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Non-Tech : Iomega Thread without Iomega -- Ignore unavailable to you. Want to Upgrade?

To: Naggrachi who wrote (6610)	1/23/1999 2:29:00 AM
From: HardMoney	Read Replies (2) \| Respond to of 10072

First let me say that many on this thread, especially the traders, I believe expect too much out of IOM's stock price. IOM reminds alot of Unisys (UIS) about a year an a half ago.It was at 7.5 then too....today its at 34.....anyway some thoughts: During the conference call they indicated that they were basically comfortable with FY99 estimates. Zacks and First Call have it at 35 cents . Now they also clearly stated net income for the year to be mid single digits....lets use 5% and lets say it's constant fro the year ( BTW I believe the contrary and see FY2000 with low double digit net margins 10-12%) for our discussion. Currents rev estimates are around 2 - 2.1 billion. Ok, if they think they'll break even in Q1 and they also believe they can do 35 cents for the year and they have a 5% net margin......then they would have to generate at least 2 billion in rev in the last 3 quarters of the year using a constant 285 million shares outstanding. Now q1 is seasonly slow and they have their supply constraints so lets say that rev for q1 end up between 350 and 400 million lets use 400 million....20% sequential decline....not unreasonable. So that means FY99 rev of 2.4 billion as compared to 1.65 for 98...that's a 44% top line growth rate. Using a constant 5% net margin you get 42 cents for 99......if the growt rate were to remain constant into FY2000 and the net margin % were to increase FY2000 looks like 1 dollar a share in earnings. (10 net margin would require FY 2000 Rev to be 2.85 Billion only a 18% increase fro fy99's estimate of 2.4 Billion. I can only ifer one conclusion from this exercise. This company is on the brink of exploding. Also taking the fact that OEM Zip drives were 2 million this quarter and represented 58% of all Zip drives shipped, on can infer that 3.4 million Zips were shipped this quarter, more than a million per month.....imagine if they didn't have supplier constraints a ramp up hassles this quarter...I predict at least 16 million Zip drives ship fpr the year. Also during the Vcall interview Mr. Glore, when asked, did not rule out a kind of iomega.com e.commerce plan, this type of selling would help tremoundously outside the US where CompUSA's are not the norm and are few and far between. IOM could charge higher prices than there US channel partners, thereby protecting them from competion while at the same time reaching International markets their partners don't even participate in....it would be a win/win situation. Ah well, just some random thoughts Frank

To: Naggrachi who wrote (6610)	1/23/1999 9:38:00 AM
From: s. bateh	Respond to of 10072

Zead, all i can say is that a lot of that 8-10 week inventory is in places like ingram, techdata,merisel...and i can also tell you that they will blow it out of stock real quick....with promo's that do not cost iom at all, like buy 250 zip parallel drives and get a zip 50 pk. of disks free....

To: Naggrachi who wrote (6610)	1/24/1999 11:56:00 AM
From: Cogito	Read Replies (1) \| Respond to of 10072

Zead - Re: channel inventory "problem" I think that the writer of that article for the Fool is absolutely incorrect when he says that "there is nothing build-to-order" about having 8 to ten weeks of inventory in the channel. He's wrong, plain and simple. Inventory in the channel was ordered by distributors. Since it wasn't shipped until after it was ordered, it doesn't affect the build-to-order strategy. Inventory on hand has been reduced, and that's what's important. The Fool writer says that the channel inventory was "supposedly" ordered by the distributors. Do you suppose that with profit margins being what they are in computer hardware, the distributors accept shipments they haven't ordered? I can recall a couple of years ago, when Iomega was having a lot of trouble getting Zip drives to market because of component shortages. For several conference calls in a row, Kim Edwards discussed the fact that there wasn't enough inventory in the channel, but that they were working to get it up to the 8 week level where they would be comfortable. Anything less than 8 weeks in the retail channel can translate into shortages on store shelves, as it did with Zip drives throughout 1996 and 1997. People can't buy products that aren't there. I'm sure that if you ask Jodie Glore if he would like to reduce channel inventories to less than 8 weeks, he would say that he absolutely does not. - Allen

To: Naggrachi who wrote (6610)	1/25/1999 12:43:00 PM
From: D.J.Smyth	Respond to of 10072

Naggrachi, re the conference call analysis and numbers you listed: doing some simple calculations (my simple numbers, not an analyst). assume 13,000,000 zips sold in 1999, an increase of 25% over 1998, which is consistent with 97. 70% go to OEMs, net to IOM of $55, and 30% retail, net $78. total revenue in 99 for zips would equal $804.7 million. using latter 98 as guidance disk revenue equals about 87% of total zip drive revenue. disk revenue would equal $700.08 milion. total zip revenue then (drives and disks) for 99 is $2.25 billion. you can lower the $55 and the $78 by 10% and you come close to $2 billion in sales. the above assumption does not give any additiional positive lattitude to the following variables: 1) Jaz sales that could total $360 million 2) increasing sales of notebook zips (above expectations - IDC believes that notebooks will account for more and more total PC sales, currently at 18%) 3)clik! sales 4)new product introduction sales 5)miscellaneous sales 6)exponentiating zip sales given that syquest is no longer available 7)potential increased sales from former syquest holders 8)so on channel inventory is above average due to one of two things (a) higher expected demand at retail or (b) slower box sales than expected. we already know that that 60% of the sales go to OEMs, 40% to retail. so the greater weight for channel inventory SHOULD be on the OEM side, not the retail. IDC reports that going forward box sales will increase in 99 over 98 by about 17% - actually ABOVE the increase in activity we see in the channel for zip drives - so if IDC reports that demand is higher, then the channel tends to prepare for increased demand - always running ahead - as IOM's capacity to increase manufacturing has also increased along with partners. supply constraints can be problematic. but supply constraints going forward are not well comparable to supply constraints we saw in Q4 97 when zips were running on 100% more chips. IOM has cut the chip count down (through improved technology) by over 1/2 compared to 97. There's certainly fewer fixed parts to go wrong or to constrain. so, any constraints should be hopefully temporary. in Q4 97 when supply constraints were WAY out of line, the Zip lost valuable sales to Syquest. This time around you shouldn't see the retail shelves empty of zips, and there's no syquest to buy instead. There is the LS120...but...compatibility is now an issue. the fool's comment that part of their earnings in 98 were due to a "$25 million tax refund" is said in such a manner than one doesn't realize of which year they're speaking. So? They lost money and didn't pay taxes - in fact, had a tax credit of taxes credited to their account through payment. Who doesn't when they lose money? I ran the numbers using 80% OEMs and 20% retail (compared to 70% OEM, 30% retail), and the decrease in revenue is minimal. The main schtick is the disks. As long as disk revenue continues to run at about 87% of total zip revenue (now, anyway), then 99 should be a good year. At 1 million Zips a month, IOM should do well. That number has been increasing, by the way. The general theory would be that zip disk revenue will increase beyond 87% of zip drive revenue as the total number of drives increase. Also, if you look at total zip disk revenue compared as a percent of total zip drive revenue in the past you'll notice that the zip disk revenue is increasing at a healthy rate. This is where most of the margins lie.

To: Naggrachi who wrote (6610)	1/25/1999 1:06:00 PM
From: D.J.Smyth	Respond to of 10072

Naggrachi, re the conference call analysis and numbers you listed: doing some simple calculations (my simple numbers, not an analyst). assume 13,000,000 zips sold in 1999, an increase of 25% over 1998, which is consistent with 97. 70% go to OEMs, net to IOM of $55, and 30% retail, net $78. total revenue in 99 for zips would equal $804.7 million. using latter 98 as guidance disk revenue equals about 87% of total zip drive revenue. disk revenue would equal $700.08 milion. total zip revenue then (drives and disks) for 99 is $1.55 billion. you can lower the $55 and the $78 by 10% and you come close to $1.4 billion in sales. the above assumption does not give any additiional positive lattitude to the following variables: 1) Jaz sales that could total $360 million 2) increasing sales of notebook zips (above expectations - IDC believes that notebooks will account for more and more total PC sales, currently at 18%) 3)clik! sales 4)new product introduction sales 5)miscellaneous sales 6)exponentiating zip sales given that syquest is no longer available 7)potential increased sales from former syquest holders 8)so on channel inventory is above average due to one of two things (a) higher expected demand at retail or (b) slower box sales than expected. we already know that that 60% of the sales go to OEMs, 40% to retail. so the greater weight for channel inventory SHOULD be on the OEM side, not the retail. IDC reports that going forward box sales will increase in 99 over 98 by about 17% - actually ABOVE the increase in activity we see in the channel for zip drives - so if IDC reports that demand is higher, then the channel tends to prepare for increased demand - always running ahead - as IOM's capacity to increase manufacturing has also increased along with partners. supply constraints can be problematic. but supply constraints going forward are not well comparable to supply constraints we saw in Q4 97 when zips were running on 100% more chips. IOM has cut the chip count down (through improved technology) by over 1/2 compared to 97. There's certainly fewer fixed parts to go wrong or to constrain. so, any constraints should be hopefully temporary. in Q4 97 when supply constraints were WAY out of line, the Zip lost valuable sales to Syquest. This time around you shouldn't see the retail shelves empty of zips, and there's no syquest to buy instead. There is the LS120...but...compatibility is now an issue. the fool's comment that part of their earnings in 98 were due to a "$25 million tax refund" is said in such a manner than one doesn't realize of which year they're speaking. So? They lost money and didn't pay taxes - in fact, had a tax credit of taxes credited to their account through payment. Who doesn't when they lose money? I ran the numbers using 80% OEMs and 20% retail (compared to 70% OEM, 30% retail), and the decrease in revenue is minimal. The main schtick is the disks. As long as disk revenue continues to run at about 87% of total zip revenue (now, anyway), then 99 should be a good year. At 1 million Zips a month, IOM should do well. That number has been increasing, by the way. The general theory would be that zip disk revenue will increase beyond 87% of zip drive revenue as the total number of drives increase. Also, if you look at total zip disk revenue compared as a percent of total zip drive revenue in the past you'll notice that the zip disk revenue is increasing at a healthy rate. This is where most of the margins lie.