Jock, thanks for the compliment. I had typed a message reply before, but my net connection was terminated, and I lost my computer. Another win 95 DUN (dial up network) crash.
ok, I understand your PSR measurement. However, I think it would be more relevant for us to look at trailing PSR info, not forward, because at THIS point, we have little idea what next 12 months Sales will be, yes? Thus a trailing 12 month PSR will provide a hint of where expectations for SEG, WDC, IOM, etc of the DDX sector will go when the competitive situation turns.
My experience tells me that over time there is a further write
down of these raw materials if only because the product mix changes.
Raw material write down will occur as you said, if they cannot sell the product or sales are slow. However all products zip PP, Zip SCSI, Zip IDE, zip ATAPI, zip +, jaz 1, jaz2, buz are still current products, with no sign of obsolescence. However if Orb, or Sony HiFD reduce prices so much in July/ August, then a writedown will be appropriate.
So we should know the answer by end of July.
But I am
certain that there will always be a need for the current floppy because God forbid
no one wants to lose that much printed work that one could lose on a Zip.
I only use my 3.5" floppy for driver updates for new modem/graphics cards. I don't need it for anything else. File transfer via sneaker net is much easier on zip. My financial data I have on hard disk, but when I want to xfer to others, I mail via zip disk.
Right now, I only backup my files, not programs, so I only need about 5 zip disks. However, I will need about 5 more in the future.
Why would anyone
want to install a Zip like drive in his or her computer if there was a product "out
there" that didn't require such installation, but provided the same amount of storage?
Please educate me.
I too am disappointed in the way which IOM addressed the "floppy replacement" argument. My solution for this is for IOM to create a driver update database (weekly updated) for VARs, which will conventiently fit on a 100mB zip disk. This way, drivers can be downloaded via the I-way, or you can get the latest driver updates from your local computer shop.
Your arguing the "floppy replacement" is similar to the unease I feel. Each million zips sold makes me feel less uneasy, however I think the critical limit is about 22 million drives sold. Then I think it is a locked in standard.
Your argument on reliability has been validated with the "click of death" problem. I was very uneasy about the COD problem, but have had reliable service with my ATAPI drive. From what I heard, there is a dust issue, a bad component IDE issue (something about magnetic fields from speakers or monitors), and the bad disk contamination issue (bad disk killing a good drive, bad drive killing good disks).
If IOM comes out with an admission of faulty components on the old IDE drives, I think lots of reliability concerns will be laid to rest. Although I think they will lose some money, so I waffle on this issue.
this is a broad issue, and I will discuss it further if you want. It is a short treatment of the entire "floppy replacement issue" and I haven't done justice to it.
You mention Sony. Sony is going to be selling yen made products for American
dollars. There is no way on God's green earth that IOM can compete on that field.
Last I heard, IOM production facility is in Malaysia. Do you know where Sony disk production is? It'd be interesting to compare shop rates. I think IOM's BIG problem is not labor costs, which is usually only 20% (top) of materials, but is RAW MATERIAL PROCUREMENT policy.
I think they paid premium prices for the material they ordering in December and accepted in January. Hey, they have enough raw material (if it was set ordered) for the ENTIRE Q2 sales estimate.
I would add that you failed to address the issue of why anyone would want to invest
in a company that cannot forecast its sales for the next quarter, but can assure you
that in three quarters it will make a profit. It makes no sense.
I won't argue valuation with you. Its the futile exercise people on this thread keep participating in. Imagine how good they would look if they spent that much time in the gym pumping iron!
How big is the installed base for floppies? 200Million?
Are you saying the total base for zip disk is only 200 million disks?
hmmm...I think you have the general magnitude correct, and this low end estimate might be ok, but an upside estimate might be 5 times bigger. This assumes about 50 million zip drives sold. I think there are more than 200mm floppies out there now. But they are essentially free so that is why zip has such a hard time unseating the floppy.
The 100mb size is ok for now, and will be too small in 5-6 years. But so is the 1.44mb floppy too small now. hmmm...falling back into the above argument. I disagree with posts asking for a 200mb floppy zip. Just spend the money on making the 100mb cheap. Do you mind the $20 you pay for the floppy in your system?
If seagate or others decide to buy IOM, then lots of things have to happen, like their stock has to increase rapidly, over IOM, etc. for it to happen. I doubt IOM is a takeover target for anyone right now. (today, IBM has a better chance of takeover than SEG, anyway).
I think that (ignoring Q1), cash flow for next 12 months will be close to $0.75 per share which values IOM at 10x cash flow. Not too bad in terms of valuation. But again, I am waiting (impatiently) for the price to dump so I can pick it up even cheaper. Again, I am looking for an 18 month investment, so I am looking at Oct 20 1999 and counting before I can sell at the lower tax rate. thats a long time to wait, but also a long time to allow IOM to recover.
Did I cover the sales estimate/cash flow issues on this rewrite? If not, then I think that the Raw Materials fiasco caused this to be certain. I think the profitability is negative because the cost of raw materials had a pull in premium built in. So if they sell it, then their margins will be less. Also, PC sales will be weak this quarter, because people will delay their purchase until win98 is released june 25th. So sales may be uncertain, but the loss on sales is pretty clear for some products. Depending upon product mix, this will be break even at best.
Re Orb...if only 200mm zip disks can be sold does this mean only 10mm orb disks can be sold? the math...$29 * 10mm = $290mm total revenue.
Is Castlewood a good company to invest in?
Re Sony HiFD ... If people only need 5 zip disks, does that mean they only need 2-3 HiFD disks? No, I think that means that they might buy 5 HiFD disks, because they need to separate their files physically.
When you are on a corporate network, don't you get frustrated trying to find some files? There are so many layers to go through, its such a pain. KISS - Keep it simple, stupid, still rules. separate disks are the easiest way to manage data.
I'm keeping it short, so maybe not fleshed out.
BL |
