I think Jim Savage laid a completely plausible analysis.
Excellent write-up, along the lines of what we have been talking about for a the last six months, but now with firmer and firmer numbers. The deals that were still rumors 4-6 months ago, are one by one being revealed. I think Jabil has landed HP deal which will add $650M+ to revenues, Bay Networks and Dell each which should be doing $250M of revenues annualized by Aug99, and Lucent which should add $450M per year. Add all of this to base revenues of about $1400M to $1500M due to some growth in existing accounts like Cisco, and you get revenues of over $3000M annualized by the end of FY99. This is $750M per Q.
Even assuming a drop in net margins, from 5.6% last Q to say 4.5%, this means $33M in profits per quarter eventually. Using a slightly diluted 38M outstanding shares, one can calculate about 88 cents per share. Now they probably won't hit this number by next August, maybe 18 months out is a better guess. And we don't know the margins on the new business, but this suggests a big upward trend in EPS over the next 12-18 months. The AugQ will be the low for this cycle. So everyone should get on board before the mo guys grab this stock and run it.
Paul |
