>>Allen, I'm remembering the 60-70% figure from early FALL when I was telling this thread to go short. I will try to track down the quote, BUT I've a pretty long memory and I remember we went over this rebate deal ALOT.
As I remember KE made a statement to the effect that the rebates were between 50-70%, BUT closer to 70 than 50. I took this to mean 69% ;-)
EVEN at 50% though, this is a MUCH higher rate of return than is normal. I have an article SOMEWHERE from the USRX thread discussing how MOST people just don't ever get around to using the rebate. I believe 25% is even considered on the high side of "normal".
Bottom line is that I think IOM was blindsided by their own success. I would bet my last dollar that when the IOM management was sitting around discussing a rebate they had no idea that it would take so much out of their pockets. <<
Jeffrey -
I notice that before I wrote this, a lot of other people had already responded to you. Interesting that they all agree about what KE's actual statement was. I just checked my stored summary of the 3Q conference call, as reported by the Motley Fool."
KE's statement, in the 3Q conference call, was that rebates were coming in "closer to 50% than 100%." Many people made the assumption that this meant 74.9%, but there was no real information to support that. As that same conference call continued, and also during the 4Q call, KE and the CFO referred several times to 50%.
In the 4Q call they said the rate of return were getting was in line with what they had expected, based on information from a consulting firm which researched the subject before the rebate program was begun. Certainly, by the end of one full quarter of rebates, they knew from experience what rate to expect.
So your conclusion that they had no idea how much the rebates were going to cost them doesn't appear to be even close to correct.
BTW, when you buy your CD-Recordable drive, remember that every time your computer hiccups while you are writing to a blank, that blank becomes useless. I was on the phone with an engineer at work today, when his NT workstation blue-screened in the middle of a CD-Write. You should have heard him curse.
The CD-Recorders are not the same type of device as a Zip. Not a meaningful comparison.
All that having been said, though, I certainly agree that I would have been wise indeed to take the advice of all the bears and short Iomega last fall when it was in the 20's. Sure as hell wouldn't short it now, though.
- Allen |
