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Wednesday, October 09, 1996 Iomega was up $1 3/4 Tuesday, closing at $23 5/8 (+8.00%). TODAY'S RECAP: On no news, Iomega shares were up sharply Tuesday in heavier-than-average trading. What might have caused this rally? Could the jump have come in anticipation of Iomega's earnings report -- which, due to an error at Zacks, some traders may have thought was being released yesterday? Or perhaps the story about SyQuest in the October 8th issue of Investor's Business Daily (summarized here yesterday) might have tipped off the Street as to just how deep that company's problems really are? Or maybe it was plain old short covering, or the alignment of planets, or an unusually vigorous random walk? Alas, we will never know for sure. In any case, the strong move up was a nice surprise for Iomega longs on an otherwise uneventful day. 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++Ind Sales continues his consideration of tie ratios. And now, the Best of the Board...Started 3 a.m. 10/8/96.
1++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Tie Ratio/sales Date: 96-10-08 07:53:23 EDT From: Ind Sales
Thanks, Jim Arden(Foolshdog), and others that replied to my post. I really had thrown it out there as a reflective question relative to sales.
As you can see, it is still very, very hard for the Zip cartridges, even at an 8, or 10:1 tie ratio to produce the kind of sales that Iomega needs to show the incredible growth over the last 12-18 months. I haven't forgotten about the Jaz, Ditto, and other great products, but as this board frequently assures everyone, 'It ain't the razor, it's the blades'.
Assuming the Zip provides the growth necessary to give Iomega the dream OEM sales needed to conquer the market, then the tie ratio will still be very meaningful, but I also assume that the prices and maybe the margins will have dropped also.
This is a very tough global market, and as I have stated in the past, I hope Iomega is putting all of that R&D money into the right places. My gut reaction as a CEO, is that I would be talking to Seagate in several months. A company that has world-class hard drives, and removable technology would be tougher, larger, and more profitable IMHO.
Steve Hinchey
IND SALES 2++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:IBD article Date: 96-10-08 08:01:14 EDT From: MF KarenK
From the IBD article:
<<They're at the leading edge of an industry phenomenon,'' said Bob Abraham, an analyst at Freeman Associates Inc., a Santa Barbara, Calif. research firm. ''There's a need for a lot more storage at the personal level.''>>
This is the crux of the issue (for me) and Iomega has the lead. Of course, the other, and more significant point, is, can Iomega make a profit at this? I believe they can, from what I have been hearing about the deals with the chip makers helping to contribute to bringing down the cost of zip. I still have faith that this management team is running this business the way it should be run...to insure the long term success of the zip and the Iomega brand name.
FWIW, Karen Kosoy 3++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Can Syquest Do Battle with IO? Date: 96-10-08 09:04:16 EDT From: BlckMarlin
Today's article in IBD is quite interesting. While conceding that Syquest is being slaughtered on all fronts by Iomega, there is an underlying message that Syquest will somehow overcome due to new management and products.
Not a mention that the products are based upon Iomega cast-away technology.....Interesting also that Syquest has till Oct 31 to get out of the red in order to continue to be listed on Nasdaq. I don't understand how financing $50 million (going into further debt) can bring immediate profits, without some kind of overnight turnover of new products on a massive scale. One has to but visit any retailer to know it just isn't happening.
The capper was the conclusion from analyst Bob Abraham at Freeman Associates Inc, here in my home town of Santa Barbara. "They're (Syquest) at the leading edge of an industry phenomenon". Mr. Freeman needs to do just a little more homework to find that Iomega is the one at the leading edge. It's simple - either you are or you aren't.....and Syquest aren't...
BlckMarlin 4++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Today's WSJ Date: 96-10-08 09:40:47 EDT From: KSuitter
This was brought to my attention from a fellow Fool. It doesn't look good!
>>Finally, Venture Manufacturing -- one of the largest contract manufacturers in Singapore -- is another perennial top performer, with an international customer base and startlingly strong earnings reported recently. Venture stunned the market by tripling revenue to S$320 million for the six months ended June 30, while net profit jumped 90% to S$15.2 million.
Margins slid to 8% from 12% in the first half of last year, indicating that the company had taken on more high-volume, lower-margin work. Venture also benefited from a bonanza in orders from Iomega, a U.S. manufacturer of disk drives used for data storage that boomed earlier this year but now is awash in inventory and is cutting production.<<
This Was Better Than Sex Ken Suitter 5++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Fuji Film Zip Drive Sighted Date: 96-10-08 10:33:50 EDT From: Shig2
Here in southern Japanese city of Kagoshima, I visited several computer stores. I found absolutely no Iomega brand Zip drives, but found a plenty of Epson-branded & Fuji Film-branded Zip drives. Both are selling for 19,800 yen or approx. $188 without any cables.
Fuji Film version comes with a photo collection of a popular Japanese singer group. Fuji Film Zip looks just like Iomega drive with the same color. The only difference is brand name label.
Iomega brand Jaz drive is selling for 49,800 yen or approx. $474. No rebates are offered for either Jaz nor Zip drives. Iomega tools software is for English version. There is a coupon for free upgrade to Japanese version of the tools when they become available. There are five times as many MO cartridges than Zip cartridges (Fuji & Maxell) are available, but Zip seems to be getting increasingly popular. 6++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Corporate Channel Check Date: 96-10-08 10:37:44 EDT From: Grif 10ace
Fellow Fools:
I work for a Fortune 200 electronics manufacturing company and have been watching for sometime as to when the Zip Drive would make the "approved purchase list" of computer hardware within our company. By way of background, due to quality, maintenance, and support issues, only IBM and Compaq models are approved at this time.
Yesterday I saw that an evaluation of the Compaq DeskPro 4000 series had been conducted and approved for purchase. Two of the six models included the LS-120 drive! These models were "Model 5120/1620/LS 1.62GB" and "Model 5166/2500/LS 2.5GB".
I called our hardware vendor to check on availability. They left a message back for me that they had 100 and 200 in stock respectively. "Drew" also mentioned that he is currently not seeing a huge demand but availability is always subject to change.
As a IOMEGA shareholder I have been looking forward to IOMEGAs entry into the corporate market. I'm disappointed that the LS-120 is here first, at least as approved within my company. Anyone else seeing anything similar out there? 7++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Venture, I ramble on. Date: 96-10-08 13:46:09 EDT From: CyberVster
From todays WSJ
<<Finally, Venture Manufacturing -- one of the largest contract manufacturers in Singapore -- is another perennial top performer, with an international customer base and startlingly strong earnings reported recently. Venture stunned the market by tripling revenue to S$320 million for the six months ended June 30, while net profit jumped 90% to S$15.2 million. Margins slid to 8% from 12% in the first half of last year, indicating that the company had taken on more high-volume, lower-margin work. Venture also benefited from a bonanza in orders from Iomega, a U.S. manufacturer of disk drives used for data storage that boomed earlier this year but now is awash in inventory and is cutting production. >>
and my ramblings: I did not see the entire article, the Venture portion was emailed to me. Question: what section of the paper was it in? It seems to be a part of a bigger summary, Is the article warning us about Venture, the word perennial can mean enduring or seasonal. Will Its huge growth come to a screeching halt at the loss of Iomega orders? or is it touting Venture as a up and comer? Is this sentence << Margins slid to 8% from 12% in the first half of last year, indicating that the company had taken on more high-volume, lower-margin work.>> referring to Iomega orders, or is it a blind to mask other problems?
Is Iomega cutting its orders to Venture because of internal manufacturing capacity coming on line in Malaysia? Is Venture crying in its soup here? Did Iomega cut its orders to Venture as a step in phasing them out? . In this sentence <<Venture stunned the market by tripling revenue to S$320 million for the six months ended June 30>> about a third (Singapore $s) of Iomegas revenue for the same period. Was Venture catapulted here by Iomega orders? Has Venture reached its maximum capacities?
Taken at face value the articles last sentence seems to indicate that Iomega is awash in inventory and cutting production (at least with Venture). It may be true, Iomega stated in Q2 conference call that Finished Goods will be higher at the end of Q3 then they were end of Q2. In anticipation of Q4 demand, the company planned to stockpile inventory to help retailers meet Xmas needs. I expect big finished goods numbers to be reported in 10 days. Is Iomega simply shifting production elsewhere and using the buildup of inventory as an excuse to pull away from Venture? Can Venture achieve the economy of scale that Iomega needs to cut its own costs?
I am pondering what awash with inventory really means, if Syquest had 30 plus million in finished goods I would consider that awash. Iomega on the other hand could ship that in a few weeks time. As for cutting production, does Venture simply assemble parts or do they make some of the parts? Big difference. Could the Dream Team announcement be involved?
Who wrote this sentence? Venture, or a dedicated (never take the path of least resistance) reporter, who did some digging and discovered this news from another source and then went further to confirm it via a second independent source? (well, I can dream cant I? After all this is the WSJ!) FCOL.
I expect Iomega will have to shift a lot of its startup production to manufacturers who have the facilities to produce lots of product. Iomega now has the parts shortages under control (it you dont agree, ask Intel.) I feel for IMP and Venture (there will be others), Iomega is out growing its original pot and needs to replant itself in order to grow.
Anyone have more details on just what Venture did/does for Iomega? Venture has tripled revenue while margin fell 40%, my guess is that Iomega had some influence here. At least on the revenue side, could the falling margins be caused by something else? Is Venture a public company? If so Can MF Robert get access to their quarterly reports and sleuth out some answers? MF Robert?
Mark 8++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Channel Check/Disclosure Date: 96-10-08 18:09:50 EDT From: MU82
In an attempt to bring this board back to what I believe it should be (I have been a lurker for the past year) I offer the following constructive comments and observations.
1. I do not pretend to have all of the laws regarding corporate disclosure at my finger tips, but I seem to recall (from school) that a publicly traded company has no obligation to disclose any information other than in its reporting with the SEC. If it makes a voluntary disclosure, it must speak the whole truth and is then under a continuing duty to update the disclosure should new information come to light that makes a prior announcement misleading. Forward looking statements (e.g. projections about upcoming performance) are particularly problematic because of aggressive legal talent in this country. I personally believe that accurate information is valuable to us as shareholders. That said, we need to remember that as owners of Iomega we have entrusted the running of our company to KE and Co. If we do not like *our* management, we need to vote in a new slate of directors who will change the focus of *our* company. I do not intend to vote in such a manner any time soon.
2. Channel Check - was at MicroCenter in Cincinnati last weekend (Hi, MF Horns) and they had a *lot* (approx. 125) of Zips, internal, external (scsi) and external (pp). They also had Jaz and Ditto all prominently displayed. Salesman said the Zips were selling very well and that they were priced perfectly for the holiday shopping season, particularly with the rebate. He noted that Jaz was a little tougher sell because of the price ($499). He was unaware of the BIOS news and was telling another customer to wait for the LS120 because it was backward compatible and bootable. I informed him of the BIOS news and asked him when the LS120 would be available. He said he did not know and then I told the customer that the LS120 had been announced 12-18 months ago but had yet to make an appearance. Customer was extremely interested in the BIOS news.
3. A little background on this poster so you do not have to run to my profile (although you are more than welcome to do so). I have been long since 10/95 (a newbie to some of you other longs) and bot on the way up and the way down. Still holding all I ever owned (in hindsight a little stupid, but at least I didnt sell at $13).
Hope this post is construed as a positive addition to the board, who knows I may post again next year!
Good Luck to all
Jeff Fossett 9++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: WSJ ad Date: 96-10-08 21:26:36 EDT From: RgeSeymour
Haven't seen this mentioned yet. Nice big Iomega ad in yesterday's WSJ (A13). Goofy guy with a stack of floppies in one hand, a glorious little Zip disk in the other. "It's like your floppy drive. Only it holds 70 times more stuff, and it's up to 20 times faster. Okay, so it's not like your floppy."
The fine print seems to offer something new. "Free Stuff. Buy a Zip drive and get over $150 worth of cool games and accessories or a $50 mail-in rebate. Plus, buy a Zip Disk 10-Pack and get over $150 worth of great software and accessories to help you organize your Internet downloads and multimedia, or a $20 mail-in rebate. See store for details. Offer good through 1/31/97."
Maybe I've just missed it, but I haven't seen the games/accessories or software/accessories offered before as an option in lieu of the cash. No indication what companies' products are included in these packages, but suggests Iomega may have some co-marketing deals that allow them to offer "rebates" without necessarily paying out cash. Interesting.
Louis Corrigan 10++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Adaptec advertizes Zip! Date: 96-10-09 00:24:46 EDT From: Sunraydoc
I haven't seen anybody mention this , and it seems worth passing along. The October issue of PC Computing has an ad on page 318 for the Adaptec SCSI board---featuring great picture of a Zip drive with Cookie Monster eyes on top, gobbling a disk with simulated teeth while screaming along with its cord streaming behind. The caption reads: "You'll rip up to 600% faster with a SCSI Zip drive." The underlying copy tells us that "Zip drives come in two flavors" [SCSI and parallel port] and goes on to recommend the SCSI Zip...adding that "With an Adaptec SCSI adapter you could be zipping along up to 600% faster." I understand Adaptec makes the Zip Zoom SCSI adapter. Obviously their agreement with Iomega allows them to advertize their own SCSI adapter for use with the SCSI Zip. I think this is an example of the sort of win/ win deal that Iomega has been making with their partners; Adaptec clearly recognizes the Zip as a great opportunity to hitchhike for profit, kind of like a remora on a shark....a very big shark, IMO.....:)
Sunray
End Report. Posts covered through 3 a.m. 10/9/96. _______________________________
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