Marc and Wesley,
Jack Kay said in the conference call that he prefers that INTC
does NOT ship beyond the minimum number of motherboards.
Any number up to that they get a fixed revenue starting this quarter.
In fact, INTC doesn't want to ship as many motherboards as they
can sell either. For both INTC and PTEC, this is a way to stimulate
demand for higher revenues and profits from other business. Once
INTC builds the state-of-the-art system (motherboard in this case), then
everyone else copies it or modifies it slightly to differentiate their
product. Of course, they will have a strong interest in using INTC
processors and PTEC BIOS products in building those motherboards
and will pay top dollar!
I've heard that INTC has targeted only 10 million motherboards this
year. That would be only 25% of PTEC's projected 50% market
share (40 million PCs). PTEC shipped on about 17 million PCs last year,
so that leaves an additional 13 million PCs above 1996 that are
not part of the INTC motherboard deal (or almost DOUBLE last
year's unit sales). PTEC should be able to get full price for these
additional units.
Again, the average revenue per unit should go UP not DOWN for
the 75% that are not on INTC motherboards (USB, diagnostic/
automated repair, increase in portable vs. desktop business, etc.).
Even if you forget the INTC revenues, PTEC should have AT LEAST $4.60 times 30 million units or
$138 million in 1997!!! (that number is FAR below analyst estimates).
Forget about PICO which is a whole other business in itself. If you
compare the PICO group to GWRX, PICO ALONE would have a stock
price of over $25 a share!! PICO is only 14% of PTECs business currently.
PTEC is obviously extremely undervalued!! PTEC should have a market
value of at least $50, based on projected growth and comparables. |
