Replies to post #7146 on PowerLinx Inc (PWNX)

[dk76]

A quick and very conservative calculation reveals the potential return on this money. Let's assume they only invest $500K in SecureView manufacturing. If we use a fully burdened cost estimate of $100/unit, they would be funding 5000 units. If they were to sell these units for $300 each, the ROI would be $1M ($200 x 5000).

If component parts are available, the constraint becomes one of labor, which shouldn't be a problem. If the company reinvests the $1M received into a subsequent production run, they would realize 10,000 units this time ($1M x $100).

I think the key to this is that those who have been calling for "mass production" (whatever that means) may need to realize that the constraint isn't likely to be assembly capacity, but component availability. I continue to look for a somewhat slow beginning, but once they become solvent enough to order parts in substantial quantity, we should be able to expect a highly profitable product line and steeper growth curve.

The next question becomes one of margin. Most of us will probably agree that $499 retail is too high. I think Rich probably does too, but the $499 figure was set as a means to decrease demand when he figured out they couldn't be produced. IF the $100 burdened cost of goods sold is accurate (or higher than reality), even if the wholesale price was $200 and retailers were selling them for $250-300, we'd all do extremely well.

Of course if they don't sell or have quality problems, all bets are off, but if the company can regain solvency, they should be able to continue to improve the product as necessary and increase efficiency in production and operations.

So many people, particularly on RB, seem fixated on McBride's personal life or the company's history of poor PRs and questionable business practices. Those are unfortunate and very real distractions, but as far as I'm concerned, they're not the real issues. Rich is a very bright guy. He may be a victim of his own success, as he developed a product and a company which was successful beyond his abilities. I wish I had such problems.