RE: Forecasts for 4Q97
Q: Scott, I have not done a detailed spread sheet analysis on CYMI's earning as function of number of lasers shipped, but I was wondering, did you factor in the explosion in head count that CYMI had in recent months? These are important to support future growth, but short term it might have a little negative impact on their bottom line.
My spreadsheets are for the most part yearly based spreadsheets with assumptions lastly at least a year (like tax rate, depreciation, etc.). CYMI is a moving target so, I make corrections by hand. Last Quarter, there was a $1.5MM one time charge to increase reserves for the CIP program. To put in perspective, CYMI would have reported $0.28 EPS last quarter without the increased reserves. They also had a one time charge for moving into their new bigger plant and shuffling orders for customers. Hopefully, these are all truly ONE-time charges. That is why, I think CYMI will hit $0.30EPS this quarter.
As for more manpower, I hope that is used to make more lasers. Should you consider it a variable cost that will be taken care of by making more lasers or a Fixed cost killing their margins? (CPA's out there save it. I know the strict definitions). I am sure that there will be a lot of training costs before the new people are productive but, I think that the additional lasers produced will dilute the effect of the new people. The CC will tell if there is a one time charge for training. |
