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Technology Stocks : Data Race (NASDAQ: RACE) NEWS! 2 voice/data/fax: ONE LINE! -- Ignore unavailable to you. Want to Upgrade?

To: Ignacio Mosqueira who wrote (25865)	11/21/1997 12:54:00 AM
From: drakes353	Read Replies (4) \| Respond to of 33268

Ignacio: First of all let me say that I'm so proud of you. You've actually attempted to put some kind of estimate together. That's great. I've asked our resident finance man for numbers off and on for months and have gotten nada. (As a quick aside did you know that at one point when I asked Willie for some earnings estimates he told me he didn't have to do them because some fine analyst at SCCC had put an estimate of $1.45 for fiscal '98? At the time I actually thought he was serious. That Willie, he is one funny, funny guy.) OK, you do appear to be a little bit confused. I've been talking about sales numbers for the last little while. PSR=price to sales ratio. And here you went and estimated earnings, EARNINGS. If that takes a man with vision then I guess you're the right man for the job. But all kidding aside you do need a course in remedial reading. Comments like that only.....oh, nevermind. Don't want to diminish the impact of your words. Please continue with the lesson.... I told you that the initial selling will come from DG hence a step function after Inacom begins selling is an apt description. YOur number games are just as much fun. We already established earlier today that once the product began selling sales would go up. BTW, I spoke with Yogi at his home today, he concurs with this assessment. It was a quick call though since he was running out to dinner. When I asked him if he still went to one of our old hang-outs he told me: "Nah, no one goes there anymore. It's too crowded." ;-) Ok then here is a math primer of the situation as it will unfold. Oh, boy. This is classic, classic stuff. In 11.99534 months DR will make 45.33 million net and this is how it will happen. First quarter most sales will come from DG with inacom contributing a small amount. Net will not be so good because the margin will be below the intended model. Some sales may even need discounts with respect to what DR finds desirable at this time. Thus 0.6 million net is what DR will make (that is to three significant figures). After that server outsourcing will bring the model back in line and inacom will pretty much takeover. Tell you what. I'll give you 'til the end of calender Q1 '98 to hit that number. Earnings of $600k which works out to around 9 cents a share (600/6.5=.09). Gotcha. No idea what your guess is for sales but that's OK. Get back to me on your sales numbers. Second quarter we are talking 5.11 million net with much improved margin but still slightly below desirable levels (i.e. 45%). OK, earnings up what? 900% Sequentially, no less, it happens all the time. $5.11 mil/6.5 = per share earnings of .79 Keep in mind that the 50% margin number that's been discussed for so long has been the gross margin number. RACE has never said they would have net margins of 45-50% Details, details, what the hey, you're on a roll. After that it gets easier since it will be a classical model of exponential growth with a steep ramp due to the concurrent growth in distribution channels. I arn't no meth majur but you've straight lined your growth numbers going forward at a 3x sequential growth rate. Wouldn't the slope of the growth rate line steepen under an exponential scenario? That is 15.33 for the third quarter and 45.99 for the final one. Gotcha. $2.36 in earnings for Q3 and $7.09 for Q4. Let's summarize: Ignacio's Earnings Estimates for RACE (Calender '98) Q1 $0 .09 Q2 $0 .79 Q3 $2.36 Q4 $7.09 Ummm, my calculator is smokin' but that works out to earnings per share of $10.33, jeez put a 50 PE on the stock and it would be at $516 a share. As they say in the Clubhouse: AHAHAHAHAHAHAHAHA. I hope that answers all your questions. If you have any more please let me know. No, really, what are your estimates? Consider trying to come up with estimates of sales first and working from there making some assumptions about SG&A growth, cost of capital, margins, tax rates, etc. drakes353