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Non-Tech : Any info about Iomega (IOM)?
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To: Young D.T. Nguyen who wrote (1230)4/25/1996 11:25:00 PM
From: Rick Mortellra   of 58324
 
Hi Young, glad to see you take an interest in the CB too. Actual dilution comes in at 3.6% and does only reduce 1Q EPS by a penney. But your 2Q EPS figures could really be on the rosy side. IBES estimates 18 cents, while both Zacks and Nelson say 14 cents. The 4 brokers that cover the company are all over the place with annual estimates of between 65 and 1.05 for 1996 also. If forced to choose, I have found IBES to be the most reliable. What this really tells me though is that no one can really still get a handle on what this company will do yet. Past quarterly comparisons are not so useful either. It troubles me to see 25% of their cash being burned through in 3 months. Tells me that they still can't support their growth internally. This means they may have to tap their equity base again if the bankers won't pony up, e.g. another CB, stock split or secondary offering. These are bad for existing shareholders because of the dilution. When the CB converts, IOMG will wipe away $46 million in debt. Where will they get the $46 million from? Why the existing shareholders of course! You may not even notice it since the market cap is now over $3 billion, but it will come off the share price. More shares usually produces more strain on quarterly earnings performance too. IOMG lives or dies by the quarter and there is no room in the stock price for error.
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