The Ultimate “ALL IN”Boom or Bust.... (a little drama, for the record iI am buried up to my eyeballs in S7 and rooting for the Impending Boom)
So basically it looks like the company will be mortgaging the farm by putting their patent portfolio at risk by leveraging their Crown Jewels designed for these designed for the Hyperscale Kings Crowns!
Boom scenario:
1. They can secure enough funding to get them through the next 9 months until they can monetize the Data Center component. The VR / AR revenue for the first 6 months of 2019 if average sales are equivalent to $400k per month @ 50% GP or about $1.2 million in gross profits off of sales of $2.4 million. (This might cover 20% of their monthly cash burn)
2. Hyperscale Data Centers (100,000 severs) use approximately 2 cables that could contain S7 ACC chips per server. So 200,000 chip sets( per center X2 Centers) at $10 a connector would generate $4 million in revenue or $5 million if you use $15 per connector. I am hopeful there are more than 2 interconnect opportunities per server, but I just don’t know! This guesstimate seems really light, but should be a very safe and I hope I am way under on this. If anyone has a better read on the actual potential interconnects S7 could supply the Chinese operator later this year, please provide the info!
The company really needs to provide 5 million of these interconnect chips annually to gross about $25 million or about 25 Data Centers at the $10 or $30 million using $15 per interconnect.That a little more than half of the 40 or so new Centers projected to be constructed annually.
If they booked 2 of these Centers in 2019, that’s an additional $4-5 million in revenue at probably 58% GP.
3. The Console manufacturer! Did anyone else notice or question why there wasn’t a bullet point related to this major piece of news. Ya, I know about the NDA But Raouf openly spoke about their deal with a top company who makes the console VR games. So did (Sony or whomever) institute a gag order as they may be nearing the VR2 refreshed version release?
If all goes well here, as there were sales figures that indicated Sony sells about 1 million units over a 12 month period at $5 per unit for S7 = about $5 million. If it is Sony, we should see revenue begin in Q2 and ramp up in Q3 for pre Christmas distribution.
The other 2 majors Rft and Vive combined should yield a similar sales figure for 12 month period of about $5 million.
4. Type C interconnects supporting AR Glasses tethered to smart phones ( Android Only) at the moment .
Nreal slated to market these later 2019. Revenue from this sector, if they sold 100,000 units prior to years end at $5 would add $500,000 to the kitty.
The early BLOOM or BOOM of 2019:
$. 5 Million Data center revenue
$10 Million AR / VR / Console revenue (*Console revenue could be less if the mfg is delayed and places orders later in the cycle)
$ 1 Million AR/ tethered smart phone glasses and misc other revenue
$ 16 million combined if all projections come in on these targets and are shipped before year end 2019 + 45 Design Wins that could be leading to the potential Boom!
This would reduce the annual operating loss to about ($4 million for 2019) and could possibly set up a real Boom year in yes, 2020! The real big UNknown for me is the number of cables available for S7 to use their ACC interconnects.If the number is higher than 200,000 per center, then we could see a mini boom in late 2019 and potentially leading into a major Boom in 2019 with the signing on of more DC operators and perhaps an Apple AR tethered Glasses in 2020....
Yes Nor Cal Tommy, another year out probably! Sorry!
The DOOM or GLOOM:
Obviously when you are ALL IN on the poker table, you either take down the pot or get up and go home. No middle ground!
A couple of things To consider :
I don’t like this record back log stuff! Great, but when being compared to such miserable past sales numbers it makes me think of much larger numbers that are really still pretty small.
For example, the first 2 Data Center orders going to “mass production” was probably only about 20 to 25,000 units.
It probably is mass production since all their volume previously was strictly testing sample size orders!
They didn’t separate the sales from VR to DC so we have a better idea on the numbers.
The game console deal needs to happen!
For me, it’s about a couple of things as the technology is clearly in place!
Secure the funding, keep pursung a position to sell millions of DC interconnects in 2020, close the console deal and maintain control and some growth in the VR/AR space combined with the emerging tethered smart phone AR Glasses segment!
If the company can survive and execute at a strong level, well who knows but this miserable waiting game will be free balky coming into focus for at least 1 person here....
Kind of lengthy, but all of the above is my humble opinion, guesses, thought, angst and whatever pent up emotion this game forces you to endure!!!
If this was easy, everyone would be doing it!!!
Good Luck you guys and Ms Brandt