I looked at Kanming Xu's repost of your estimates. I find your number to be both bullish and bearish. They are bullish (IMO) because of the $110 estimate per drive. Obviously, if companies such as Micron sell internals for $99 then Iomega, isn't making $110 on those drives. That would mean that Iomega makes >$110 on the externals so that the average is $110/drive.
Your numbers are also bearish because they predict flat Zip revenues sometime in 97. I am basing this comment on your estimate for Q1-Q2 growth of $88M, Q2-Q3 growth of $64M, and Q3-Q4 growth of $46M .... growth clearly trending down. I understand that this results mainly from the constraint of 5M drive total production for 96. While this may be the capacity NOW, even your model predicts monthly drive sales of 500+ drives by Dec 96. Annualized this is 6M+ drives. In other words, serious undersupply in 97. Thus, a forward looking model MUST include increased drive capacity.
That being said, I believe your calculations for Q2 will probably be accurate (or close) anyway but beyond that they will be low. Using your Zip revenues as a baseline I tried to estimate total sales. I used your Q1 figure of 12.5% of Zip and Jaz due to Jaz and assumed that won't change for the whole year (not likely). I also assumed that the dollar amount of sales due to Ditto, Bernoulli, etc.. to be the same as those from Q1 for the entire year (also not likely). I calculate:
$1.1B / 0.875 = $1.26B from Z+J
(222 - 185) * 4 = $0.15B from D+B
for total sales (very conservative) ~$1.4B for 1996, which is close to other estimates. I guess in that sense, your figures are pretty close to what others have been using.
I cannot estimate EPS or margin, but I would remind anyone who tries to include interest on the $175M that was raised by the secondary. This won't all be blown right away!
Jay
LONG on IOMG |
