Q1 and Q2 earnings concerns......................
VCD ASPs were about $12 in Q4, 1997, they will drop to around $10 in Q1. C-Cube needs to sell 4.2M units this Q to break even. Last Q was around 3.5M units. The last two years, we have seen a nasty drop in demand that starts in March or late April. If demand runs through the end of March this year, C-Cube can do 4.2M units, if not, VCD revenues decline. They almost certainly will in Q2.
Divicom's headend business is flat this Q.
Settop boxes won't add in Q1. No Kirch sales.
DVD revenues should be up, maybe double over Q4. Add $4M.
DVx is replacing older encoder chip sales. DVx is much cheaper. It will take a 50% increase in units to make up for the lower prices. Not happening this Q. A decrease in encoder chip revenues.
Gross margins will increase from 53% to over 54% this Q, and spending is still constrained. This should add a little to ESP.
C-Cube's tax rate is moving down from 34% to 30% this year, don't expect it all in one Q. A 30% tax rate would have added $.05 per share more earning in 1997.
All-in-all, I see $92M to $94 in revenues in Q1, if VCD runs out the Q.
$.33+ EPS. |
