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Monday, September 30, 1996 Iomega was up $1/2 Friday, closing at $23 1/4 (+2.20%). TODAY'S RECAP: It was a slow weekend in the Iomega Folder, with no new news for Fools to mull over. Much of what was discussed centered on mentions of Iomega products in the media, including an interview with Iomega spokesperson Jackie Joyner-Kersee and sightings of Iomega endorsements in several magazines. We also have the usual chatter about valuations, sales, competition, and prospects for the future. Since so little of consequence was discussed this weekend, we've abbreviated this edition of I/T into one part rather than Monday's customary two. INDEX: (Use the Search or Find feature of your word processor to locate the article number [Find: 1++, 3++, etc.]--or use AOL's Edit>>Find in Top Window Feature. If Find in Top Window is dimmed, just click on some text, anything, in the IOMG Today window and try again.)
1++RB61 explains how Iomega must account for the 3Q rebates. And now, the Best of the Board... Started 3 a.m. 9/27/96.
1+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re: Sales Rebates Date: 96-09-27 20:06:29 EDT From: RB61
Thursday, I heard back from the AICPA (American Institute of Certified Public Accountants) on my question to them on how IOMG should account for the sales rebates. The AICPA is THE authority for the accounting profession. Their answer was that IOMG MUST account for them as a reduction in sales. In other words, the entry would be Debit (reduce) Sales Revenues and Credit (increase) Sales Rebate Accrual.
The reason why this is the method they must use is that the rebate is a material aspect of sales. With the rebate being $50 on a $200 retail product, this accounts for 25% of retail and even a higher percentage of the wholesale price IOMG receives. Because of the materiality of the rebate , the AICPA indicated that Sales must be reduced by the anticipated redemption level of the rebate.
Now, what does all this mean? It means that those estimates put up by H&Q and JP Morgan, more than likely, account for this rebate in the same manner. I have to believe that they have asked and received guidance from IOMG on the rebate issue. So then, the $257m H&Q has as a revenue estimate, is already reduced by an estimated amount for the rebates. This also helps us in estimating how many Zip drives IOMG may sell for the qtr.
Fool On,
Robert 2+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: New to Iomega, PartI Date: 96-09-27 22:46:23 EDT From: Hal Rubel
I'm new to Iomega. Read all your current postings the other night. (an incredible number of postings compared to AMAT, COMS, CISC, and OXHP). I was so overwhelmed by the concentrated enthusiasm that I fell into a trance and placed an order for 200 IOMG for the open which cleared at 25 7/8. Now that I am in, I'm in. I like the company's long term prospects so I'm happy. Here are some plusses and minuses as a new person like me might see them.
(+) Recent Reduction in Estimated Earnings - Was actually a good thing because pie-in-the-sky numbers were replaced by more realistic numbers. The fact that the new figures were lower greatly enhanced their credibility in my mind. Since the presumably more conservative numbers were not all that bad, Iomega's prospects became more realistic to me. I could see myself owning Iomega and sleeping at night. Judging by the recent price move., I was not the only one that saw it that way. The point here is that the price of the stock benefited by a more realistically cold blooded appraisal of its potential.
(-) Zip to Replace Floppies and/or Hard Drives - Unrealistic expectations by current stockholders may make potential buyers nervous about the stability of the stock's price. I think it is an unrealistic expectation that current products will displace floppies or hard drives for certain reasons. The Zip's advantages of being Cheap, High Capacity, Reliable, Recordable, Removable, and Popular are insufficient.
a) Zip disks are cheap but not cheap enough for the job of replacing floppies. Floppies are practically free. The America On Line Marketing Dept., bless their hearts, has supplied me with more promotional disks than I can possibly reformat and swap with friends. Also, when people send me stuff, disks accumulate, and sometimes even those disks show the remains of an AOL label. Clearly, we are approaching a critical mass of free floating floppy disks. Just think about what happened to last years floppy production, and the year before's? They are going to come back to haunt us in hordes. As old floppies fade they are recycled. And now, as people buy Zips and other grand storage devices to back-up old floppies, they free even more floppies into the available pool. One Zip disk can free up 100 floppies. Now, I just can't see myself pumping Zip disks out the door at a couple bucks a pop. I certainly could not expect my friends, nice as they are, to send stuff to me on Zip disks at least until they run out of floppies.
b). Zip offers a big capacity improvement, but that is not enough to turn the tide. All new machines seem to come with a CD-ROM drive which also presents a capacity increase. With the ongoing inflation in program size, software suppliers now favor CD's over floppies. CDs are preferred not just because of their enhanced capacity, cheapness, lower bulk, speed, and the omnipresence of CD players, but also because of the CD's non-magnetic data integrity. The occasional but inevitable single bad floppy in a set of 10 creates a small customer service nightmare.
c). Zips are reliable but they are magnetic. Because they are magnetic they begin degrading starting day one from handling and from normal microscopic magnetic domain degradation. (Scientific American had interesting article last year). Magnetic media was probably never intended to be permanent like CD and magneto optical seems to be. A student, for instance, may not reasonably be expected to carry a magnetic media disk back and forth between his/her school and home computer every day of the school year. (Though the idea could give new meaning to the old reliable "A dog ate my homework"). Electrical equipment, refrigerator magnets, hot cars on summer days, boiling coffee, and father time conspire against magnetic media. At the same time, in the public conciseness, recordable CDs (klunky) are just around the corner, and affordable 1-2 Gb magneto optical devices are on the horizon.
(+) Iomega's Prospects - However, I do believe that Zip products have gained the high ground of being a computer equipment standard where Syquest once stood. I do believe individual users are going through a backup and storage revolution that will be evidenced by strong Christmas sales. Too bad for Syquest that it won't be in on this one. I do believe the product will make inroads against floppies where capacity is a factor, but Zip disks would have to be as cheap as floppy disks to actually displace floppy drives in new computer units. I do know that floppy disks were originally expensive and yet still became a standard. In 1986 floppies did sell for as much as $29 a box, but unlike the Zip situation, every computer then already came with a floppy drive and there were no alternatives. The floppy was standard from day one as a given, without struggle or a second thought.
(+) Wild Speculation - Now, if a Zip drive could also read a floppy disk, then manufacturers would dump the floppy drive for ever without a second thought and Zip would be king. Likewise, if Iomega would attempt to cost-revolutionize large hard drive capacity non-magnetic removable media, they would rule the world. Imagine being able to have your computer eject in a compact bootable form the entire OS, programs and file contents of your computer in such a way that you could safely carry it between work and home or to another office simply by slipping a removable disk into your pocket. That would tempt me to mortgage the house to buy Iomega stock if any could be had. Of course, a move like that by Iomega may be bad for sales. Why buy the product for work, when you could just buy the stock and retire. 3+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:New to Iomega, PartI Date: 96-09-27 23:45:39 EDT From: MF DTurkey
<<<b). Zip offers a big capacity improvement, but that is not enough to turn the tide. All new machines seem to come with a CD-ROM drive which also presents a capacity increase. With the ongoing inflation in program size, software suppliers now favor CD's over floppies.>>>
Hal, you focused on the size of programs, but the real value of the Zip come in when dealing with the size of files the user creates on their own. You're right, the Zip isn't going to beat out the floppy as the medium of choice for dispersing software. But programs aren't the only things that are getting bigger, the files they create are. And for any file over 1.4 MB, the zillion floppies AOL has sent out aren't going to do the job. And as still images & video become more and more popular, file sizes above 1.4 MB will become more and more the norm.
And even if your file is only, say, 0.5 MB, but you have 20 of them. Then what? You could load them onto 10 floppies. Or..........
Dan 4+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Zip Across America-Indy TV Date: 96-09-28 03:17:14 EDT From: RonaldM348
Below is reasonably accurate transcript of Jackie Joyner-Kersee interview on major Indianapolis network Thursday 9/26 on the noon news. I thought most of you would find it interesting. Ron Mason
Male news anchor: " Well there is a new program. It is called 'Zip Across America' . It is program designed to involve hundreds of thousands of young people in the election year."
Female news anchor: "It encourages youngsters to write letters to the president. Three time Olympia gold medalist Jackie Joyner-Kersee was in Washington today for the kickoff of the program. She joins us live via satellite to tell us more about it. Thank you very much for joining us here."
JJK: Well thank you;
Female news anchor: "We understand the bus tour will stop here in Indianapolis. So tell us a little bit about the 'Zip Across America' program and bus tour here and how it works."
JJK: Well the 'Zip Across America' program is an educational program designed to give young people a voice and get involved in the political process. So that kids will write about the issues that they are concerned with and present this to the president on a Zip disk. The bus itself will travel through 17 cities; and, Indianapolis being one of the 17 cities. The kids will come to the bus, get their picture digitized and get their voice recorded and also be able to tour the bus."
"This new modern technology I think is great for kids and gets them involved in computers; and, also understand their letter is going to be stored on this Zip disk and hopefully this will be presented to the incoming president in January."
Male news anchor: "And, the Zip disk is a newer kind of media right-a computer storage disk? But, you are going to actually deliver that to the president?"
JJK: "Yes we were going to mail it to to-we are hoping to get this into the presidents hands. Hopefully in his spare time after the election that he would be able to look at this Zip disk download it and see the issues these kids are concerned with. Were talking about 4th graders through 8th graders too. Because these kids are not allowed to vote. But yet, they do have this voice; and, they do have concerns; and, they would like to be heard. So "Zip Across America' has given them that voice.
Female news anchor: "Jackie you have talked to many children across the country-actually across the world. Do you have any idea what their interests are and what types of things they will write to the president?"
JJK: "Oh yes! These kids are writing about second hand smoke, talking about drugs and violence, abuse, graffiti, you know how to clean up the graffiti, the environment , you know, and to save the trees. It is amazing some of these things that kids are concerned about. I think it is very important for our president to understand these young people are the future of tomorrow. And there are things they are concerned with even though they can't cast a vote, but yet still they do have a voice and they do need to be heard."
Male news anchor: "Al right Jackie Joyner-Kersee, 'Zip Across America', we hope these kids get their message across to the president."
JJK: "yes"
Male news anchor: Thanks for being with us today-appreciate it.
Female news anchor: " A bus here in Indianapolis too." 5+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:PLAYBOY Date: 96-09-28 13:37:02 EDT From: M Andrews2
Haven't seen this posted yet. From the Nov. issue of PLAYBOY
"One of the most sought after computer peripherals among musicians and filmmakers these days is Iomega's Jaz drive. Priced at $500. for an external version or 400 for an internal one, the two pound Jaz is an economical and slick way to add storage to your computer system. Why slick? Because the device uses removable cartridges that are slightly larger than a 3.5 floppy disk yet store up to a gig of info and data. That means you can put eight hours of cd quality audio or a full movie on a single jaz cartridge. No wonder the Sundance Institute, Don Was and Herbie Hancock are all jazzed about Jaz."
A nice picture of the Jaz too. 6+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Zip in the box Date: 96-09-28 14:37:57 EDT From: Tgizip
One of Iomega's goals is to get Zip inside the box according to KE. Recent channel checks lead me to believe that this goal is not going to be achieved in the near future. Most of the new models have now arrived at retail for the Christmas selling season and zip is in very few of these machines.
The biggest disappointment, in my opinion, has been IBM. I saw the new Aptive S line at CompUSA today. These machines look awesome and are sure to be big sellers this Christmas. The main unit is a mini-tower which can be stored under the desk, up to 6' away. The new innovation is the media console a space saving unit that sits on the desktop and contains a popup CD-rom and a standard 3 1/2" floppy (boy do I wish it was a zip!). Great idea IMO, saves space on the desktop but allows easy access to floppy and CD drives. The problem is that there is no room in this console for a 3rd device (zip). This leads me to believe that IBM has no plans of selling machines with internal Zips any time soon.
In addition to this new IBM line, CompUSA has new models from Compaq, Nec, Sony, Toshiba, HP and PB and none of these models have internal Zip drives.
On a positive note, I have seen the HP 7110Z and a PB Platinum model with internal Zip at Circuit City as well as the HP 7275Z at Computer City. IMO three models out of maybe 30 or 40 new models selling at retail stores does not a large presence make.
I believe that the new IBM's, Sony's, and Toshiba's with their new looks will be the hot selling boxes for this holiday season. If Zip had made it into at least one of these three it would have been encouraging. Oh well, maybe 1997 will be the year for the internal zip because it looks like we have missed the boat for 1996.
Last but certainly not least, I believe that the external zip sales will be huge this holiday season and this should make for a great 4th quarter for IOMG, as for 3rd quarter, I am not expecting any big surprises. I hope IOMG can at lease meet estimates.
I would like to hear other peoples opinions. I am not bearish on IOMG, just a little disappointed about the acceptance of internal zips by the OEM's to date.
bye for now
Ed W. alias Tgizip 7+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Dogs are barking Date: 96-09-28 18:30:59 EDT From: OnLine MW
>>>>I'd warn you to sell, but I'll enjoy reading the anguished bitching in this folder when your equity evaporates.<<<
To be honest..I think anyone who gets up and say they know what IO will do in the next several months is just guessing. And guessing without much reason to think their guesses will be any better than throwing darts at a dart board in a dark room.
There is a window right now where any of several competing medias will begin to pull slowly away from most of the others. One very well become a standard that will be around for the next several years. There will be some big winners and many losers. But right now......no one knows who will win that race. And I think we won't know until next spring/summer. Till then the various companies stocks will wander up and down price-wise. IO as a company has as good of a chance as any of the others. Maybe better. And from what I have heard in the computer biz, both in the Mac world...where for many , Zip and Jaz drives have already replaced Syquest drives in computer rentals companies and copy centers.....you can get Mac's with internal Zip drives(and they always were able to a boot drive) from Apple dealers and computer super stores and mail order. And I have been told that around 35% of those computers sold get the Zip drive... The PC world is still way behind that percentage. A friend of mine at the mail order company PC Mall said it was less than 10%...
In any case....over the next few months we should see some movement to some kind of new standard. The 3.5 floppy drive's day is done. But nothing in the next few months is going to indicate which media it will be... no single piece of information....is going to cha market.... I am enjoying it!
Steve Costa 8+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Dogs are barking Date: 96-09-28 19:29:15 EDT From: MF Ben
<<<And from what I have heard in the computer biz, both in the Mac world...where for many , Zip and Jaz drives have already replaced Syquest drives in computer rentals companies and copy centers.....<SNIP> And I have been told that around 35% of those computers sold get the Zip drive... The PC world is still way behind that percentage. A friend of mine at the mail order company PC Mall said it was less than 10%...>>>
Steve Costa,
Interesting statistics. Gives us a dangerous beginning for new CPU penetration rates (no Playboy/Jaz jokes puleeze!) but nothing I would want to use to extrapolate the whole market (confounding factors being mail order, sample of one, etc.).
The really interesting aspect of it is that most of those sales must be the external version. That has implications for the SKUs that include internal Zips and warrants further thought. Thanks for sharing the information.
<<<In any case....over the next few months we should see some movement to some kind of new standard. The 3.5 floppy drive's day is done. But nothing in the next few months is going to indicate which media it will be... no single piece of information....is going to cha market.... I am enjoying it!>>>
I agree. No single announcement wins the prize but each one does help close the odds a bit, some more than others.
<<<But right now......no one knows who will win that race. And I think we won't know until next spring/summer.>>>
OK, why spring/summer? And using what basis? Percentage of SKUs with Zips? Installed base over XYZ? Annual unit sales over a certain number? What will it take? What measurable (or immeasurable) target must be reached for Steve Costa and/or MacWorld (and the rest of the press) to declare the race over?
Cheers,
Benjamin 9+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Dogs are barking Date: 96-09-29 01:19:12 EDT From: OnLine MW
<<OK, why spring/summer? And using what basis? Percentage of SKUs with Zips? Installed base over XYZ? Annual unit sales over a certain number? What will it take? What measurable (or immeasurable) target must be reached for Steve Costa and/or MacWorld (and the rest of the press) to declare the race over?<<
Why next summer? Because by next summer a new generation of personal computers will begin to be available. 300 to 500 mhz computers will be available at reasonable prices.. And they will be in a position to make some changes that will be easier then than now. Look at it this way...this year for the first time the production of floppy disks has not increased anything like in years past... less than 3%. I haven't a floppy disk in months. I've used Zip drives...cartridges. My System Software I download it install from CD ROMs. I get anything else I need from a network server. While I think I am not the most common example there are more and more people like me...
This is the start of a major shift in the industry and I think by then.....we will see the beginning of what of these media in more and more of these computers. I'm not the only one either. IO thinks so in this time frame and so does Sony...
Ive been NDAed on a number of things so I can't say much....just that things will be a process of changing over the next several quarters and by then stocks like IO will either be higher..and higher for good fundamental reasons that will be hard to debate with...... Or they will become companies with just with a niche product and fade away.... And I don't think that will become clear any more than it is now for quite some time. IO will go up and down with the wind....
Steve Costa 10++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: "Modern Ferret" Endorses Zip Date: 96-09-29 21:22:40 EDT From: JIMMUNROE
I may not post very often but I'm going to be hard to top. My 13 year old daughter loves animals and her current fascination is with ferrets. As part of a campaign to get me to agree to a subscription to "Modern Ferret" magazine, she showed me a Zip picture in Vol 1 No. 6. By golly, there was a white ferret exploring a Zip disk on top of a Zip drive. Doubters are encouraged to turn to page 43 of "the magazine that dogs and cats envy". Looking closer, it got even better: it was a bona fide product endorsement! Below the picture was the following:
"Product Review: zip drive by iomega"
"This is great. There is no other description. Cheap, easy to use additional disc space that's portable. I can no longer imagine living without. This issue is already backed up onto disks as a works-in-progress! File transfers to service places is quick, easy and best of all painless!
(Begin bold face type)
A MUST-HAVE resource for anyone dealing with growing numbers of desktop publishing files!
(End bold fact type)
I love this thing and they're available everywhere! Compatibles are already being made by other mfgs, turning this into a standard!"
There was no mention of the LS-120 or the MO or the Easy Flyer or the Syjet or...... If you are short the stock, this is a sure indicator that you are about to take a bath. I eagerly await an endorsement to top this one!
Jim Munroe
End Report. Posts covered through 3 a.m. 9/30/96 _______________________________
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