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To: Senthil Sankarappan who wrote (8014)	3/6/1999 5:53:00 PM
From: Rocky Reid	Read Replies (1) of 10072

>>What do you think about the chances of an Earnings Warning this time?<< About a 25% chance. CEO Jodie already pre-announced a small possible loss in the Conference Call. The current IOM price is still not reflecting Iomega's fundamentals. It is still coming down from the 4th Q Hype levels from months ago. The kind of money that poured into IOM at that time takes awhile to shake out, but it eventually does. We are witnessing this now. >>Also, the Million mark has not moved from 21 Mil. 20th Mil was announced on Dec 15th and 21st during CC. << I have noticed this too. It looks like Iomega stuffed the channel when they were realizing 4th Q unit sales growth due to the price cuts. But the hype and "What a Great Deal!" mentality soon wore off, and has left Iomega holding the bag on not only a bloated channel, but lower margins as well. Iomega normally counts 6 weeks of inventory as "Sold." I expect that the channel has been backed up for much longer than this for 1st Q '99. This is why in my view Iomega has yet to announce any Zip shipment updates. Also, the large price cuts for Zip disks last 4th Q (that increased disk unit sales dramatically), should show an equally dramatic unit sales drop-off this Q. It could get pretty ugly, especially for 2nd Q expectations. Expect another Earnings Warning...not now...but in the 1st Q 99 Conference Call.

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