In Redchip's latest publication, Robins printed opinion at least as of 12/11 was a stock price of approximately $25 in 3 to 4 years if one takes into account KM.
He believes that by year 2000 KM could bring in $0.65 eps. His rational was:
Disk drive produced in 2000, 600 million units, units produced in 1995 was about 240 million units, assuming 20% annual growth rate.
KM has 15% of market share, 90 million units (I think the market share is low, guess Robins is being conservative).
AXC margin per disk of $0.50 (which in my opinion is rather low, but I guess Robin was being conservative).
KM margin is $45 million.
After tax of $0.65 eps per share assuming 45 million shares outstanding from KM alone.
Add on top of that the value of their other business and he came to about $25.
My gut feel is that they will be able to get more than $0.50 margin for the KM per disk drive and the market share could be more than a mere 15% especially if KM works with MR. If KM can increase capacity by 30% to 40% and at present I think a 100% increase in capacity of drives brings a corresponding 70% increase in price, Thus if KM can increase capacity by 30%, there will be a 21% increae in selling price. I think that its worth more than $0.50 per drive here.
Also, for market share, I think that if one company adopts KM, the others will follow. Thus market share will be big, especially if KM is benificial to MR technology. So 15% in market share is low.
Anyway, thats my humble opinion.
Mike |
