|
Here's my take on the conference call. Very positive, albeit in a low key way. Alex is gun-shy, but in today's environment, who can blame him. He wanted to say that the prognosis for the rest of 1998 is terrific but had to dance around the specifics. What exactly did he say? Only that communications,i.e. encoding, Divicom, and set top, totalling 60% of this Q's revenue, had good solid visibility for growth for the balance of the year. It was the "good visibility" that sruck me as very positive, and each of these 3 pieces were up 2Q over 1Q. Maybe 8-10% sequential growth in each of the next 2 Q's, call it $5million increase for 3Q alone. In consumer, we all know that the 2Q is the seasonal low point with increasing unit sales in 3Q and 4Q. If Cube can migrate the Chinese consumer to CVD from VCD at an additional $2 ASP per unit, and CVD goes from close to 25% of units this Q to 50% of units in 4Q, with an additional half million units due to seasonality, 3Q revenues from VCD/CVD at an ASP of $10.50 average will be up $5.5 million. Total is at least $10 million + in new revenue without any retail success from DVD at all! At 55% gross, that's $5.5 million, say $1.5 million in additional G&A, that's $4 million pretax, $2.8 million after-tax, or 7 cents a share. So there we have it. 32 cents a share for the 3Q as an absolute minimum. Any surprises are likely to be positive, and frankly, I am expecting more.This level, assuming an equal gain in Q4, will get them comfortably ahead of the current full year estimate of $1.14. Estimates will have to go up. Sure wouldn't want to be short this baby. Any other opinions? |
