Of course, if the revenue was $25 mil, but you're stating when SNA gets a contract for $25 mil, the yearly revenue in a simplified form would only be $5 mil.
I don't believe that I said that AMS does the installs, I'm fully aware they don't. What I said was that it takes 6-18 months before all the units of a contract are installed because the installs are only performed when a plane is taken out of service for it's C Check.
I know all of you have done your DD, so I'm sure you know what a C check is but I'll provide the link just incase.
http://en.wikipedia.org/wiki/Aircraft_maintenance_checks
Let's say PIA signs up all 39 of their planes. REVENUES are made up of two parts, the unit and recurring. Pia isn't going to pay for all 39 units up front, Maybe they'll take 13 first which will be installed over the first 6 months, no need to really ramp up production for a few units BL, it's all piece work and always will be so relax with that.
I'm using $75,000 a unit and $1500 for recurring, pleasse correct me if I'm wrong.
So they send a cheque for $975,000, sna needs to pay for these units, let's be generous and say they have a 50% mark up. Great, now they have $487,500 in the bank, from what I remeber that should be enoungh of 2-3 months of expenses, oops, still short a few months till the next order. No worries they can always raise what they need.
Does everybody know that even when a unit is installed, it can take a couple of months before it starts to produce revenues? For our purpose here I'll assume that they're plug and play.
The first 13 units are installed and producing $19500 per month and the next 13 units get ordered, they're still short a few months of cash, time to raise some more. Now 26 are running with $39,000 per month. The next 13 get ordered, still short cash, raise more cash, all 39 are running with $58,500 a month but oops no more installs because India still hasn't come through and China is still five years away from producing planes.
At the end of the day, using my guestimate numbers, the contract over a five year period for 39 planes is $6,435,000, a major difference from the guaranteed $25 mil. A single $25 mil contract doesn't seem to be realiastic for either company, it doesn't happen that big or fast my friend, could be wrong but I highly doubt it. Not a single legacy carrier would sign up for a contract of that value without wanting a balance sheet that's in the millions. It'll take years and approximately 500-600 planes to achieve $25 mil in recurring revenues.
IMO your projections and expectations are excessive which could be misleading. Do your DD people and see which scenerio is closer to the real world.
