One thing I was surprised about the CC was that nobody even bothered to ask for a guidance.
And then, it hit me that none of the analysts/firms needed a guidance - they already have that for up to 2013. It was simple:
Amazon's fee for 2012 was prepaid, and capped at $3.8 mln, which contributed 55% of the total revenues for Q2 and Q3, with $1.543 mln left to book for the rest of year.
So, you see why no big trader/investor is chasing the stock?
The 55% is $3.8 mln for the year, and more than half already booked in the first half. So, the rest of the year will be hit hard on the revenue recognition.
And the R&D expenses already hit $1.5 mln in Q2. They're going to burn through most of the cash in 2012.
Accordingly, if Amazon was accumulating eReader inventory by prepaying the licensing fee, either in Q3 or Q4, we'll see a sudden drop of $1.5 mln in revenue, b/c Amazon won't be paying no more for 2012.
And you'll see the stock gets cut in half instantly!
"As of March 31, 2012 and December 31, 2011, we have $1.5 million and $1.5 million, respectively, of deferred license fee revenue related to a prepayment for future license fees from one customer."
That's Amazon, it always pre-paid the licensing fees.
At the end of Q1, there was $3 mln delayed revenue for 2012. That's part of the A/R
At the end of Q2, there's only $1.5 mln delayed revenue. So, they recognized $1.5 mln in Q2.
That means, the licensing revenue in Q2 was less than $500,000.
Not a meaningful number.
"Our net revenues for the six months ended June 30, 2012 was earned from sixteen customers. Customers who accounted for 10% or more of our net revenues during the six months ended June 30, 2012 are as follows:
● Amazon - 53%
● Sony Corporation – 13%"
"Our accounts receivable as of December 31, 2011 was due from five customers, two of which accounted for 87% of our accounts receivable as of December 31, 2011."
If you understand the relationship between the A/R and the six month revenue, you'll see what I meant.
The eReader market in the US was already saturated. Products orders were done six months in advance to factories in China.
The only real unknown was/is the engineering fees, which was always a variable.