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Non-Tech : Any info about Iomega (IOM)? -- Ignore unavailable to you. Want to Upgrade?

To: Michael Coley who wrote (37416)	11/25/1997 2:58:00 PM
From: Frank Drumond	Read Replies (1) \| Respond to of 58324

Keeler's surprise at growth in retail is to be expected but do keep this in mind. As Zip penetrates the OEM market there will be MORE pressure for current computer owners that do not have Zip to get one. So, retail sales may grow more than people expect.

To: Michael Coley who wrote (37416)	12/2/1997 4:24:00 PM
From: Michael Coley	Respond to of 58324

RE: Licensee Effect on Revenues, Earnings, and Margins - TMF Keeler Here's another great messages from TMF Keeler on the Motley Fool board. Subject: Licensee effect Author: TMFKeelerÿÿÿ Date: 12/1/97 8:45:24 PM Iomega has publicly stated that royalties from the sale of licensed Zip drives will not be significant in terms of overall revenues. Whether they will be significant in terms of net income we will have to wait and see. However, direct royalties boosting net income, I don't think, is the important way to view licensee Zip sales. Currently there are two Zip drive licensees: MCI (division of Matsushita) and NEC. Neither has produced many Zip drives to date. Both have talked about producing large quantities starting next month. Two quick examples of the difference between when Iomega makes and sells a drive and when NEC does (or MCI). The numbers are just my guesses as to what selling prices and margins are. Good enough for what I'm doing ;-) Dell buys a Zip from Iomega for $43. Dell sells that to a customer who buys 3 Zip disks. Lets say Iomega has a $3 gross margin on the drive and has a $5 gross margin on disks which it sells for $9. In this scenario IOM has a Cost of Goods Sold of $52 and a gross margin of $18. Average gross margin is 26%. No lets say Dell buys a Zip from NEC and IOM gets $0.25 in royalty on the drive. The Dell customer then buys 3 Zip disks at $9 with the $5 gross margin. Now IOM has a Cost of Goods Sold of $12 and a Gross Margin of $15.25. Average Gross Margin is 56%. If licensee's do produce and sell large numbers of any type of Zip drive (especially the OEM kind) in the coming years, it will do wonders for Iomega's margins :) Patrick - Michael Coley - i1.net