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Non-Tech : Any info about Iomega (IOM)?
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To: StormRider who wrote (8767)10/14/1996 9:44:00 PM
From: Rodger Wenzel   of 58324
 
Although I am positive in the long run on IOMG (I am currently evaluating this position) . I do think that OEM announcements will help propel this stock higher. But in the next week there is a serious consideration -- the earnings. Sept was a fantastic month for sales. July was awful. Aug was average to above average.

All in all this should be an fairly average quarter. The big question which several people have already raised is the $50.00 rebate. There is also the $20.00 rebate on the zip 10 packs. And the JaZ Drive which I purchased in May (and return in june since the write times were so pathetic, read times were acceptable) These sales are strong. But I paid $480 (the cheapest of all the places I called) These are now around $359(cheapest available). These drive were suppose to have much lower margins than the ZIP. How much can they make at this current price??

The point of all this is on which products will IO make money on?? Yes the obvious answer is the DISKS.. But if everything else is a loss leader, how many disk must you sell to make up for the losses on other products??

Also I did see the new Olympus drive in the NOV WIN magazine. The thing that makes this drive look very appealing is the low cost of the media. It stated $10.00 per 230 MB. Obviously on a MB basis (which I believe is the most important for the product, not the initial costs) this is less than 1/4 of the costs of zip disks, and about 40% of the cost of the JAZ media.

I have no idea of how this product will perform, or sell. But it does seem to be a serious threat to the zip. Mind you, not in the simple minded view that the Olympus is going to outsell the ZIP. They don't have to. The threat that olympus makes is to the cost of the disks. This would mean the only item in which they make a sizable profit margin, would start to have margin constraints (due to competition).

With a competitors media selling for 60 to 75% less than yours, how many people will buy the 10 pack?? (the Olympus would be cheaper at this level) This would imply a lower tie rate. (all high volume consumers using the competitors)

All in all (again not finalized) it would appear that IO has some very serious threats to its short to intermediate term profitability.

Obviously these threats can be nullified with a more competitive product, but what does this do to your installed base of drives. All of the people who have speculated on a product in between the Jaz, and ZIP. I think this would be the worse thing!! The last thing the market needs is another choice to cannibalize the market.

Well I will appreciate everyone thoughts on this, as I do plan to finalize my current evaluation of IO. Thanks
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