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Non-Tech : Iomega - A Civil Discussion
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To: steve goff who wrote (54)3/15/1997 2:27:00 AM
From: Dale Stempson   of 1908
 
RE: Q1 Earnings Estimates

I believe First Call has it at $0.14 and Zacks has it at $0.12. I'll just call it $0.13. All are significantly lower than last quarter's earnings of $0.19 ($0.15 after the one-time charge).

Using last quarter's numbers and excluding the one-time charge, a $0.13 EPS estimate would equate to about $272 million in sales. $272 million is less than the December, the September and the June quarters of last year. That doesn't seem possible IMO. Sales may have declined from the holiday quarter, but I would expect them to at least be on par with the 3rd quarter of $310 million and no where near $272 million.

So, if we use a lowball $310 million in sales and a $0.13 EPS, we end up with a net profit margin of 5.5%. This would be down a full percentage point from last quarter's 6.5% (excluding the one-time charge). This also doesn't seem possible IMO. OEM sales should have increased which may have slightly lowered margins on the drives, however, cost reductions should have easily offset this.

If we were to use a sales number greater than $310 million, than the net profit margin would have to be even lower than 5.5% to get a $0.13 EPS. This seems even less possible.

EPS of $0.12, $0.13, or $0.14 is simply too low.

Regards - Dale
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