Tom,
There is no such thing as "average profit per sub after ROI period". Let
me give an example:
I lease all my CPE. It is a recurring monthly debt that will never go
away. Even after 3 years, when I own the CPE, there will be new CPE that
needs purchased... and thus new towers, new AP's, new backhauls, new
routers, new bandwidth, new whatever. Even if I move that paid for CPE
to a new customer on the edges of my network, there are still costs
mentioned above for that customer.
Maybe I'm not thinking the same as you, but I can never see an "after
ROI period". It never happens.
Travis
Microserv
Tom DeReggi wrote:
I agree current profit is irrelevant, when considering company totals
during the early growth period.
But calcualted future Profit clearly is relevant, as far as how much
profit will be made per sub, and how soon.
Profitabilty can be misleading when jsut considering accounting
paperwork (profit loss / balance sheets)
I'll give an example:
Lets say a company gets an ROI in 1 year. And had 4 years of selling
subs. And by the 4th year, profit would be being made from each sub.
But then lets says a company had a 100% growth spurt in the 5th year.
And lets say there is a 1 year ROI, meaning 12 dollars needs to be
spent for ever new dollar that is made. Because the growth rate of
the company is so much higher in the later year, the expendatures are
far greater than the revenue comming in from the samller customer base
taken on the first 4 years. Thus, it appears the company is losing
money and not profiting.
When in actuallity, the company has record high success. All
pre-existing subs ARE 100% profitable, and lot of new growth has been
made to replicate the previous years successful model.
So yes, profitable books may mean a company is not growing and not
making new sales.
However, showing the average profit per sub, after the ROI period is a
VERY relevant bit of information. Its what defines the value of the
business model in my mind.
In other words:
Forcasted Profit margin based on current years proven track record.
Tom DeReggi
RapidDSL & Wireless, Inc
IntAirNet- Fixed Wireless Broadband
----- Original Message ----- From: "Matt Liotta" <[EMAIL PROTECTED]>
To: <[EMAIL PROTECTED]>; "WISPA General List" <wireless@wispa.org>
Sent: Tuesday, May 30, 2006 6:19 PM
Subject: Re: [WISPA] This is HUGE!
Profit is irrelevant for an early stage growth company.
-Matt
Peter R. wrote:
Because number of subs is the measuring stick.
Revenue is more important; but profit is the most important.
Not many can speak to profit, so they measure in subs.
- Peter
Matt Liotta wrote:
Not sure why the number of customers is even important when the
quality of customers can vary so wildly. I run into WISPs regularly
whose ARPU is barely above $100. At 1000 customers an ARPU of $100
is only $1.2M per year. That's a lot of radios and a lot of
customers for very little revenue. Compare this to CBeyond, which
is an Atlanta-based CLEC that in recent time went public. Today
they have about 17,000 customers, but their ARPU is $761. With just
1000 customers, an ARPU of $761 would be worth $9.1M. Or to look at
it a different way, with 17,000 customers an ARPU of $100 would
only be $20.4M compared with the $155.2M they pull in now.
A WISP would be wise to raise their ARPU as opposed to the number
of customers.
-Matt
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