Tuesday, January 6, 2009

Revised 2009 Estimates

I talked with Barry Hutton today and got some clarification on the bookings for 2008 with regards to the PAS infra. Book to bill for PAS infra was around 0.2 for 2008. PAS handsets were around 1.0. This shows the rapid decline in PAS infra orders but does highlight the bookings in other areas finally replacing PAS in a material way.

Previously, I had estimated around $711m in core bookings (without CDMA handsets) based on the previous 4 quarters in bookings and PCD information provided by the company. If we assume that PAS infra had sales of around $180m in 2008, bookings would be around $36m. Subtracting this from $711m would result in $675m in bookings that I will use to estimate 2009 revenues. I will use a 25% reduction in PAS infra revenue to be recognized in 2009 but this has to be added to the $675m. So, $675m+0.75*$180m = $810m. CDMA hanset sales of $35m/quarter could continue until mid June and I will assume will be replaced with China CDMA sales. That will add $140m in revenues resulting in around $950m. I will use 27% GMs for the non-CDMA handset/non infra PAS GMs, 45% for PAS infra, 5 and 10% GMs for the CDMA handset sales outside/inside China. Gross profit estimates are now $675m*.27 + $135m*.45 + $70m*.05 + $70m*.1 = $254m in gross profits.

I had previously estimated $295m in opex for 2009 so the operating loss could be around $40m for the year, much less than my previous worse case scenarios. There are a lot of variables above so take the estimate with a grain of salt and you can do your own model with different GMs, different revenues for handsets, factor in some revenue may be multi-year, etc.

What the above shows is the company NOT being profitable in 2009. While "everyone" already assumes this, it shows the miscalculations that even "new" management has to face up to now. On the positive side, cash burn will probably be limited and give the company additional time to build up bookings in non-PAS areas.

Here's to waiting another year for sustainable profitability. BTW, thanks to Tigre/Shadow (I just caught up reading their gazillion postings) for discussing the technical issues and potential markets for UT. Talking to another investor the last couple of days, there is no question its been frustrating seeing the losses year after year (not to mention the stock price) but with a negative enterprise value, growing core businesses, little market cap, there still seems a lot of potential for this old dog.....Transport network product, Russia, iptv, China handset market, worldwide iptv growth, etc etc.......Have a good evening.

1 comment:

Anonymous said...

pumping this dead`n dirty co. is like having sex with a dead woman - simply disgusting (but you seem to enjoy it)!