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Technology Stocks : Zitel-ZITL What's Happening
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To: Marconi who wrote (16489)7/10/1998 3:21:00 PM
From: James Rembar  Read Replies (1) of 18263
 
Mr. Marconi:

You wrote: "Methinks the margins for a tool are 10X reality"

MD is not selling a tool, they are selling a factory process. They have developed the software for code remediation over a long period of time and most of the costs are behind them. The factory process uses very limited amounts of labor (in this case called exception handlers) as they process code.

You wrote: "The LOC involvement is high by better than 10."

I don't know if you are referring to the overall size of the market, but GM has indicated publicly that they have approximately 2 billion LOC. If you are questioning whether Keane may have on the order of 1 billion LOC to process, I think you underestimate the summation of their 500 plus contracts. If you have better information than I about the number of LOC at NIH, please post it.

You question whether MD has 150 employees. More than a year ago they had over 100 employees and since then they have continued to hire, though not at a pace I would consider dramatic. It is my understanding that MD has had about 150 employees for the past few months.

You wrote: "MD would have had to come up with $15M to carry them for a year forward"

MD is being privately funded. We know that BRCP, JBJ Trust, and Zitel have been involved in the financings. Currently, my understanding is that financing AND revenues support the company.

Fundamentally, the main question is whether MD has a superior technology or not. Apparently, we differ.
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