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VTSS Investor Forum

metrics/ratios I would like to see

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There are a number of standard financial ratios and metrics used to appraise a company and management. Here are a couple I would like to see from Vitesse.

R&D expenditures/new product revenue. Add up the past 5 years and calculate the ratio. In a healthy company this ratio would be well below .5. At Vitesse my guess is it is very close to 10. Which means management is spending $10 in R&D to get $1 of revenue.

R&D expenditures/gross profit from new product revenue. A more telling variant of the above. This is a must to have under the value of 1. That would mean VTSS is getting $1 dollar of gross profit for every $1 spent in R&D. My guess is they are no where near that.

Revenue/ design wins. add up every design win for the past 5 years and take the total revenue from those design wins for the past 5 years and calculate the above ratio. I am of the belief it would be shocking to see how little revenue has come from the hundreds of design wins announced over the past 5 years.

There are a bunch of profitability ratios that are commonly used. VTSS has major problems here stemming from the fact that management, having never seen a real profit, has only an academic understanding of what a profit might be.

Net profit/Assets. This ratio demonstrates the effectiveness of management in using the assets of the company. The higher the number the better. With no profit it is a meaningless calculation.

Net profit/Stockholders Equity. This ratio is considered the great equalizer. It can be used across industries and companies. It answers the one question that every management must answer. We don't care what your product is,we don't care where or who you sell to or how you sell it. How much money are you making us? This ratio tells you what percentage the owners are making on the money management has been given to use wisely.

It is here where VTSS management has really distinguished itself. VTSS does not have a net profit and it does not have a positive value for its Stockholders equity (okay technically they have a negative "accumulated deficit" and a positive Stockholders equity but that is an accounting detail). If there are any of you out there who think that this is fine because the 2 negatives will equate to a positive I invite you to send a resume to VTSS. You will find a bevy of like minded engineers who will be happy to fund, evidently forever, your mathematically correct calculation.

Posted by dlog - 11 years ago | Updated 11 years ago


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Here is an interesting table from The Street. They chose a starting date of March 24 (I have no idea why they chose that date) for price action of the stock. 24 companies on the table. VTSS is not on the table.

ON March 24 VTSS closed at $4.40 (those were the days). On June 5 VTSS closed at $3.74, down 15.0% from the March 24 date.

24 companies listed on this table only 2 are down more than 15%. Cree and Xilinx. I have no ideas why that is but interesting none-the-less.

Posted by dlog - 11 years ago | Updated 11 years ago

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