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Non-Tech : Iomega Thread without Iomega

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To: Mel Boreham who wrote (9170)	4/16/1999 1:34:00 PM
From: Ken Pomaranski	Read Replies (4) of 10072

My take on the earnings announcement: 1. Jaz puzzles me. Q4 1998 was very strong, Q1 1999 was VERY weak. I also cannot figure out how they are losing money on such a high margin product! This should have taken EVERYONE by surprise. (First saw this in the annual report.. Then in the earnings release.) 2. I am convinced that Iomega makes no money on ZIP100 OEM drives. This certainly was true in 1998. The rest of you can believe what you want, if it helps you support your investment in Iomega. 3. Iomega finally admitted that they need more than price cuts to stimulate ZIP demand. They finally admitted that the price elasticity isn't what they had hoped. 4. ZIP250 is a big surprise. Without this product, I would be 100% sure that Iomega is headed toward 1 or so. This product should help margins for the time being. Depends on the mix going out of Dell. 5. Iomega = most improved Dell supplier. Good, but proves they had TONS of problems in the past. Now you know why the stock sits at 5 bucks. 6. CLIK! is also a big question mark. I have a very difficult time understanding it's value proposition given the product specs, and the way it needs to be used. The ZIP has a very easy to understand value proposition, is a highly desirable product, and they still have problems making big money off it. Wait and see here... SUMMARY It looks likely that Iomega will create a low scale cash cow out of the ZIP franchise. The question is, what do they do after this? All other products have been an utter failure in the marketplace. And now it looks as though the Jaz drive is a DRAIN on the company. CLIK! is a wildcard, with a 10% chance of success in my mind. What will I be doing? Waiting.. I'll re-evaluate after Q2. Good luck! kp

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