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Technology Stocks : TAVA Technologies (TAVA-NASDAQ) -- Ignore unavailable to you. Want to Upgrade?

To: Gerald Underwood who wrote (12000)	2/27/1998 5:14:00 PM
From: Dr. J	Read Replies (2) \| Respond to of 31646

I'm dubious about your calculations. Let's take a different approach: Right now, TAVA is barely breakeven. Let's add 100 engineers (one of the numbers that has been talked about) and bill them out at $100/hour. Even assuming 100% billability (which is unusual, but perhaps ok in this Y2K environment), you get $20M additional revenue in a year. Assuming 50% GM (roughly what they told us on the CC), and assuming other costs are covered in the existing breakeven environment, I get incremental earnings of $10M or about 40c/share, 10c/quarter (of course, the engineers are getting added over a period of time, so this isn'tall going to happen at once.). I'm ignoring taxes. Added to this is some partner revenue, and some software licensing fees. The most licensing fees are going to come from the companies who don't use TAVA (because they will want the most seats). Let's assume 20000 CDs go out, and 1/10 use them for average of 50 unique tools each at $200 (??) per tool. That's $20M in s/w revenue. At say 30% OPM on s/w (could be higher on my previous assumption), we're looking at additional $6M in earnings or another 25c/share (say). I admit I'm just pulling numbers out of the hat (based on some experience in the s/w industry). I can stretch to $1/share on forward 12 months, but not much more than that.