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Technology Stocks : LUMM - Lumenon Innovative Lightwave Technology Inc. -- Ignore unavailable to you. Want to Upgrade?

To: pat mudge who wrote (1654)	3/25/2000 11:05:00 AM
From: UR_In&Out	Respond to of 2484

This exercise makes me appreciate the hurdles that securities analysts face when trying to forecast revenue growth and profits! Pat, according to published newspaper reports, the cost per chip is reported to be between $50 and $100. However, each chip needs to be packaged. Estimates of the cost of packaging are tough to come by, but some claim $1,000 a chip. I believe that Lumenon will have significantly lowered this cost by the time they achieve 1,000 chips a day. The Groome Capital report was estimating that COGS sold would be $36 million on sales of $351 million, or about 10%. I thought that figure was too low, so I used the $500 figure for COGS ($100 + $400 for packaging). I know this is just guessing, but we have to start somewhere! If anything, I believe that the average channel count that I've use (8) is way too low, and that revenues could be significantly higher. I am willing to look out to FY 2002 because it is not that far away, and it is much easier to make an estimate of earnings as though Molex were not involved at all (Yes, they still might be, but at least they would be paying fair-market prices by then). Now, if you want to do some earlier projections: Groome Capital says that they estimated an all-in COGS of $30 per channel for Lumenon and that Lumenon would receive approximately $43 per channel from Molex. That doesn't sit well with the $100 figure per chip that has been reported recently in the press. Perhaps the cost has come down since Groome did their report (November, 1999)? As for price erosion: I have seen projections of price declines varying from 12% a year to 20% a year. Given the current price of around $450 per channel, I believe my price of $300 per channel takes into account a significant price decline between now and 2002. Thanks for offering to do the near-term projections. That will be a bear since there are even more variables to consider.