IOM Earnings Warning? Folks, here are the reasons why I think this might happen: I would like to hear your opinions.
a) Intel announced a significant demand shortfall for their chips, which they said was probably because of an inventory correction being done by the PC makers. This was unanticipated, and surprising.
b) The same inventory correction will likely affect all PC hardware components, and it stands to reason that IOM will face the same issue.
c) IOM shipped 3 million drives in 4Q, and announced that they had shipped over "12 million drives" in their quarterly report. Yet, in a recent press release dated Feb 25 ("IBM Japan to ship ..."), they made exactly the same statement. To me, this suggests that their shipments have not crossed 13 million yet. This could be evidence of this inventory correction.
d) Jaz 2GB just started shipping, and I couldnt find them in most stores. The revenue from this one is not going to be significant this quarter.
e) Asian purchasing power is still at an alltime low.
f) In their Conference Call, IOM announced that their earnings shortfall was because of the lower margin sales to PC Makers. It looks like if this is the case in this quarter also, the margin will be even lower, since retail sales of computer components are slow in Jan-Feb-March.
Therefore, I strongly suspect that an earnings disappointment is in the offing.
Your comments are solicited.
Joseph |
