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Non-Tech : Any info about Iomega (IOM)?
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To: Kangming Xu who wrote (3363)6/22/1996 7:59:00 PM
From: Daven G. Rajangam   of 58324
 
Just a brief note on earnings estimates.
Disk Sales - Disk cost = Disk Gross Profit
Disk Gross Profit - Sales, Marketing Exp. - R&D = Operating Profit or
Pretax Earnings
Net (After tax) Earnings = Operating Profit X (1-Tax rate)

IOMG is estimating Sales, Marketing expense at 13-15% of TOTAL sales and R&D at 3-4% of TOTAL Sales. Together these items sum to 16-18% of and should be subtracted before calculating net earnings or eps.

I think the fact that your earnings from disks alone sum to over .20/share shows that you're WAY too high on the per disk revenues. Just what do you think total earnings will be after Zip drive sales, Jaz drive and disk sales, Ditto and Bernouilli are considered? From the models you've proposed, they're likely to be double your disk-only estimate. DO you really think H&Q, Emerald and all the others are that far off?

Dave
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