Common,
My point on the comment you quoted was that, as you agree, gross margin is what matters, not top line revenue. $160M of 30% GM is equiavlent to $140M at a 34% margin. That's why I view the $160M "goal" as meaningless.
"""In the case of OVRL, their last report was 3Q 2014. Their gross margin for that quarter was 32.5%."""
That is inaccurate. It was 27.8% ($6,362 / $22,896)
In that quarter the $6.4M in gross profit didn't even cover sales and marketing and R&D costs ($7.5M combined), and that is before G&A of another $5.8M and interest payments on the debt.
I don't disagree that it's conceivable that the company could be break even at those levels. That wasn't even the question. The question was how would I value it. Given there is no positive cash flow or earnings a Price/Sales aprroach is not unreasonable.
Quantum is a far superior business to OVRL (in same business but with greater scale, has invested in R&D, and has 46% gross margins, is profitable, and trades between 0.7x and 0.9x revenue. I used 0.7x which gives OVRL a lot of credit it hasn't earned. I also think the business that is shrinking the fastest (tape drives and media) is also the highest margin, but we wouldn't know as they don't break it out.
V3's assets were bought for $10M. Nobody was willing to pay more.
"""The real question becomes what kind of revenue will GlassWare produce."""
I agree completely.
"""The funny thing is that even with your tainted toward the negative analysis, you still come up with a $3 per share value for Sphere."""
No. That analysis ASSUMED things that I do not believe are likely to happen. I.e. that was an upside analysis IMHO.
"""On the other hand if the longs are right...."""
Sure. But I have seen no analysis or any detailed arguments other than "connecting the dots", parsing Peter Bookman tweets, wild unfounded speculation about Microsoft's cloud strategy, and so on. I see no detailed information from the company on Glassware other than some puff and some hand drawn sketches about how the technology is, or will, work.
All IMHO. That's what makes a market.
What I don't understand is the utter fear that some people (not you it seems) have in a frank discussion about their beloved "Spiffy".
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