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Technology Stocks : Disk Drive Sector Discussion Forum -- Ignore unavailable to you. Want to Upgrade?

To: La Traguhs who wrote (4772)	10/20/1998 4:42:00 PM
From: Mark Oliver	Read Replies (2) \| Respond to of 9256

Do you have a conference call number for HMT? Thanks, Mark

To: La Traguhs who wrote (4772)	10/20/1998 10:57:00 PM
From: Mark Oliver	Read Replies (1) \| Respond to of 9256

Some excellent notes from a friend on the Iomega conference call. Regards, MArk Iomega executives (J.Sierk, Scott Flaig, Dan Strong) talked about the CQ3 financial results and business outlook with industry analysts and major financial institutions. Overall, the conference call was very good and informative, and they (Iomega execuives) were very upbeat about the company's business outlook. One of the good news was that Iomega received a letter of intent (volume purchase agreement ???) from one OEM for the Clik!. They will announce the details very shortly. My disappointment was that they did not talk a lot about the RED (Zip 250MB)program. They reiterated that they will be ready to introduce the program at the "right" timing, though. Here is my notes from the conference call. -- achieved 34% reduction (= $49 million) in operating expenses. (target was at least 25% reduction in the CQ3 with $50 million total reduction in the 2nd half of 1998) -- improved the cost structure significantly. (announced very aggressive cost cutting moves in June) -- OEM sales continued to become a larger part of the business. OEM was more than 50% of the total Zip drive volume in the CQ3. -- posted a net loss of $7.6 million ($0.03 per share loss) for the CQ3 before $11.1 million non-cash pre-tax special charges related to write-down of purchased in-process technology, part of the Nomai acquisition. -- the net loss of $7.6 million included a $3 million after-tax loss from Nomai ongoing operations and goodwill amortization. -- expects to be profitable and cash flow positive in CQ4. -- reduced inventory by $85 million to $196 million, 30% decrease from CQ2. 4.3 inventory turn (from CQ2's 6.2 turn) -- improved supply chain management. the initial efforts to move toward "Virtual Enterprize Model" is paying off. -- $46 million cash, plus $90 million undrawn availability on credit line totaling $136 million available. -- $21 million negative cash flow before $45 million cost involved in the Nomai acquisition. improved the cash flow position from $41 million negative in CQ2 to $21 million negative in the CQ3. -- expect positive cash flow in CQ4 , though entire 1998 will still be cash flow negative. -- shipped 18 millionth Zip drives in the CQ3. -- shipped 100 millionth Zip disks in the CQ3. -- Zip disk now selling for $9.95 in a 10pcs pack. -- external Zip drive now selling for $119 and internal model for $99. -- shipped 2 millionth Jaz drives (last week). -- gross marging of Jaz drives improved considerably. -- start shipment of Clik! drives and USB Zip drive in CQ4. -- received a letter of intent from Major OEM customer on Clik! drive. (announce the details shortly) -- exploring development of new higher capacity product including CD-RW technology. -- net sales for the CQ3 was $392 million, 9% drop from CQ3'97, 1% down from CQ2, mainly due to the lower ASP caused by Zip/Jaz price reduction. -- total drive sales vs total disk(cartridge) sales was $228 million vs $164 million. total drive sales was 2% up from CQ2 and 11% down from last year. total disk(cartridge) sales was 4% down and 7% down from CQ2 and CQ3'97 respectively. -- revenue from Zip drive/disk sales was $279 million , 2% down from CQ2. -- shipped 2.4 million Zip drives in the CQ3, 39% increase from a year ago and 20% up from CQ2. -- shipped a record number of Zip disks in the CQ3, 6% up from CQ2, 30% jump from CQ3 '97. -- Jaz drive/cartridge sales was $95 million, 9% up from the last quarter. Jaz-2 drive shipments increased significantly. CQ3 Jaz cartridge unit shipment increased 22% from CQ2, down 9% compared with the same quarter a year ago. -- Ditto tape and drive sales was $13 million, 38% drop from CQ2. -- sales to Europe was $88 million in the CQ3, 5% down from CQ2. -- sales to Asia-Pacific was $33 million, 23 % drop from CQ2. -- US domestic sales was $268 million, 4% up from CQ2. -- CQ3 gross profit was $88 million, 8 % down from CQ2. CQ3 gross profit margin was 22% vs 24% in CQ2, 32% in CQ3 '97. -- Jaz gross margin improved. -- company's future gross margin expected to be mid 20%. -- SG and A for the CQ3 was $73 million, 37% (= $42M) cut from CQ2. $35 million out of the total $42 million cut was from sales/marketting expense cut. -- R&D expense was 6% of total sales in the CQ3, 22% down from CQ2. -- $225 million receivables. days sales outstanding was 52 days. (33 days in CQ2 and 55 days in CQ3 last year) -- channel inventory: Zip drive 8.5 weeks (from 6.5 weeks CQ2) Zip disk 7 weeks (from 6 weeks CQ2) Jaz drive inventory significantly declined. -- Zip/Jaz drive return rate was lowest ever in the company's history in the CQ3. OEM customers are telling now that Iomega made a dramatic improvement in quality and service. -- Nomai acquisitions is $45 million investment with 98% share/stake. -- still searching CEO. a couple of weeks behind the schedule. -- licensees built 11% of total OEM Zip drives, up from 5%. licensees boosting production capacity. -- NEC announced that it will produce USB Clik! drives and make a product demonstration at Comdex. -- introduce high capacity Zip (RED) at right timing.