Sorry, for the confusion--I was comparing the next four quarters of sales to the four quarters ending March, 1996. For the four quarters ending March, 1996, Iomega did $509 mm in sales. My guess of $1.2 billion for the next four quarters compares to estimates I've seen of $1.6 billion. The 1.2 billion does represent 135% growth.
Further, as to a valuation of 2x's revenues after tremendous growth take a look at some of the semiconductor equipment makers such as Lam Research, Novelllus, and Applied Materials. All these companies sell for around 1 to 1.5x's projected revenues and less than 10x's projected earnings despite revenue growth of 40 to 50%. If Iomega's stock goes to $100 in three years and shares o/s increase, which they always do, the valuation of the company will be $16 billion. the point is the double going forward is next to impossible. The risk's are greater than the rewards, in my opinion.
Separately, does anyone have any thoughts on the company's 6/3 press release? Is production for 1996 really limited to only 5 mm Zip drives, and if so, What does this imply for Revenue? Finally, does everyone agree that only 2 mm Zip drives have been sold to date as stated in the company's press release, not the 3 mm drives widely circulated on this board? Does this change any of the bull's convictions?
Finally, the fact that the company was able to raise that much money with such little dilution was truly awesome. I can not believe Seagate, Quantum, Western Digital, and IBM allowed it to happen without even a wimper. Microsoft would have had more announcement of vapor products and trashed Iomega publicly had It been in the same position. I sold my seagate stock because of this. The company has obviously got distracted by the Conner transaction and has lost its killer instincts. This does bode well for Iomega. But it is still too expensive.
Joe Rizzo
JMR Trading
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