you, but here is the best incentive I know of to hang on to my TOPRO cookies. 170,000 potential CD clients @ $7000 a pop. And as was put during the conference call-the CD is just an entry point into the internet commerce on selling database, tools and everything else down the line which is the real value add.
Of course all of us can run the applicable set of multipliers needed to extrapolate on this, BTW did someone ask why we are holding at $5.00 and change per shr ?
I for one do not expect a lot of financial news right after the CD comes out. After all, this is really just the beginning. Does anyone really expect a daily numbers game on amount of CDs sold? But in the next month or two I think we may start to see the evolution beginning in the form of some contract announcements. TOPRO must be very busy now laying the ground work for a massive ramp up. This takes time and
I myself am not concerned about the immediate time frame, however If anyone decides to sell out their shares cheap, let me know and I will be standing by to pick up some more. One of the reasons that I am betting on y2k, is because of the inevitability. And the way I see it, TOPRO is about as inevitable as you can get. JMO. |
