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Non-Tech : The New Iomega '2000' Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: Ausdauer who wrote (1496)	7/7/1999 2:06:00 PM
From: Cogito	Read Replies (1) \| Respond to of 5023

Ausdauer - Sandisk will certainly enjoy increasing unit sales going forward. However, as Ken Pomeranski has pointed out with respect to Iomega, there is a "treadmill" effect that comes into play. If you sell four times as many units, but your prices have gone down by 80%, your revenue is lower, not higher. I would suspect that this treadmill effect would be more profound in Sandisk's case than in Iomega's, since Iomega at least can still sell disks to someone who has paid a lower price for a drive. Yes, you're right, the company doesn't "justify" its valuation. The valuation is placed upon the company by the market. However, when the market places high valuation on a company based on the expectation of revenue and earnings growth, and that growth doesn't materialize, the market adjusts the company's valuation downward. I am not saying that Sandisk will absolutely not be able to grow revenues. I don't know that, because I haven't studied them as a business. I can say that it's very clear that CompactFlash is the Zip of that particular market segment. Iomega is going to have to fight tooth and nail for every percentage point of market share gain they hope to make for Clik! As Iomega continues to see delays in getting Clik! built into products, CompactFlash becomes more and more entrenched. It's similar to the situation between Zip and HiFD. - Allen