COCA COLA & TAVA
Multi-Plant Pilot Engagement with The Coca-Cola Company - March 5
biz.yahoo.com
fnews.yahoo.com
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Immensity of KO deal: As in, if KO has 4,000 factories in its chain, and TAVA cuts them an assessment deal of $5,000/factory, TAVA gets $20 mil. in high margin assessment revenues. So KO all by itself could boost TAVA in the $1/share EPS area. Or if KO tells TAVA to do a complete remediation on the top 100 factories, and the tab comes to
$300,000/factory (Sun Oil model), the tab comes to $30 mil. There sure are a lot of possible ways to put together some big revenue projections with the KO deal.
To grasp the magnitude of selling 336 BILLION bottles of soft drink/yr, I did the following. I stretched a sash around the Earth at the equator, pulled the northern edge of the sash 3,000 miles up, and the southern edge 3,000 miles down. Laying the sash on the floor, I had 24,000 mile x 6,000 mile rectangle.
I cut off 16,000 miles of sash (oceans), and placed all Coke customers equidistant in the remaining 8,000 by 6,000 mile rectangle. I then placed a syrup factory every 1,000 miles, and had each syrup factory deliver to bottlers for 500 miles in every direction. I placed a bottler every 100 miles. My result is an estimate that it takes 4,500 to 5,000 factories to do the job. Coke is going dwarf the Bristol-Myers contract. Karl Drobnic - VENTURE RETURNS NEWSLETTER
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Could assessment phase of Coca-Cola mean $17 million in gross profit to Tava? Here is how I arrive at my numbers -
First of all, we know from Coca-Cola's 10-K which was released on 3/9/98 that, "In 1997, net sales of concentrates and syrups by the Company to Coca-Cola Enterprises were approximately $2.5 billion, or approximately 13% of the Company's net operating revenues."
From Coca-Cola Enterprises website, we also know CCE owns 310 facilities.
cokecce.com
If it takes 310 facilities to generate 13% of Coca-Cola's revenue, one can extrapolate it takes 2400 facilities worldwide to generate 100% of Coca-Cola's revenue. Just to be on the conservative side, let's say 1,000 facilities end up purchasing Tava's CD.
Therefore - 1,000 facilities x 20,000 CD cost per facility x 85 percent Gross Margins = $17,000,000 in Gross Profit for Tava.
Remember, this $17 million figure doesn't even include possible remediation work done by Tava. At this point in Tava's history, estimates of $0.81 look rather low to me. Fair conclusions? Chris Coppage
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You probably will not see the large ramp up in revenues due to remediation until approx. June. What you want to see is the company getting as many I&A (Inventory & Assessment) as possibly. They have high margins, it increases company exposure and it somewhat locks in future revenues.
J. Scott Liolios - TAVA IR - Pacific Consulting Group
CK SIDEBAR: Remediation reference is general - not Coke specific |
