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

To: RetiredNow who wrote (45447)	1/24/1998 9:30:00 PM
From: Sigmund	Read Replies (1) \| Respond to of 58324

Mindmeld. I am not an investor in IOM but I wonder if you have taken taxes into account correctly. The doubled earnings would appear to be aftertax numbers yet the advertising cost is pretax. Perhaps using $50 million for an aftertax impact of the advertising expense would be more on target. The key questions re advertising are: * how effective? * how soon effective? * how long effective? People seem to be addressing the first two points but not necessarily the third. Perhaps advertising will impact revenue growth for more than just one year. This would make a big difference in your analysis.

To: RetiredNow who wrote (45447)	1/24/1998 10:33:00 PM
From: Gary Wisdom	Respond to of 58324

Re: <<We need to reduce earnings by the $100 million expense.>> This is wrong. Your logic is in error. If revenues increase $300MM (they increased $500MM in 1997), then the effect is zero, since at a gross margin of 33%, this would bring $100 MM more to gross margin, fully offsetting the advertising cost. And, that's not even taking into consideration that they grew revenues 43% this year without the $100 MM advertising program. They doubled net income this year without the advertising. With the advertising program (if advertising truly is effective), then they should be able to do much better than $.48 this year. You've got to spend money to make money.