Fred, one should "walk" before one runs.
Are these estimates for 1999, 2000, 2001, this is quite important.
I take it in you first paragraph ("Koreans unrealistic when they stated they would be producing 1 mln laptop batteries per month") you meant "cellphones", not laptops, otherwise they will take the whole shabang and leave none to VLNC (VBG).
None of the URL referred to Hamil, so it is difficult for me to estimate their contribution. From the thread I was led to believe that VLNC gets 50% of profits. That is a very "clumsy" arrangement. I execute quite a number of licensing agreement every year, and I always make sure I get a percentage of sales, not profits, the reason is very simple, profits are figment of an accountant imagination. Furthermore, Korean companies have no learned yet the principle of making money (profits) they go after market share at any price, Hamil might have very low profit contribution to make. It is best to see their first royalty payment before banking it.
While Hamil may have announced that they will be in production in the first quarter, I think that liquidity shortage in Korea could have had some negative impact on such a plan. Do we have any recent verification of where they are relative to plan (no offense intended to my Korean friends, but VLNC itself had some slippage in plans, so we should assume Mr. Murphy played a trick or two with Hamil as well).
If Hamil is indeed a source of positive cash flow in the first quarter, I think it is very important to find out, timing of the cash receipts are going to be critical, because the burn rate is at $25 MM/year and possibly, much higher (all these new people at NI), a real danger of running out of cash in the next six months exists, and if cash from Hamil can tidy over cash shortages, this greatly alleviates the fear I have that VLNC will have to go back to well.
Do we have any recent verifiable status from Hamil?
Last you assume profits margins of 33%, and frankly, I have not had the pleasure in all my lengthy career of reaching peak profitability of a line even within a year of start up. They should be quite happy to have yield of 50% to 60% for a quarter or two, slowly climbing to 80% or so after a year or two (ULBI assumes such a slow ramp up in yield in their plans). That is why I am asking for which year is that forecast?
Zeev
Zeev |
