I think that it is less productive to speculate about the reasons for current share price fluctuations than to look at the near-term prospects for the company.
If Jim Collier's repeated statements about achieving breakeven by the Jan-Mar, 2003 quarter are correct, then the sales level in that quarter will exceed $10 million.
Assuming a constant operating expense rate of $500,000 per month, it would require sales of at least $10 million and a gross margin of at least 15% to cover those expenses in one quarter.
We know that the sales in the quarter ending 3/31/02 were about $800,000 and that sales in the current quarter (ending 6/30/02) were about the same from Ran Furman's comments in the conference call.
We also know that sales were held down by the delay in the registration statement approval (which delayed the receipt of cash needed for inventory build-up to meet retailer orders.)
So what sales will the company achieve in the middle two quarters? (Ending 9/30/02 and 12/31/02.)
I'll guess $3 million and $6 million as more retailers are added, more audio products are added, DataPlay products begin generating revenues, telematics shipments begin and DivX products are introduced.
Add these estimated quarterly sales for the current year and you are at about $20 million.
How do you value a company that produces more than a ten-fold increse in sales in one year and is rapidly growing?
Let's assume a price/sales ratio of ten.
The total market value on an expected sales basis would be $200 million or $1.33/share. That is a fair value for the company right now.
By the quarter ended 3/31/03 the annual sales rate will be $40 million and the projected sales rate will be at least $60 million. (See tolstoy's comments on RB about Archos' sales.)
By these standards the share value would be $2.67 to $4.00 within twelve months, or six to ten times the current level.
I am very confident about our prospects and felt that management did a great job is sketching out the broad brush picture of the company's future.
Given Jim Collier's conservatism, I would be willing to bet that he left out some other developments or down-played our prospects in several areas. Remember that he gave few clues in his shareholder meeting speech about all of the developments which have already been announced this year.
JimC
AI
