>>Young, The following statement taken from Iomega's recent press release
caught my attention:
ROY, Utah--(BUSINESS WIRE)--Sept. 19, 1996--Iomega Corporation (NASDAQ:IOMG)
..."There are currently more than 2 million Zip drive owners around the world, and
many of the world's top personal computer manufacturers now build Zip drives
into their computers as either standard or optional features," said Timothy
L. Hill, vice president of worldwide marketing for Iomega....
<<
Dale, the same thing caught my eyes (and I suspect, most others). However, I was
not sure what to make of it. Either IOMG is purposely trying to warn investors in a
subtle way, or they just choose to use the previously released number in order not
to reveal the actual quantity of Zip drives sold at this point.
Even if IOMG actually sells less Zip drives in Q3 than in Q2 (JPM apparently think
so with their 257MM/0.07 estimates, and I understand H&Q now revised their
estimates to be even lower), I am not sure that there is actually a slow down
in consumer demands for Zip/Jaz in the next few quarters, especially Q4.
More likely just a hiccup during summer months.
I think JPM and H&Q 's new estimates are reasonable for Q3 given the expected
summer sales slowdown in Europe and US. A source of negative surprise in EPS
can come from unexpected high costs associated with starting up he Jaz Plant in
the Far East (forgot which country). On this note, I would have been even happier
if the new estimates were even lower. Iomega is growing at an incredibly fast rate
as a company, so I expect that they will incur a lot of unexepcted costs as a results
of growing pains.
If we look beyond Q3, however, things are looking just beautiful for IOMG
investors, IMO.
Young |
