So, it sounds like you are saying the $35 figure is meter and nodes. Let me ask you another question. Ron Sege mentioned that the company is dividing sales into 3 categories; NES Systems, subsystems, and components. If the subsystems are $5-$15 each, what are we selling as components that would cost less than $5?
First of all, I want to thank you for making me go do some DD of my own. I have been so disgusted with this company lately, I guess I have just tuned out everything. After spending some time researching the Brazilian market, here is what I have come up with. From everything that I read, the Brazilian government wants approximately 65 million smart meters installed by 2020. Also, from all that I have read, ELO has 40% of the brazilian meter market. If you divide the 65 million meters by 9 years ( I am including 2012), you get roughly 7 million meters a year. 40% of the 7 million is roughly 3 million meters a year for ELO/Echelon. It appears that ELO is using our PLC software, firmware in the meter, and control nodes. Since the software upgrade most likely represents the $15 revenue per meter, we do have to include the cost of the firmware and nodes. I can't find anything that talks about the price for the nodes or the firmware, so it isn't out of the question that the package could amount to $35 per meter. If we use a conservative $25 per meter, that would be 75 million in annual revenue over the next 9 years. At 60% margin, that would be 45 million in gross profit. We were pretty much at break even without any ELO revenue, and with the additional streetlight business, we could show a bottom line profit of about .75 a share if nothing new comes along. So, my conclusion is that Dolphin is actually wrong in his calculations, and while a complete rollout of Brazil over the next 9 years won't shoot us to the moon, it should take us over $10 after we are at least 6-9 months into the rollout. Wall Street will need to see that it is going smoothly with no glitches. Now, here is the big IF. all of this can only happen IF ELO actually sells the metering system to their utility customers. Based on what I have read, there doesn't seem to be any reason why it won't start happening soon, but until it actually starts, we will languish down here. Frankly, I was a little disappointed that Piper said they would start generating revenue NEXT YEAR. If everything is in place, why would it take another 10 months or more to start selling?