IDTI - an IC Play on Growth Markets Message Board

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Technology Stocks : IDTI - an IC Play on Growth Markets

IDTI 48.99

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Mar 29 5:00 PM EST

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To: Xianming Liu who wrote (9098)	7/6/1998 11:44:00 PM
From: Rob S.	Read Replies (1) of 11555

Thanks for the post. The article hits the basic assumptions but does a sloppy job of forecasting the needed production/sales targets. The 100,000 parts number is stupid - 100k at say $60 wholesale ASP only makes $6 million in added sales. That would not only not add much to the sales revenue figure but the cost of doing that small amount of business would be far more than the income generated. IDT needs to sell at the bare minimum 400,000 parts per quarter at an ASP of at least $60 to turn even a modest profit from the WC operations. That would result in $24 million in added sales and maybe a few cents in earnings contribution at best. If sales reach higher quantity or the ASP achieved is higher, the profits will start to roll in on each part the company sells at a nice incremental level. The leverage can be substantial and the difference between success and failure is razor thin. Then there is the "opportunity cost" of chasing after a fleeting market window while other product strategies are short-changed and capacity is tied up.

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