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Non-Tech : Any info about Iomega (IOM)?
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To: Jeffery E. Forrest who wrote (9469)10/20/1996 2:24:00 AM
From: Dale Stempson   of 58324
 
Jeffery, Re: "(3) I always figured a company giving out rebates was in trouble. Hey you don't see the Auto companys giving rebates on "sports utility, mini-vans, trucks etc." only on cars, which no one is buying these days. If it's such a great product why have a rebate at all? Everyone should be lining up and offering to pay double just for the privilege of ownership."

Iomega's rebate strategy worked great. By effectively reducing the cost to $149. they were able to increase sales during the summer months. They made progress towards their goal of a $99 ZIP. They improved their cash flow by holding rebate cash on their books until the coupons were returned. They added millions to the bottom line because so many people never sent for the rebate.

By offering the rebate instead of cutting the sell price they are now capable of offering their new "software rebate" option. I bet that this costs Iomega a lot less than $50 and will add more bucks to the bottom line next quarter.

Also, by getting more ZIPs out there, they were able to sell more high gross margin disks and move a little closer to their goal of becoming the "standard".

There have been a number of people who have expressed their concern that the rebates signaled trouble at the company. With the 3rd quarter results showing improved sales and margins virtually unchanged, Iomega has proven that their strategy is working great.
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