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From: luvb2b (Rep: 1582) reply to luvb2bDate: 02/20/2013 18:24
Forum: Tesla - Msg #598Thread #673503677 (Rec: 0)
just got done with the call. may not satisfy short term traders, but man some impressive accomplishments.

the biggest one to me is the gross margin. when you listen to the things they had as cost factors in q4, it's amazing they had +8% gross margin. the kinds of things they talked about:

* 68 hour work week for production workers in q4. overtime was basically double for people. this is already down to 54 hours and by march they expect mid 40s. to give an idea how much cost this adds:

with 68 hour weeks:
40 hour workweek x $30/hour = $1200
28 hours over time x $60/hour = $1680
total labor cost per week = $2880

with 45 hour weeks:
40 hour work week x $30/hour = $1200
5 hours overtime x $60/hour = $300
total labor cost per week = $1500... almost 50% less!

* had to fly in tires from czech republic. seriously. probably cost them at least $25-40 per tire.

* suppliers price breaks not included at low volumes: for example panasonic gives them price breaks at higher unit volumes.

so when they say they can get margin to mid-teens by q1, that's pretty damn realistic imo.

they were totally confident of being profitable in q1 (i think they mean ebitda). that was confusing a lot of analysts, me included. i can't quite figure out how much margin or revenue they must have to make it to breakeven. but damn they sound so confident.

sounds all good to me, just not what the hot money needs though. a lot of call options probably gonna get vaporized, including a few of my own.



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my daily motivational reading, what the high and mighty penny pumpers say about luv:

"any knowledge you currently have about trading, finance, accounting, etc... that i don't, are things i can fully absorb within a relatively short period of time if its really important to do so... on the other hand, i am quite certain that you are incapable of grasping even 20% of the knowledge i've gained in math, associated algorithmic coding, physical chemistry, solid-state physics, materials science and engineering over decades of study." 

"There are those who market trades, and there are those who trade markets.
There are those who follow marketers, and those who follow markets.
The marketers feast on their followers; the traders feast on the markets." -luvb2b

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Reply to luvb2b - Msg #2352329 - 02/20/2013 16:36

tesla report, about as expected. the call will be interesting. awesome to see gross margins are already +8%, and will be mid teens by next quarter.

their spending is going down, which means so is their cash burn for now. i am trying to figure out how they can be profitable next quarter with 4500 cars sold and as much as they have in expenses.

i am guessing what they are projecting internally is something like 4500 x 80000 = 360m in revenue, with around $55m gross profit. with expenses declining and taking out interest and depreciation you'd get to a near zero result on eps for next quarter. i guess that means roughly $70m in quarterly sg&a and r&d expenses.

that means maybe by q4, you could do 5000 x 80000 x 0.25 = $100m in gross profit, then back out your $70-75m in quarterly expenses excluding interest & depreciation, and you got a $25m net profit, so maybe 20-25c eps in q4? i guess you're looking at tops 50c eps this year, with next year probably well over $1 with the model x intro.

you could get incremental upside to units and margins, which might add another quarter to eps at the end of the year. the stock's up almost 50% coming into earnings. it will take additional reservations growth to give you this upside. you may not see that until march when the spring car buying season rolls around.

the report is good, and expected, but i don't think it's going to satisfy all the recent call buyers. you might get some more interesting nuggets on the conference call.
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