You used 20,000 GTE links in your calculations, along with Q3 revenues of $7.4M, but isn't the 20,000 figure for q4? If it is, along with this quote from the ORCTF press release,
"Deutsche Telekom plans to deploy 70,000 ADSL lines in 43 local networks throughout Germany by 1999, of which Orckit was awarded a minimum quantity of 35,000 ADSL lines."
then we will be at the 250,000 link run rate starting now. My question about the press release is "by 1999," do they mean in Q4 as the words mean, or throughout 1999, which the words don't mean. In any case, it sounds like revenues will continue to ramp very, very handsomely. The question for the stock, of course, is profit.
"If the $260 per link savings is correct and ORCTF sells say, 250,000 links in '99 they will save $65MM."
If this is correct, ADSL revenues will be $116M. I can't imagine the price to sales ratio under 3, as long as there aren't losses. This puts the stock at 20 3/4 end of 1999 (less dilution) -- and it doesn't count HDSL revenues, new contracts, or VDSL prospects.
The real question, however, is profits, and when they come. If, as you say, they can save $260 per link ($100 already accomplished) and economies of scale to kick in soon, then profits can't be more than six months away.
One worry is dilution.
Did you notice that outstanding shares increased from 15 to 16.8m this quarter. To my way of thinking, that means that the stock price drops 12% to maintain the same capitalization.
Peter
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