Senthil, I know you were asking Darrell, but I have responses to a couple of your questions.
First, I can sure relate to getting tired of being and IOM bull. It can really wear a person out. Now to some of your questions:
>>Why this $16 target esp when the company is not even confident of the profitability. If the company is not sure of profit even after 21 Mil Zip drives, when will it be confident? i.e what's the point in selling these many millions of drives?<<
They stated clearly that they were confident that they would return the company to profitability and to sustainable, predictable growth. They also stated clearly that they expected to be profitable for the year as a whole in 1999. They did say that their current expectation of Q1 is breakeven plus or minus 2 cents, but that doesn't contradict the other two points, and doesn't seem like a lack of confidence to me.
>>what do you think about their inventory pile of 8-10 weeks i.e over 2 months of inventory meaning over 2 Mil drives. Why did this happen esp when they are touting about Scott Flaig/Oracle/asset management etc etc.<<
The inventory of 8 weeks is in the distribution channel, not sitting in Iomega's warehouses. That means the drives have been ordered by customers and shipped to them. So it's sitting on the customer's books, not Iomega's. The inventory on hand has been significantly reduced.
BTW, if channel inventory were much lower, that would be a cause for concern, because it would indicate that the company was having a lot of trouble meeting demand.
>>Don't you feel that IMN is getting some momentum esp with CPQ going with them in many models. They might lose money but that won't kill them like SYQT.<<
Imation may have gained momentum, but they are way behind in this race. As Glore pointed Iomega sold more units of Zip last quarter than Imation has of Superdisk in the nearly three years since they introduced it. More than 21 million Zip drives installed, less than 3 million Superdisks.
Since unit sales of both products increased during the last quarter, it's clear that the market for low-end removable drives is continuing to expand.
I believe Compaq will find that computers with Zip built in sell better than those with SuperDisk.
- Allen |
