Not a bad guess VLAD, except off a little on Cost of Goods.
Here is my overly optimistic estimate based on ideal everything:
domestic ~ $3M
international ~ $12M
total revenue ~ $15M
Cost of Sales ~ $8.0M
R$D ~ $2.0M
SGA ~ $2.0M
total costs ~ $12M
Net income ~ +.09
International sales: I think they are stronger than realized (probably lighter than whats in my calculation, but I want to get my point across). The myopic view that Viagra dominates everywhere is ill conceived. We know that Muse is #1 in Canada, Sweden sales have only dropped 20%,and England sales have rebounded. It is apparent that England and Canada want no part of Viagra. Maybe out of fear of the viagra "body count" or maybe out of fear of bankrupting the system. Most probably a combination of both.
Cost of Sales: A common misconception here is that producing half the product results in half the cost. Not true due to fixed costs.
Thus, the cost of goods you calculate most likely reflects the cost of producing nothing. That is why it is important to have factory running at capacity, marginal unit cost decreases greatly.
R&D: Your guess is as good as mine here. But considering the climate and Vivus is positioning for survival, I am sure Vivus hacked and slashed all they could.
SG&A: I would go as low as $2 Mill here. This is the one cost Vivus can control directly. We know they have restructured, and if done correctly, 50% reduction is not uncommon. I have been through downsizings and restructurings. They are ugly...but the impact on bottom line is incredible.
One important note: while the Street applauds positive earnings that meet expectations, it is important to look at this from an analyst's point of view. Earnings are increasing, but revenues are decreasing. From here on out, there is no more cost cutting. Leland must now either increase revenues in Q2, or prove to the street that he has a plan for doing such. US marketing partner ought to do the trick. But again, patients is essential here. If deal goes sour, or is just plain sub-par, it could have extremely adverse consequences. I would feel most comfortable with Astra due to past track record. Again, I cannot stress the importance for all of us shareholders to wait patiently. |
