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Technology Stocks : Zitel-ZITL What's Happening
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To: Pancho Villa who wrote (14804)3/31/1998 2:33:00 PM
From: White Shoes  Read Replies (2) of 18263
 
YOU DO THE MATH:

Some fancy figuring from the Yahoo! ZITL thread (but remember as one long put it, "figures lie and liars figure" whatever that means):

Zitel needs to earn more than $240 million in the next two years to justify its current market cap. So we are talking about $120 million a year. A generous net profit margin is 10%, not 50%. Keane, a real live company does not get as much as 10%. Zitel needs to have revenues of about $1,200 million this year to earn the $120 million the market cap requires. If revenues on a job is $10 million, you need 120 jobs this year. The year is half over. That is about one contract per work day. When you need one a day and you have never gotten any, this makes a pretty difficult argument to be long. That is why no long ever discusses it.

Do the math for what MD must earn and you start getting dizzy.

- Courtesy "Mr. Heartless"

P.S. I don't know if we need to put such a high standard on ZITL. Even if we ask it to only earn $50 million this year, it won't come close. I think some of these longs are confusing Y2K revenues (of which ZITL has none by the way) with Y2K earnings. I think another issue that needs to be explained is the contribution of Matridigm to ZITL's earnings. Because the answer is likely to be slim to none (which could be good considering Matridigm doesn't make money), the longs have had to concoct this new "merger" story, as if this would solve anything for these two pathetic companies.
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