Any info about Iomega (IOM)? Message Board

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

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To: Patrick Keeler who wrote (8682)	10/12/1996 6:01:00 PM
From: Dale Stempson	of 58324

Re:<<Thanks for the post but how do you explain this: In the 1Q96 Iomega had EPS of $0.08/share on $222 million in sales. You are using a higher revenue figure and coming up with huge declines in EPS. I don't think you can come to the figures you do unless Iomega is losing money on rebated Zip drives. They have stated that they will not lose money on drives with or without rebates. Further, even though OEM drives are low priced they doesn't mean they have to be low margin. Patrick>> Patrick, I believe it would be more accurate to compare my estimate to the more recent 2nd quarter EPS of $0.11/share on $283 million in sales than the older 1st quarter numbers. Iomega significantly increased their Operating Expenses (including R&D) between the 1st and 2nd quarters by over $10 million. This would explain the decline in EPS that you noted. My estimate assumes Iomega will make money on every ZIP sold. Although I stated that a significant number of lower margin OEM ZIPs would be sold, I also figured that Iomega would make up for this margin change through manufacturing cost reductions that would apply to all ZIPs made. I hope this clarifies things. Regards - Dale.

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