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Non-Tech : Iomega Thread without Iomega
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To: Naggrachi who wrote (6610)1/23/1999 2:29:00 AM
From: HardMoney  Read Replies (2) of 10072
 
First let me say that many on this thread, especially the traders, I believe expect too much out of IOM's stock price. IOM reminds alot of Unisys (UIS) about a year an a half ago.It was at 7.5 then too....today its at 34.....anyway some thoughts:

During the conference call they indicated that they were basically comfortable with FY99 estimates. Zacks and First Call have it at 35 cents .

Now they also clearly stated net income for the year to be mid single digits....lets use 5% and lets say it's constant fro the year ( BTW I believe the contrary and see FY2000 with low double digit net margins 10-12%) for our discussion.

Currents rev estimates are around 2 - 2.1 billion.

Ok, if they think they'll break even in Q1 and they also believe they can do 35 cents for the year and they have a 5% net margin......then they would have to generate at least 2 billion in rev in the last 3 quarters of the year using a constant 285 million shares outstanding.

Now q1 is seasonly slow and they have their supply constraints so lets say that rev for q1 end up between 350 and 400 million lets use 400 million....20% sequential decline....not unreasonable.

So that means FY99 rev of 2.4 billion as compared to 1.65 for 98...that's a 44% top line growth rate.

Using a constant 5% net margin you get 42 cents for 99......if the growt rate were to remain constant into FY2000 and the net margin % were to increase FY2000 looks like 1 dollar a share in earnings. (10 net margin would require FY 2000 Rev to be 2.85 Billion only a 18% increase fro fy99's estimate of 2.4 Billion. I can only ifer one conclusion from this exercise. This company is on the brink of exploding.

Also taking the fact that OEM Zip drives were 2 million this quarter and represented 58% of all Zip drives shipped, on can infer that 3.4 million Zips were shipped this quarter, more than a million per month.....imagine if they didn't have supplier constraints a ramp up hassles this quarter...I predict at least 16 million Zip drives ship fpr the year.

Also during the Vcall interview Mr. Glore, when asked, did not rule out a kind of iomega.com e.commerce plan, this type of selling would help tremoundously outside the US where CompUSA's are not the norm and are few and far between. IOM could charge higher prices than there US channel partners, thereby protecting them from competion while at the same time reaching International markets their partners don't even participate in....it would be a win/win situation.

Ah well, just some random thoughts

Frank
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