Hello all,
Just as a bit of information, I was down at our local Best Buy superstore here in San Bernardino, Calfornia and they were selling external Zip drives for $179.92 plus a $50 rebate. Also their extra Zip cartridges had a $20 rebate on them. (So much for making all their profit off of the disks and not the drive. Looks like they just dropped the price of disks by 10%)
Now help me out on this. My logic-- Best Buy isn't reducing their profit margins on these products. The rebates aren't coming out of their pockets. Iomega's cost of production probably hasn't fallen so quickly in the last couple of months--certainly not an extra $20 off the price of Zips since their $50 rebate was announced. There were plenty of Zips in stock. Actually, the one that seemed to be least in stock was the blowout pricing on the has-been Syquest EZ120 drives. Am I missing something or doesn't this seem to indicate that 3Q earnings are going to be "challenging?" I know all about cutting prices to establish a market share but these cuts seem more like to keep the buying interest up. Isn't it possible that there are literally tens of millions of computer owners out there who have absolutely no interest in backing up computer information??? Could Iomega's target market group be the hardcore computer users who just have to have the latest and greatest hot product whether it is a 3-D video card, 8X cd-rom, or Pentium whatever? Worse, once those people have all bought those products then what? I think you're going to have a hard time convincing the average Joe computer-novice buyer at Circuit City that they really do need a back-up device on their computer and it only costs an extra $99 or whatever. What's he going to back up--his games?, his couple of letters?, his kids homework? You'll really need good luck to convince "Joe" that he needs a $500 Jaz drive. (see-catering to the limited market of hardcore users out there) These are not heavy duty computer users out there, and that's where the growth market is.
For all those verbal attackers out there, I don't currently own or short shares in Iomega. I've never owned or shorted shares in IOMG. Actually, I might be tempted to buy IOMG in the single digits but I won't touch it until 3Q numbers are out. Any thoughts out there? Whatever your comments, please use some logic and sense, not "you secret IOMG shorter", "you're an idiot", "get off this thread", "long on IOMG forever!". If you want to say that, just mumble that to your computer screen and don't waste anyone's time on this thread. Thanks. |
