RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:First PO of the yearHey Tommy, it is my understanding that S7 makes about $5 per every VR head mounted display sold in the lower 50% gross profit range. (52-55%)
Raouf talks about making a higher gross margin on the Data Center chips (55-60%) which require a chip on each end of the cable as I understand.
Sam has said the company has talked about making $15-20 per connector sold in a past statement.
I don’t know by who or when the statement was made regarding gross profit per unit, but it makes sense to me when super high volume orders are placed that most business try to negotiate a better price on volume runs.
So it is my guess the gross profit per connector chip set sold will end up being closer to $10-12 range as economies of scale kick in at all levels including the chip manufacturer and their cable assembly partner as they can also reduce their production costs with volume!
Would I love to see the price at $15, heck yes!
Whats important for me here and I believe most have also have a pretty clear picture is this:
At current monthly operating costs close to $900,000 per month the company has a huge nut to meet every single month unless they made some major reductions to their staff size.
VR and with a looming deal with potentially Sony which will more than equal all the VR sales for 2019 will provide a nice incremental base of sales that will probably be heavily concentrated in second half of 2019.
Where the rubber meets the road will be the company’s ability to land sales for new build out with the likes of an Alibaba, other Asian majors to kick start the movement of some serious volume sales. ( we know they have processed and shipped at least a couple of orders with Foxconn and Amphenol in Q4 according to Raoufs statements. No one knows the sizes ordered, but if it was massive I don’t think the share price sits at .09 cents today’s)
If this is followed up by breaking into one or more of the major players we all recognize Amazon, Microsoft, Google, and of course their friends at Oculus/Facebook type Data Center owners then the company can reach critical mass production and likely have a great chance at blowing out some serious sales volume which is exactly what they need to really become successful!
Its really all riding on the 400GPS drive in 2019, their energy savings connectors and the fantastic partnerships they have formed to help them meet some major sales goals required and then to exceed their operational costs as a company.
Pretty sure there the wait to find out will be limited to a few months time! I am not here trying to promote the company, only trying to provide some crude estimates based on the limited information we have been provided. You better believe I am pulling for a successful outcome though as I have stacked some chips on this one!
All of the above is in my opinion only!