firefight4: A true pessimist at heart: " I don't know the answer but I assume the worst and then hope we get something better."
Paranoia leads to insanity and insanity is only extreme irrationalism.
It is just plain irrational to think that if their business is to be the slightest bit successful through the help of their CC partnership and with 16M in cash currently to play with, they won't be able the let it stretch long enough until they break-even.
How are they going to break even? Subscribers. Taking the estimates that dspetry provided (Thanx!) and upping them some, I conservatively come out with the following as my guesstimation for GZFX's next year (2006):
Total operating expenses: $650K/month*3 months = $1.95M/quarter or $7.8M/year (almost doubling the operating expense guestimate for this year to take in account a possible HUGE advertising push:)
$650Kmonth/$12.99AvgSubRateMo = 50,038 subscribers/month
$1.95Mquarter/$38.97AvgSubRateQt = 50,038 subscribers/quarter
$7.8Myear/$155.88AvgSubRateYr = 50,038 subscribers/year
50,038subs/600stores = 84 subs/store (rounding up)
That's HIGHLY achievable and that's only figuring in Circuit City's IN-STORE pull. Crap, they could reach easily 1/4 of that just from the CC employees themselves! Add in continued weekly/monthly nationwide newspaper coverage (through CC), possible internet advertising (on their own as well as through CC), possible TV/Radio spots, push through CC employee word of mouth to friends/family, push through shareholders word of mouth to freinds/family, current subs word of mouth to friends/family...
Are you starting to get the picture?
Don't forget, I'm using an INCREASE of almost DOUBLE this year's expected total expenses for GZFX and about 28% LESS the average monthly subscription revenue per paying subscriber than that of NFLX! Do you even know how many subscribers NFLX has? They have about 3M.
Hmmm, another way to look at it is...let's see 50Ksubs(GZFX)/3Msubs(NFLX) = 1.67% the amount of subscribers that NFLX has.
This is VERY doable. Heck, I could see a break-even by the summertime if my numbers are too conservative (which I think they are;). Sure, their's always "churn" but that will be substantially lowered through continued timely delivery of and turnaround of games/DVD's and an ever increasing selection availability percentage. I, for one, do believe that it is Chip and JF's full intention to realize these goals because they didn't start this up to shoot it down and they know those two goals are KEY to their success.
Pessimism leads to self-defeatism. Folks like you say, "I've been burned once because I was stupid, but, no...wait, it wasn't me who was stupid, it somebody elses fault...I just know it! So, never again! I'll just stuff my money into a 401K jail-house and let the professionals guide me to the halfway house." Even worse, many like yourself try to get others to see the world as "half-empty" just like them.
Well, they do say "misery loves company".
Why are you here? Lonely?
Don't you think folks already know the risks at hand and are adult enough to make their own decisions regarding their investing dollars? Obviously you feel the need to assume they don't and can't and they need you to guide them.
We don't need your negativity around here. Afterall, it's your core base of a dismall outlook on life that leads you to think like you do so who needs it?
Certainly, not I.
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