Easy! I just make em up! Okay, seriously, here is my thinking.
If AXC can capture most of the market's drive manufacturers, which we know now they're negotiating with AT LEAST 5 OF THE WORLD'S BIGGEST 7, according to the most recent S3, then they're talking about upwards of at least 100M disk drives coated with KM per year. So I just guess, figuring that they'll charge AT LEAST a couple dollars per drive, giving me revenue multiples of $200M as a conservative barely getting started bottom figure. Plus, this is a proprietary, patented product, so they CAN'T just give it away for peanuts in terms of gross margin, due to it's dramatic ~35% increase in disk capacity and performance, that's got to be worth something substantial to a disk drive that's being marketed at between $200-$350, as the most commonly sold drives are for the consumer market- altho hi end drives go for even more and have much higher profit margins. Taking a reasonable earnings margin on at least $200M in extra sales, and dividing by 50M shares, I can easily see eps climbing past $1 up to $2, providing my basic assumptions are correct:
High % penetration of disk drive market
At least couple dollars per drive
High margin product
Then brew all that together in an a few different analyst's reports, have em publish some high eps growth projections, a buying stampede erupts, stock becomes popular and hits a totally unreasonable price (say, around $500 a share if we can get Iomega folks excited)combined with the inevitable short squeeze, and I can easily see $80-100 share in next 24 months.
Caveat empor: if AXC gives the technology away for peanuts, in terms of price and margin, all bets for over say, $20-30 are off.
What we are pretty sure of now is that most drive manufacturers will sign on, can't see why in the world they wouldn't!! Can you? that alone will jack the price up pretty heftily. Why, they don't even have to actually EARN the extra money, the analysts just have to PREDICT it publicly, so it gets on Zacks database. that alone will make it a must have momentum growth stock, even before they ever sell one KM disk. And that initial announcement, if it includes several licensees, could do the trick. What we're hoping is that KM can be both the catalyst for teh stock, and teh easy gold mine of money to enable to commercialize many more of the advanced patents they've got sitting around doing nothing. I wouldn't cry if this company goes from strength to strength and turns out into a long term cutting edge tech holding as it rises Cisco like or Ascend Communications like into a must have holding for every growth stock manager in the US!
I'm already pretty sure most, if not all, disk drive makers will sign on: for me the question is: how profitable will it be? That'll be all the difference between a 3 bagger from here or a 10 bagger.
I just wish the price would go down once more so I could buy some more at a sweet lower price. |
