Now , lets try for MY estimates of what the 1999 EPS might be. Remember these are MY guesses.
I am going to make assumptions of the monitary burn rates and revenue earnings reduced to EPS standings as best as I can based on the approximate figures as I understand they might be conservatively.
First the burn rate might still be, from todays levels of revenue, a negative $350,000. Increase that for the last 6 months to $500,000 due to the increase needed to fund the addition of personnel and getting the necessary equipment( the major stuff should be financed for a 3-5 yr period) for the SV office. To be conservative place the needed earnings to compensate the burn rate at $5,000,000. That should more than cover the bill. Remember TSIG already has the infrastructure in place to handle the increase anticipated from the addition of all the signed and to be assigned business except the expenses admimistratively to produce product.
The site revenue is increasing now so the earnings from that is also increasing. The increasing earnings from the outside site attraction should more than compensate for the increased needs of the burn rate. The Signature deal has earnings of about $4,000,000 expected this year. Together they should about or better than cover the expenses of TSIG. Throw them out and the Babe Ruth, Lifetime Learning, NMF, Lightning, Ice Palace, and TEMPO might be calculated as full EPS impact.
Since the CD product sales have been explained to earn $1+ profit to the company, I will assume a straight $1/CD profit. That is a straight impact to the bottom line. Remember this!
I am going to further cut the MusicCard revenue due to the impact of administrative costs (production, commissions, NMF) by $1.75/card.
Now the potential EPS impact of what is on the table. I will forgo the deal explanations as they are covered in my prior post.
1. Taking out site attraction and leaving NMF, Lightning, Ice Palace, TEMPO, insignificant deals.
600,000 Cards @ $3.00 = $1,800,000
5 CDs/card in 1999 = $3,000,000
2. Babe Ruth
I will further reduce the impact of the anticipated sales
700,000 Cards @ $3.50 = $ 2,450,000
4 CDs/Card in 1999 = $ 2,800,000
3. Lifetime Learning
Again I will cut the Card sales in half.
12,500,000 Cards @ $2.50 (assume marketer gets $1)
50% in 1999--6,250,000 Cards @ $2.50 = $15,562,500
2 CDs/Card in 1999 = $12,500,000
Now let's see the total
$ 1,800,000
$ 3,000,000
$ 2,450,000
$ 2,800,000
$15,562,500
$12,500,000
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$38,175,500 possible impact to the EPS
Assume the shares remain the same and the retirement happens as I suspect. There could be approx 80,000,000 shares at the end of the year. I get an estimate of .45 EPS and using the 20x for the PE the value looks to be about $9/share forward value for the shares of TSIG.
This has no allowance for the impact of additional earnings to be accrued from additional sponsorships and alliances and assumes the in place contracts perform according to MY schedule.
Make your own judgements.
Bob
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