Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Rational who wrote (53038)	4/19/1998 1:01:00 AM
From: RetiredNow	Read Replies (4) \| Respond to of 58324

True enough, Sankar. It really all boils down to guesswork. If any of us had crystal balls, we'd be billionaires. Here's some more food for thought. Sorry to keep posting these figures, but I wanted to point something else out. (in millions) 09/96 12/96 03/97 06/97 09/97 12/97 03/98 Revenue 310.1 397.1 361.3 400.2 431.7 546.8 408.0 Net Income 12.8 20.4 23.0 26.2 30.0 36.1 (18.6) Net PM 4.1% 5.1% 6.4% 6.5% 7.0% 6.6% (4.5%) Share O/S 274.1 273.4 271.4 272.9 274.1 283.5 262.2 EPS .04 .07 .08 .10 .11 .13 (.07) If you take the $408 MM in revenues from 3/98 and multiply by a net profit margin of 6.5%, you get $26.5 MM. So $26.5 MM is what IOM's net income should have been based on historical net PM percentages. However, in the CC, they said that profit would have been better if they hadn't spent $20 MM on incremental advertising during the quarter. O.K. So that gets us back up to $1.4 MM (20-18.6) they should have earned. But they should have earned $26.5? That's $25.1 MM (26.5-1.4) that got lost somewhere. Well, they tried to explain it away by saying that their product mix shifted. They put the positive spin on it, saying that OEM sales as a percentage of total went up to 50%. What they neglected to mention was that the increase to 50% was due to retail sales having decreased dramatically. OEM sales actually have stayed the same as last quarter. This is bad news. Not only are sales to OEMs not increasing as fast as they say, but retail sales are shrinking. It's too early to say whether this is a permanent trend or if it's just KEs parting gift to the company. But if this type of thing continues into the next few quarters, and the new products don't materialize, I'd say IOM is in for prolonged troubles. What happened this quarter could just be a prelude to more disasters.

To: Rational who wrote (53038)	4/19/1998 1:18:00 AM
From: Herb Fuller	Read Replies (1) \| Respond to of 58324

Sankar , Is it fair to assume that a company that is growing into an expanding market at the rate of 35% a year would have a problem maintaining a constant earnings pattern due to expansion , market fluctuations ,r&d cost , growing capitol expenditures , employee problems etc. ? The rewards for the stockholders would come after the company matures into their market and the company can pay dividends due to a more stable marketing environment . IBM is a good case in point . This is where I think that Iomega is at at the moment , a growing company in an expanding market . Herb