Any info about Iomega (IOM)? Message Board

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Non-Tech : Any info about Iomega (IOM)?

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To: jwk who wrote (39870)	12/14/1997 10:55:00 PM
From: Dale Stempson	Read Replies (2) of 58324

Refurbished Drives A few people here have commented about the seemingly large number of refurbished Zips that have recently been made available at many of the large retailers. Certainly the reduced price (some as low as $69) is certainly very appealing for the very cost conscious and those considering a second Zip. Not having seen these units available previously, I assume that Iomega has been accumulating returns for some time now. Perhaps because of higher priorities, they waited until there was a sufficient number of units on hand before launching a program to sell them. (BTW, regarding refurbished drives: I would not hesitate for a moment in buying one. I believe that the vast majority of returns are for a host of reasons other than defective product. Besides, these units must be 100% tested, whereas new units are typically 100% tested according to a limited percentage sampling plan.) While I expect that the total number of units being made available is somewhat small overall, when compared to one quarter's unit sales, the number could be a bit more significant. I wouldn't be surprised if the profit margins are very large, maybe even 100%. I would guess that costs associated with these drives have already been accounted for in the quarters when the drives were returned. If all the accumulated refurbished units were sold to retailers this quarter at high margins, it's possible we could have a nice little margin adder. A side benefit of these units is that they have been widely advertised at very low prices by a number of major retailers. This draws attention to Iomega's products and serves to help justify a buying decision for those comparing prices with the competition. In a way, these units also represent a price transition as we head into the new year with the expectation of continued reductions in the future prices of new units. The benefit of course is that margins are not negatively impacted. Lots of speculation here, but who knows, refurbished drive sales this quarter might turn out to be a slight positive. Regards - Dale

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