burt if you consider 32 design wins a year, average life of win 10 years, average revenue per win of $1.5 million, then each win will contribute approximately $150,000 in annual revenues or $4.8 mil ($150K X 32 wins) total each year to revenue. This compounds, as first year wins equals $4.8, next year would be $9.6, third year $14.4, fourth year $19.2, etc. if viewed in a linear growth pattern with little/no variance. however, only death is linear 1 birth eventually produces 1 death. their business model shouldn't show slowing growth, but expanding growth as average revenue from design wins become larger, number of wins per year increases (as it has thus far) and begin to compound on each other. the average life of the design wins will become shorter as technological knowhow increases, but for the next five years rsys should show expanding growth exponentially, not slowing growth. their growth in years one and two were 45%, now moving to 25%, but as designs wins begin to contribute to the bottom line, as Europe begins add more to RSYS bottom line (they appear to be taking an aggressive posture in Europe), growth rate should begin expanding more rapidly toward the end of this year, not faltering. embedded computer needs are increasing in demand, not slowing or growig linearly.
what i'd like more is a much quicker time from when the "win" becomes known to when the "win" begins to add revenue. right now this frame is 12 to 18 months, which is both a marketing and a design function. some wins, such as this quarter's gaming win came to revenue much quicker due to increased efforts on RSYS engineering and software departments part.
this says nothing about how wallstreet will bellyup to RSYS trough with their greenbacks. low volume speaks volumes. when wallstreet gets the picture (probably later this year) it will come quickly. RSYS has failed in only one area: getting wallstreet excited about the embedded markets they are in. you can't simply say "i'm excited about what we're doing" (Meyers' comments - wallstreet actually disbelieves such statements and considers it hype, generally punishes stocks for it). wallstreet wants word pictures, potential revenue blocsks from wins, specifics of wins (RSYS states they can't be too specific for competitive reasons - oh, yah, yah) they want much hand holding, and diaper changing. otherwise, the stock price is just another rock on the sidewalk to kick around. |
