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

To: Ken Pomaranski who wrote (8432)	3/20/1999 5:04:00 PM
From: Senthil Sankarappan	Read Replies (1) \| Respond to of 10072

Very good questions kp. I hope someone more knowledgeable than me answers your questions. My rough guess is that there is plenty of money eaten in between. i.e IOM loses majority of its profit to resellers, retailers etc. If they sell direct to the consumers, then their profit will be really high. I have no idea if a direct sales model will work or not. I don't have any experience in this area but i am hoping to hear from Sandy, Reseller, Allen etc. Thanks. Keep asking these good questions. -senthil

To: Ken Pomaranski who wrote (8432)	3/20/1999 5:24:00 PM
From: Naggrachi	Respond to of 10072

<<This concerns me. >> I'm really concerned that you're concerned. 'cuase you know, I wouldn't want you to lose your hard earned money, or anything. By the way, why are you so concerned, again? Zead Concerned about your concern

To: Ken Pomaranski who wrote (8432)	3/20/1999 6:26:00 PM
From: Michael Coley	Respond to of 10072

RE: Elasticity, Jaz, and Disks... >> - Elasticity of demand year / year is less than 1:1. (As average ASP drops, unit sales don't increase enough to compensate, dropping drive revenues.) This concerns me. << They had a 36% increase in Zip drive unit sales year over year (1998 over 1997). TO look at the price cuts, I think it would be best to consider the average price over the year, not the price at the end of the year. From my best guess, the drive prices dropped somewhere between 20 and 25%. What kept revenues from keeping up was the transition from retail to OEM, not a problem with elasticity. But I would go so far as to say that elasticity is not as good as I would have liked to have seen. >> - Jaz REALLY saved their behinds last quarter. Amazing... << Yes, particularly Jaz disks. If you do a little bit of guesswork on gross margins, I think you'll be even more surprised. >>- Disk revenue was amazing in Q4. Very strong. My question: If all the margins are in the disks, why is year over year earnings down 50%? If it really is 'it's the disks, stupid', then what is the money sink? << If you're going to talk product margins, you need to look at Gross Margins. They were only down 24% year over year (Q4 98 vs. Q4 97). I believe that most of that was due to drives. I believe Iomega made some VERY good margins on the Zip drives in Q4 97. A small part of it was due to declining disk margins (a drop from about 60% margins on disks to about 50% if my guess is close). Iomega lowered disk prices in Q4 98, I believe. - Michael Coley - bible-reading.com

To: Ken Pomaranski who wrote (8432)	3/20/1999 8:49:00 PM
From: HRP	Read Replies (2) \| Respond to of 10072

Ken, I argue that the profit from Zip drive sales decreases markedly each quarter on a year over year basis due to the increasing inclusion percentage. (Michael Coley, would you please add the inclusion percentage to your statistics?) Each quarter Iomega must make up the loss of profit from 100 MB Zip drives sales (relative to the same quarter of the previous year) from other products just to stand still. New models of Zip drives will make up some of the loss as will disk sales if the strong volume of disk sales continues beyond the last quarter when prices were reduced. However, I believe a substantial amount of Click drives must be produced and sold (not happening yet) if Iomega is to meet expectations in the coming quarters. Iomega's new management appears to be making laudable progress in its initiatives to reduce costs (forced by the increasing inclusion percentage). But, supply constraints (and resulting drop in share price) due to a connector is (supply your own expletives). Still cautious about taking a long position. hrp