Still blah, blah, blah

[Jim Fleming]

On Sunday, March 30, 1997 12:19 AM, Larry Honig[SMTP:lonewolf at DRIVEWAY1.COM] wrote:
@ Jim Fleming wrote:
@ > 
@ > The market value of a single /8 is easily about...
@ > 
@ >         $50 million
@ >         or
@ >         one Stealth Jet Fighter
@ > 
@ > If you assume that the 24 bit address space
@ > has over 16.7 million raw addresses and a
@ > lease rate of $2 per address per year with
@ > a 50% occupancy level then the revenue
@ > from one /8 can be about $16 million/year.
@ > 
@ > If a /8 requires $1 million in staff and support
@ > per year, then the net profit can be about
@ > $15 million per year. With a 5 times multiple
@ > this places the value at about $75 million.
@ > A more conservative value could be $50 million.
@ > 
@ 
@ Jim, this is the internal conflict I see in your proposals writ large.
@ You may assume that the "lease rate" is $2/year (there is no market
@ research to support this, but lets just go with it). If your cost
@ figures are correct, then the investment community will simply *rush* to
@ invest in this new "industry" which offers a *15 times* yield (your
@ figures, $1m in and $15m out), and the lease rates will come down
@ rapidly to allow a more normal rate of return, generally about 20% on
@ invested capital on a going business which is largely, to use your own
@ words, based on 
@ 

1. How do you know there is no market research on this ?

2. The yield is not 15 times. You show "$1m in"...above I show $50m in...
	and $15 million out, that is 30% return on the investment of $50m...

3. We have not discussed the cost of routing IP addresses
	which has to be factored into these discussions.

--
Jim Fleming
Unir Corporation
http://www.Unir.Corp

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