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

To: Bearded One who wrote (41146)	12/21/1997 5:20:00 PM
From: Dale Stempson	Read Replies (6) \| Respond to of 58324

Re: >>>Iomega loses $10-$12 for each OEM drive sold. Thats from the conference call. They have to make it up in disk sales. Not SOME disk sales, but enough disk sales.<<< I haven't yet been successful in my attempts to listen to the conference call. Did Iomega actually say this? This seems absolutely incredible to me. Could someone possibly elaborate on exactly what was said regarding OEM pricing? TIA Regards - Dale

To: Bearded One who wrote (41146)	12/21/1997 8:50:00 PM
From: Cogito	Respond to of 58324

>>It doesn't matter whether Mr. Y buys as many disks as Mr. X. Since both of them are buying SOME disks, the total number of disks sold increases, along with revenues. Of course it matters. If Iomega lost money on the sale to Mr. Y, then Mr. Y has to purchase enough disks to recoup the losses. "SOME" disks may not be enough. Iomega loses $10-$12 for each OEM drive sold. Thats from the conference call. They have to make it up in disk sales. Not SOME disk sales, but enough disk sales. Sony's costs may or not be higher. They are in Asia, after all and benefit from the weakened Yen. They also probably have lower ramp-up costs because of all the machinery they already own.<< BO - If you want to assume that the computer buyer who made sure the Zip drive was built in buys fewer disks than the buyer who adds a Zip drive purchased in the aftermarket, feel free. And if you want to further assume that this buyer won't buy enough disks to make the sale of the OEM Zip drive worth it to Iomega, I can't stop you. Personally, I don't think that Kim Edwards and his management team are quite that stupid. Actually, we don't have to just rely on conjecture about this, because the OEM drive percentage has increased throughout the past year, while gross margins have increased. If there were something wrong with Iomega's pricing strategy with respect to OEM sales, we should have seen margins getting smaller instead. BTW, your statement that Sony will derive a cost benefit from the weakened yen is just completely wrong. They are a Japanese company, and pay their manufacturing costs in yen, not dollars. The exchange rate is not an issue. - Allen