My update to the Yahoo thread regarding Paradigm after hearing the CC:
Just listened to the call. Josh99 already provided a summary, so I will provide other information, and my impressions.
1. Iomega
They worked on this for about a year.
Already shipped some to IOM in Q2 and Q3 (qualification/sample stage?), 0 shipments in Q4. They are shipping now, and expect more in Q2 because they have finalized their qualification and agreement. They cannot say that they exactly that they will get 50%, but they expect to share the market with one other vendor.
These products are commodity devices, which sell for $0.75 to $1.50 on the open market.
My thoughts:
Please find out how many ZIPs IOM ships a year. If we assume:
10M zips a year
$1 SRAM per zip
50% market for PRDM
Then we get $5M a year for PRDM in revenue. This is nice, but low profit, and not as BIG as everyone thinks.
2. New products
SRAM market is now very tough, with Koreans and others dropping prices to below what is profitable for PRDM. PRDM was forced to pass on some orders during Q4 because they would have lost money at market prices.
To avoid this competition, they have 3 or 4 new products with little or no competition (small niche markets?), which they will introduce soon and produce revenue in Q2 or Q3.
3. Profitability
They want to be profitable this year, but it is becoming increasingly difficult due to market conditions. The pres was definitely not wearing a "sh*t eating grin", and my impression is that we are not out of the woods yet.
4. Production
Wafer fabrication is done mostly in Japan, and also in Taiwan and Singapore. It was pointed out that Korea is now much cheaper than Japan, and that they cannot compete by using Japanese fabrication services. They answered that they are negotiating for cheaper prices, but it was a WEAK rebuttal. I would have been happier to hear that "we are shifting all of our capacity to UMC, who is even more aggressive than the Koreans."
Its a gamble, but an interesting one.
I hope that other investors will aggressively call the company and ask about the current size of the backlog.
As shareholders, the company works for us, and we have a need and a right to know as much as possible.
Keep working on this. If it is a winner, I want to buy a truckload. If not, I want to know and get out ASAP.
Since it may take a while to become profitable, buying on dips may be a good strategy.
THC |
