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

To: Joseph Hoane who wrote (52229)	4/10/1998 12:19:00 PM
From: RedCrystal	Read Replies (1) \| Respond to of 58324

Re: "the stock is still cheap" <<This reminds me of why I was in Iomega originally. (I am not now, but this post makes me think I should get back in.) There was a very interesting analysis on the Motly Fool last fall which argued the following: If you throw out all Iomega earnings except future zip DISK sales, the stock is still cheap. This post reminded me that even if Zip DRIVES only sell 0.8 Million/ quarter, each one creates a demand for Zip disks for the next five years. Still cheap at twice the price, from this perspective.>> The statement that "If you throw out all Iomega earnings except future zip DISK sales, the stock is still cheap." is easy to say but impossible to prove. We know much less about the number of Zip disks sold every month than we do about the number of drives sold every month. However, my argument still holds because the analysts who project Iomega earnings have to guess at the present and future tie ratio. If they are too optimistic - by say 20% - Iomega will disappoint and the stock will suffer. But if you ask a retailer how Zip disks are selling she/he will likely say that they are "flying off the shelves" because 0.8*(a lot of disks) is still an impressive number of sales. Unless you know that Zip drives + Zip disks + Jaz drives + Jaz disks + etc. are selling much better than projected, you better not plan on a higher price for IOM stock in the near future.

To: Joseph Hoane who wrote (52229)	4/10/1998 12:27:00 PM
From: Tom Trawinski	Read Replies (1) \| Respond to of 58324

>>This reminds me of why I was in Iomega originally. (I am not now, but this post makes me think I should get back in.) There was a very interesting analysis on the Motly Fool last fall which argued the following: If you throw out all Iomega earnings except future zip DISK sales, the stock is still cheap. This post reminded me that even if Zip DRIVES only sell 0.8 Million/quarter, each one creates a demand for Zip disks for the next five years. Still cheap at twice the price, from this perspective. << Well, whoever did this analysis does not know what he/she is talking about. In Iomega's most recent annual report, it specifically states that disk sales (i.e. tie ratios) are DECLINING as a result of OEM drive sales. So what you have is Iomega selling lots of drives but fewer disks as a percentage. The disks are the bread-and-butter of earnings and also the "razor blade" business model. It appears Iomega did not do something right in it's analysis of their model. This is hardly a formula for making a lot of money, or the stock looking cheap. Tom