Value Microcaps Free-For-All

[jtomm]

DANS - I think you're confusing who gets the money. The $15 million mentioned was royalty revenue TO ICONIX, not to Danskin.

Here's the exact wording,

"The purchase price for Danskin was $70m, with a contingent payment for an additional $15m, based on the brand achieving certain performance thresholds."

"We are forecasting that Danskin will generate approx. $15m in royalty revenue to Iconix in its first 12 months."

Here's the link and you can start listening at about 13:35.

http://web.servicebureau.net/conf/meta?i=1112856323&c=2343&m=was&u=/w_ccbn.xsl&date_...

(Now back to me talking again)

Iconix is paying a max of $85m (one-time payment) for the intellectual property that will generate $15m a year for them, with almost no additional expenses for Iconix. That's basically a p/e of under 6 that they paid for an asset. A good deal for them. The royalty business is a good business. (See CHKE)

But the contract manufacturing business is generally not a great business. Seems like Danskin is basically a contract manufacturer now. The website, the wholesale business, etc., sound like very small items left. And revenues do not equal profits.

The royalty biz has great margins. That's the business Iconix is in. The contract manufacturing biz generally has pretty terrible margins. That, for the most part, is the biz DANS is left with as far as I can see.

DANS could go broke and Iconix could simply go to another contract manufacturer, because Iconix now owns the brand