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Technology Stocks : TAVA Technologies (TAVA-NASDAQ)
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To: RAVEL who wrote (21407)7/31/1998 12:51:00 PM
From: CalculatedRisk   of 31646
 
RAVEL, excellent! A few comments:

1) Core business. Perhaps you have underestimated TAVA's core business for fiscal '99. I have been using $8M per quarter.

2) Y2K revenues. This is the largest difference in our estimates for '99. There are two reasons for the difference. First, I have assumed that there is a slower ramp in TAVA's Y2K business. For the quarter just ended, I used $8M ... up from $3.5M. For fiscal Q1 '99, I was estimating $15M. Second, based on Jenkins comments, IMO TAVA's maximum potential per any quarter is $25M. You show TAVA generating $41M in Y2K revenue in Q4 '99.

3) Gross Margins. I used 37% for the core business and 60% for Y2K. It looks like we are very close.

4) Taxes. TAVA will still have some tax loss carryforwards in Q1 '98. This will increase your estimate a little. Currently they have about $3.4M in carryforwards.

Here is a comparison of fiscal Q1 '98 using our assumptions:

.............. Ravel ........ CR
Core Business.... 6.0......... 8.0
Y2K Revenue... 22.0........ 15.0
..Total Revenue. 28.0....... 23.0

Cost of Sales.. 13.1....... 11.0
Gross Margin... 14.8....... 12.0

SG&A............ 8.7........ 7.0
D&A............. 0.5........ 0.5

Operating Income 5.6........ 4.46
Interest Expense 0.13....... 0.15

Taxes............. 2.1........ 1.1
Net Income...... 3.4........ 3.2

EPS........... $0.14...... $0.13

Of course, I consider my estimates "optimistic", and you consider yours "conservative"<g>! But the major difference is in the Y2K revenue numbers.

I'll be hiking in the Sierras for a few days ... look forward to further discussion!
Regards, Bill
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