Dominion

1.    Taking a look into the sales of Dominion Motors, that out of the total sales of $323 million, the sales in the range of 1 to 200 hp motors (which is of interest to us in the entire issue of motors ranging from 5 to 10 hp motors) is $85 million i.e. 26% of the total sales by revenue. 22000 units amounted to a sales of $85 million i.e. on an average each unit in this range sold at a price of $3863. From Paragraph 6 on Page 170, we learn that the investment on motors for an average oil field operator was $1500. Another $3500 was spent on the control and the panel board units. This figure of $1500 is roughly validated by Exhibit 2. The question to be asked here is whether the expected move by Hamilton is bound to affect only the motor sales or the sales of control units also. Paragraph 5 of Page 170 suggests that ‘frequently, oil field competitors bought the motor of one manufacturer and the controls of another.’ Considering that we have 5500 producing wells, and that DMC has control of around 50% of this market and assuming each well needs one motor, then the sales of 2250 motors would contribute $33,75,000 to the sales. And since DMC controls 15% of the controls sales in the oil applications industry, then the sales of 825 units would contribute $28,87,500 to the sales. Put together, both the sales of the motors and the control units, contributes $62,62,500 to the revenue. Thus the sales of motors to the oil applications industry in the 1-200 hp range is only $6million or roughly 7% of the total sales in this segment. If we consider the total sales of DMC, then the sales of motors and controls to the motor industry constitutes only 2% of the total revenues of DMC. If we consider the life of these motors to have a life of 5 years then the figures drop ...
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