Jack, all -
Speaking of the annual report, which I just got and read yesterday, it looks like the Zip sales slowdown is a myth.
While not breaking out Zip revenues specifically, the report does provide a very interesting chart which tracks unit sales of Zip drives on one line, vs. other storage solutions on another. The chart covers the period from the beginning of '95 to the end of '96.
The Zip drive unit sales line is pretty much a straight upward line at about a 40 degree angle throughout '96. And "other storage solutions" which would include Jaz and Ditto, is a slightly steeper line which actually begins to steepen more in the final quarter of '96.
Using this chart, as well as other information contained in the report, it's easy to see that the sales of Zip drives are still accelerating. And so are the sales of the other Iomega products. Clearly, if this trend continues, earnings will grow well over 75% this year. Which means that current estimates are too low.
Wall Street may undervalue Iomega because of "concerns" over this and that at the present time. But the financial community does not ignore solid, growing earnings for long.
Bears have been correct in the last few months about the direction of IOM's price. However, they have been incorrect since last September in their predictions of a drop to single digits. I don't generally make price predictions, and I won't now. But I will say that I think single digits are unlikely to be hit again in the foreseeable future.
- Allen |
