Lets take a realistic look at a price target-
To do this you need to know a few things. Of course the BIGGEST being can they get something to market. I am not here to argue that one way or the other, so lets just say they do . . . .
-What is the total market???
Brad answered this in his Presidents letter by saying around 117 million this year and around 440 million by 2008. Lets say we get a third of the total market share (which is probably extremely high) that would be approximately 150 million in total revenue (by 2008).
-What is their margin???
I really have no idea, but I have been told by some of the major supporters of the stock that their NET margin will be 15%. This also seems a bit high for a net margin, but lets go with it. That would give NVEI 22.5 million in profit by 2008. (if they get a product done, if they get 1/3 of the worldwide market, and if they have a net profit of 15%).
-What is the TOTAL # of outstanding shares.
Well, since we are using 2008 for #'s, we will have to use 2008 for an outstanding share count. This means the current financing package will probably all have been converted. I would guess a reasonable estimation of an OS count by 2008 would be 225 million. (I picked this # because it is easy for my calculations and because I bet it will be fairly accurate).
This would give NVEI .10 a share in earnings, which at a 20 multiple would be $2 a share. I am not saying this is what I believe, I am simply saying that if everything goes perfectly, product out, huge market share, great execution, this is a reasonable #.....
60 to 90 a share is almost funny. Whoever wrote that really doesn't understand things too well. Listen, 1999 doesn't exist anymore, and what Lucent paid for something then is TOTALLY irrelevant. You can't sell a company for 10 Billion when the TOTAL MARKET for product that company sells is $440 million.
Just some thoughts - and I am not saying I believe this, so don't respond calling me a pumper, I am just posting what I think the BEST case scenerio could be IF everything NVEI says is 100% true. (Which hasn't always been the case).
