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Non-Tech : Iomega:Zip drives - a "standard" for the PC?
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To: Andy Yamaguchi who wrote (28)4/3/1996 12:48:00 PM
From: chester lee   of 156
 
0.15 seems to be in the ballpark. Assume revenues will be 200 Million +/- 10 million (5%). Revenues will not be a direct portion. Don't forget teh many expenses they incurred this quarter like the advetising cost (5 million or more), the fees for the H & Q and Montgomery secondary offering that was killed (those are not free), and the fees for the convertible bonds (those may have been expense free for reporting purposes, since H&Q takes their fee off the top). The ramp up cost and the building cost is also difficult to estimate and has a lot of one time fees that you and I don't have access to. My point is this, they have to sell a hell of a lot of zip disks and Jazz to offset the various expenses. i.e. 5 million for ads over 60 million shares is worth 8 cents in earnings. Since they are steping up production, they are also increasing inventory. Inventory holding/handling cost for instrument manufacturing is traditionally 20 to 30 percent of inventory cost. I.e. the 10 million order for chips from IPX ?[sp] will cost IOMG 12 to 13 million. Thats just part of doing business and is factored into SGA expenses.
As of this writing, IOMG hit a high of 30-1/4. Boy am I sorry I wrote the May and Aug 25 calls. That too is part of doing business. Good Luck.
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