>>Patently false. We all know that the embarrasing Jaz disc incident resulted in a .02› write-off from just 75,000 faulty discs.<<
Rocky -
Once again, not surprisingly, your logic fails to encompass the whole situation.
The recall of 75,000 faulty disks resulted in a significant loss of revenue because:
1 - All 75,000 disks were a total loss
2 - There were additional costs incurred in the process of recalling and replacing the disks
3 - There was a loss of sales as there were too few disks available in the channel.
Merely lowering prices for Jaz drives and media would not result in the same kind of hit to revenues. Instead of taking an actual loss on the disks, Iomega would just make less money on them. And while their gross margins on Jaz products might be decreased if Iomega lowers prices, their Zip revenues and margins continue to increase.
Anyway, as I said before, SyQuest and its stockholders would not derive any benefit from Iomega making less money. Every Jaz drive and/or disk Iomega sells, even if they make no profit or even take a loss on the sale, is another removable storage customer who is not adding to SyQuest's bottom line.
SyQuest needs to sell products profitably to survive. Hurting Iomega doesn't automatically help them to do that.
- Allen |
