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Technology Stocks : e.Digital Corporation(EDIG) - Embedded Digital Technology -- Ignore unavailable to you. Want to Upgrade?

To: mark cox who wrote (16169)	11/22/2000 9:50:40 PM
From: mark cox	Read Replies (1) \| Respond to of 18366

I am a bit off in the last post. I just re-read Todd's notes. Particularly this one question: Q: Does "multiple" in "multpile OEM's" mean more than 2? A: Yes it does So of course that means 3 or more. I only figured for 2. So I would have to probably add another $6 to $10 million in revenues to my previous estimates. That would make for $30 to $37 million from the opening orders from just 3 companies for just one product. " Ding dang it," said JT, " those estimates are throwing my paultry revenue estimates out the window." " I hope I'm not looking stupid yet again, " he said with embarrassement. Mark

To: mark cox who wrote (16169)	11/22/2000 10:12:50 PM
From: JimC1997	Read Replies (3) \| Respond to of 18366

Mark, Following FY 2000 of about $2 million in revenues jumping up to over $20 million would give e.Digital a quadruple digit revenue growth rate. Perhaps the local knucklehead can give an estimate for PSRs of companies that are growing by quadruple digits. Jon Tara (aka local knucklehead) doesn't have time to answer this because he is polishing up his resume and preparing a polite letter to me, asking me to send it on to Bozo for him. However, I can offer a guess on an appropriate price-to-sales ratio for a company with an extremely high growth rate. I conducted an analysis recently on the price-to-sales ratios of public companies. The results surprised me. I examined all companies with a market capitalization of more than $1 billion. There are 1,608 such companies. Of these, 27, or 1.7%, had price-to-sales ratios in excess of 200. Of these, 17 - nearly two-thirds - had revenues of less than $25 million. 58 of the companies, or 3.6%, had price-to-sales ratios in excess of 100. Of these, 23 - about 40% - had revenues of less than $25 million. 116 of the companies, or 7.2%, had price-to-sales ratios in excess of 50. Of these, 32 - about 28% - had revenues of less than $25 million. Consequently, I suggest that a price-to-sales ratio of 50 or more is quite likely for e.Digital, provided that it achieves the growth that we all project for it. Applying that PSR to the numbers we get from Todd's conversation with Robert Putnam yields a potential share price. Since we are all taking guesses, I will assume that e.Digital receives contracts from two large PC manufacturers averaging 1.0 million units each and one from another consumer electronics firm (e.g. Samsung) for 0.5 million units. Using the $17 mid-point of the Putnam licensing income range ($14 to $20) this gives a revenue from the juke box on these initial orders of $42.5 million. Add $2.5 million for cQuence deliveries to Lanier and $5 million from sales of all other products (MP2000, etc.) and the total revenue would be $50 million next year. This could support a market capitalization of $2.5 billion. That would translate into a market price of $19.70 on the current outstanding shares. Not bad for a stock currently being given away for less than $3 by foolish sellers! Let me further add that the $50 million revenue used above implies nothing for future, much larger revenues from DataPlay devices and the extension of e.Digital into a vast number of new products after its MicroOS is embedded in DSPs and SOCs. (The company has advised us that this is currently being negotiated.) And judging from the excitement level from Fred during his discussion of DataPlay you can be sure that he regards this technology and VTT/TTV applications as being the real future of the company. So what is the limit to near-term revenue opportunities? Certainly none that I can foresee. And consequently the share price potential is far higher, given the realization of these revenue streams, than what I have estimated above. JimC