Doc,
The software revenues are not booked yet. Per the conference call, the 1200 site contract has not been booked. It will be booked site by site. Each site will have around $20,000 in tool sales. See below portion of the conference call.
Dave
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The wave of demand is upon us and the ramp-up appears to be making up
significantly for the time lost in the first couple of quarters.
Specifically to this point of how do we measure that backlog?
Historically, we have always reported backlog as only the face value of an order placed.
We do not report any expected value for the full program to come out of that initial order. And as a result, using an example phase one in a Y2K project, it may be a time and materials order for the inventory, and assessment phase alone might be something like $200,000.
That's all we show as backlog when certainly, our expectation and
history has shown that the follow-on rollout on a time and material base will be significantly larger than that. So with that as a definitional backdrop, we've got a total backlog as of 3/31 is up about 15 percent over 12/31.
The point of all this is that that does not begin to tell the story of
the change in our business climate. As one specific example, our backlog does not carry any value for that large multi-site agreement that we announced last month- those orders will in fact be booked individually by site as they are executed.
So as a result, while our backlog content is changing in mix from a
fixed price to time and materials, there's an effect that it actually
understates or has an apparent depressing effect on the total value of
that backlog. While in truth, the expected value of the projects engaged is increasing dramatically.
In the future, we will be attempting to provide some kind of an estimate or forecast of total project revenues that are expected to come out of the booked backlog figure.
More specifically, I think with all of that, to emphasize the
acceleration that we talk about in the press release of the Y2K
business, I can and within the guidelines of our Safe Harbor, project
and forecast that we would expect to book between 8 and $10 million
worth of Y2K orders in this month alone.
Again, I'm using the booked backlog definition that does not include an extended valuation, as I've just talked about.
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Conservatively, a full-scale program per-site costs could be greater
than eight times the cost per site for the pilot. So let's follow the
money here. Assume a consumer goods company has 50 plants.
They launch a pilot in five plants. The tool and database per site sales are 20,000. Services for inventory and assessment per site is 60,000, totaling 80,000 per site or 400,000 for the pilot. If one uses the 8 to 1 ratio, the cost would be 640,000 per site or 32 million for the total program. And one may ask, How reasonable are these numbers?
General Motors recently announced that their program costs were
currently estimated at the half billion-dollar range. And another
company that we know of has increased its plant estimates- per plant
estimates actually- to over 2 « million per plant.
Of course, chemical, petrochemical, and pharmaceutical sites are much
more automated than the typical company outlined above. Therefore I feel our estimates are very conservative.
If one runs the math on the number of pilots that TAVA's currently
engaged in, it doesn't take long to figure out that we need the solution provider network to increase our revenue bandwidth. |
