hnstabe, I appreciate your taking the time to look at the numbers in detail.
I’m trying to do two things:
1. Keep the facts straight concerning past numbers.
2. Make conservative/reasonable projections based on the facts – while trying to keep my desires from interfering with my projections.
UPGRADES
You say, “You project upgrades at 6k and 9k for 4Q and 1Q. If I remember corrrectly, SKS said that upgrades for October almost equalled all of 3Q. That would be about 10,000 for October alone. And he strongly hinted that the pipeline was pretty full of new business.”
I know you want to believe there were 10,000 upgrades in Q3. But 10,000 upgrades would have been 2.5 times as many as the previous quarter, and if they had sold that many, Steven Sprague would have been shouting from the rooftops. From under 2,000 in Q1, to about 3,800 in Q2, to 10,000 in Q3 would have showed real, sustained improvement. I believe that a careful listening to the cc will still show that he said 3,000 – 4,000 upgrades were sold in Q3, which is essentially flat with Q2. No wonder he didn’t want to talk about it.
So, yes, he did say October almost equaled all of Q3, but that makes 3,500 a reasonable estimate for October. If that pace continued for November and December, we would reach 10,000 in Q4, which would be a strong, promising number. I hope that my estimate of 6,000 is low, but as I said in post #173976, “I chose 6,000 for Q4 upgrades in spite of the strong October for two reasons. One, the possibility of softness in spending in November and December, and two, the fact that Q2 also started as strong (relative to Q1) but ended up less than twice Q1’s number.”
As for Steven saying the pipeline is full of new business, I don’t know specifically what you are referring to, but it is true that he said a number of positive things in his opening remarks:
-- average customer order size is going up
-- the number of new customers is going up
-- business is closing in both the U.S. and Europe
-- “we’re seeing continued connection with the enterprise's focus on moving towards hardware”
-- “we're seeing many more customers who are deploying the encrypted drives also deploying some of the features and capabilities of the Trusted Platform Module”
These last two statements are particularly heartening. The next to last one isn’t very clear, but he may be saying that businesses are responding to the Intel push of moving functionality into hardware. If so – if enterprises really are starting to get it – that would give a real boost to hardware-based security over time.
And his last statement implies that the TPM is getting noticed. If one of the large potential customers orders ERAS for their TPMs, then we could see a bump up in orders in any quarter, including Q4. But without a large order, all of his statements would be consistent with an increase of 70% quarter-over-quarter (3,500 to 6,000). I think anything between 6,000 and, say, 12,000 would be a reasonable guess for Q4, assuming no large order for managing TPMs already in place.
FDE DRIVE SALES
You say, “Your 12k and 16k of FDE sales is only 0.05% of the Dell Es sold in both 4Q and 1Q. Do you think Seagate will drop the FDE product line soon? I don't and I look for FDE to spurt to 5% of so by 1Q.”
I think that the slow adoption of FDE drives is totally incomprehensible, so it’s hard to project into the future. Maybe the introduction of the E Series will somehow spur adoption of the drives, maybe the 7200 RPM will make a difference, but I don’t see how those things would be material to the decision of whether or not to start buying FDE drives for your business. Also, we were told last spring that NSA qualification was important for potential buyers, but that has had no effect that I’m aware of.
Or maybe those thousands of companies who are supposedly doing trials will suddenly start to order. I can’t figure out why they haven’t ordered yet, as there were a thousand companies way back in Q1. Where are their orders? I really don’t get it.
So until I see some actual evidence that volume is increasing substantially, I’m projecting very slowly-growing volume, which is what we’ve seen so far.
Possible monthly figures based on Steven’s statements:
Q1 6,000 (SKS: “under 10,000”)
Q2 9,000
- - - - -
Q1 + Q2 15,000 (SKS: “under 20,000” to date, as amended in Q3 cc)
Q3 11,000 (SKS: 3,000 – 4,000 times 3)
- - - - -
26,000
6,000 to 9,000 to 11,000. So based on this detail, I think my Q4 estimate should have been a little higher than 12,000, maybe something like 15,000 to 20,000.
What do you think would be driving a spurt to 5% of the E Series by Q1?
PP
You say, “Perhaps the private placement dated 12/26 was needed regardless of the CFBE in 4Q because Wave still owes $6 million in Accounts Payable and one or more of those creditors just might take some damaging action if significant payment(s) are not forthcoming soon. Wave needs all the cash they can get.”
I believe it would be lunacy for Wave to be selling shares at $.28 if they were at break-even in Q4. On the other hand, it’s also hard to understand why they would sell at $.28 right after the Dell announcement, which made Wave a much better investment overnight, and may have caused the recent run-up. Maybe Wave needed the money quickly because their vendors, while not yet requiring payment on past sales, were just not willing to provide any more credit.
OVERALL
So as I said above, overall I’m just trying to keep the facts straight and make some reasonable projections based on those facts.
