Sheila,
Congratulations to you and your husband on his recent promotion!
The news of Iomega's earnings results are indeed cause for celebration. The performance of IOM stock tomorrow, however, may leave much to be desired.
Jodie Glore's forward looking guidance for 1Q99, though possibly given to reduce investor expectations, clearly disappointed - particularly the "resignations" of Briscoe and Forsyth.
Also, component shortages for Clik! and Zip250; Glore's expectation of possible "hiccups" due to the structural reorganization - these will weigh heavily on IOM in the coming days until all of today's information can be digested by investors and analysts.
Clearly, the best news of all, IMO, was that Iomega:
1) Beat analysts earnings expectations by 40%;
2) Was cash-flow positive by $106 million;
3) Improved gross margins from 22% in 3Q98 to 28% in 4Q98;
4) Reduced operating expenses by $42 million - in addition to the $50 million achieved in 3Q98, for total operating expense reductions in the 2nd half of 1998 of $92 million.
Other highlights were:
1) 16% reduction in inventories;
2) 47% year-over-year unit increase in both Zip and Jaz disk shipments;
3) Clik! for Mobile Computers and Clik! Plus began shipping today;
4) 21 million Zip drives shipped to date;
5) More Zip drives shipped in 4Q98 than all of the Superdisk drives ever shipped by Imation;
6) Over 2 million OEM Zip drives shipped in 4Q98;
7) Commitment from Agfa for inclusion of Clik! OEM drive into digital imaging device for mid-year introduction - in addition to similar commitments from Compaq, Sharp, and others;
8) Bank line of credit paid down to zero;
9) SyQuest purchase will be treated as an asset purchase - with no charges taken, other than the normal depreciation and amortization.
It was interesting to note that OEM Zip drives shipments accounted for 59% of all Zip drives shipped. Since over 2 million OEM Zip drives were shipped, this means that total Zip drive unit shipments in 4Q98 were approximately 3.4 million - or well over 1 million Zip drives shipped per month.
regards,
Lipo |
