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Non-Tech : Any info about Iomega (IOM)?
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To: Ken Pomaranski who wrote (7166)9/16/1996 9:54:00 PM
From: Michael Rick   of 58324
 
"Let's take #1: rebates: In my experience, ALWAYS a bad sign. The bulls can put any spin on this they want, but I'll never buy any of it. Laws of supply and demand take precedence over emotion. in ECON 101, when your product is not moving (or inventories high), LOWER THE PRICE!"

Ken:

The laws of supply and demand are much, much more complicated than a simple Econ 101 supply/demand chart!!! IMO it is a mistake to consider only current demand and supply factors and not look at longer term factors and goals. Certainly Iomega may have instituted the rebates to increase demand and possibly reduce inventories. I believe, however, that Iomega's rebate strategy is directly related to several important factors. Here are two (there are easily several more):

1) Raise the stakes for any potential competitors (LS120 etc.) and "nip it in the bud" (Barney Fife) even at the expense of lower earnings. I think of the $50 rebates as insurance premiums against potential rivals (or initial equity investments in a highly profitable zip disk manufacturing operation).

2) Iomega's manufacturing learning curve is paying dividends with lower costs per drive creating more breathing room to lower prices.

Sincerely,

Michael Rick
Underemployed and not liking it. ;(
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