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Monday, October 14, 1996 Iomega was down $1/4 Friday, closing at $23 (-1.08%). TODAY'S RECAP: The Great Iomega News Drought of '96 dragged on throughout the weekend. With no new facts to discuss, Fools turned instead to rumor: namely, a post from ~Cynicalguy~ on Friday evening suggesting vaguely that Iomega may be launching a new DVD-related product. The rumor was greeted with a healthy skepticism by most, and with outright scorn by some, but it did prompt a stimulating discussion which shed much light on Iomega's approach to positioning itself in the removable storage marketplace. Rumors, of course, have a way of leading to wild speculation, and it is not our intention to contribute to that inclination here. Let us state clearly that Iomega has NOT announced a new DVD product, and there is little reason to expect that it will. However, the matter preoccupied many Fools over the weekend, and there is much in the thread that is worth the attention of those with an interest in Iomega and its place in the computer peripherals universe. REMINDER: Iomega is scheduled to announce its third quarter earnings this Thursday, October 17, after the close of trading. 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++Cynicalguy argues that the current high level of short interest is very
bullish for Iomega. And now, the Best of the Board...Started 3 a.m. 10/11/96.
1+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Leading Indicator Date: 96-10-11 14:26:00 EDT From: Cynicalguy
I have seen one or two people on this board claim that the short interest means nothing. That could not be farther from the truth.
I had only read the IBD article about Iomega online, so I never saw the graph that came with it.
Short interest in Iomega is a great leading indicator. This chart couldn't show it any better. When the short interest goes up-the stock price goes down. That makes sense since the shorts are selling shares of Iomega. But if you look at the graph, about 3 months after a short interest peak the stock peaks. In March the short interest peaked and the stock was down. It climbed steadily as they covered to 55 about 3 months later. Now the short interest is just like it was in March, and the stock is starting its climb. By the looks of this chart, Iomega should be in the 40s or 50s in January.
YOU MUST AT LEAST LOOK AT THIS CHART!!!!
GO IO!!!!!!!!! Cynicalguy Bill Bronsteen the plan coming together the NEW beginning of the beginning 2+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Leading Indicator Date: 96-10-11 15:48:40 EDT From: MF Cheeze
I have seen the IBD chart, too. In fact, I have it right here in front of me.
The thing I find most interesting is that a great deal of the short covering had occurred by April, below $30 per share, and long before the stock spiked upwards in May. Certainly the shorts lost a bundle in this move, and the short covering perhaps set up the momentum that drove the price above 50, but I don't think the shorts were the ones doing most of the buying above $30 per share or so. So even though the current level of short interest is equal to the level we saw in March, that does not necessarily mean we will see another spike above $50.
What I mean to say is, once the shorts are out of the game, you might not get the same buying frenzy following it, because too many long holders are wary after being burned in the crash.
Speaking for myself, I would much prefer to see Iomega rise steadily on fundamental factors rather than ping-ponging on these these crazy, hard-to-interpret market considerations.
And that is just about all the hocus-pocus chart reading this MF can stand for one day. :-)
Cheeze 3+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Iomega's New Product Date: 96-10-11 20:40:18 EDT From: Cynicalguy
I was just told about Iomega's next new product. The person who told me about this is the same one who told me about Seagate making Jaz disks for Iomega and the Acer/Iomega deal. I made a post about each of those things about 6 weeks before they happened. Check the graveyard if you need proof. This source is good. Very good.
"The new product is going to make Zip and Jaz secondary products." That is a quote from the source. He has heard that it is that big. It seems that it will be introduced at Comdex in November. The details as to what the product is are still not concrete, but I am hearing the word DVD mentioned. What is known is that it will come at Comdex and be much larger for the future of Iomega than Zip or Jaz. I do know some other specifics that I will not post on this board for fear of giving the competition any edge.
I feel that we will start seeing reports in the press about this in the weeks prior to Comdex. Just like we did about Viper/Jaz.
GO IO!!!!!!!!! Cynicalguy Bill Bronsteen the plan coming together the NEW beginning of the beginning 4+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re: IOMG digital camera Date: 96-10-12 11:21:59 EDT From: MF Taps
<<<<MFTaps. Your hope that <<... If I had a wish list of products for IOMG to unveil at the show in November it would be the capability to use a portable Zip with a low end digital camera. Now THAT would be good news we could take to the bank>> wouldn't carry revs and earnings very high. How many units? a few thousand? a hundred thousand? A co. like IOMG needs volume at the level that Zip and Ditto command. Do you know the potential market? I don't, but my hypothesis would be a few hundred thousand at most. >>>>
Yes I agree that *at this time* the market is limited. Why? In *my* opinion the reason it is limited now is because of the storage memory requirements. I have done a bit of *consumer* research in this area, as I have been looking for a low end digital camera for some time now. The only thing holding me back is the limited storage capacity which limits the number of and resolution of the pictures the user will take.
The additional removable flash cards used to store pictures cost mucho dinero and In my opinion are not worth the cost. Now, we will have moved into a different ballgame if we can go right from the camera to a Zip drive in the field. Bingo, unlimited storage capacity, high resolution. This will eventually enable the camera manufactures to increase the resolution capability of the low end cameras since the storage problem is no longer a problem.
Again, I agree that at this time the market is limited. Remove the storage problem and increase the resolution a bit and I see an explosion in this market that would boggle the mind. Is it just me with this train of thought? I would be interested in more informed thoughts on this.
Who else would be willing to shell out the bucks for a low end digital camera if the resolution was increased slightly and the storage problem was removed by a portable Zip drive?
Call me crazy, but I see one next every computer in the future if this happens.
Than again, I liked the 8 track :}
Jeff 5+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re: IOMG digital camera Date: 96-10-12 11:54:18 EDT From: MF Jeanie
Jeff asks: << Remove the storage problem and increase the resolution a bit and I see an explosion in this market that would boggle the mind. Is it just me with this train of thought? Who else would be willing to shell out the bucks for a low end digital camera if the resolution was increased slightly and the storage problem was removed by a portable Zip drive?>>
Who else? Only several million real estate agents, tax assessors and mortgage appraisers from coast to coast, that's who.
The biggest marketing problem in realty companies is the time delay between getting a property photographed, getting the photo digitized and into a newspaper while the listing is still hot.
A plan that has been test marketed in a few areas, but hasn't grown much due to the enormous storage problems, is to photograph every property in town and keep it on file along with the tax data from the assessors office, past sales history, and renovation updates from the building dept. (A little like Redi-Data, but with pictures). Such files would be invaluable not just for realtors, but bank assessors, mortgage companies, etc.
The combination of the digital camera and Iomega technology will allow these kinds of projects to go forward with greater speed.
One Zip disk per street, containing every street in every municipality in every state? Now that's what I call Zips Across America :-)
Jeanie 6+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Earnings-above and beyond Date: 96-10-12 12:30:01 EDT From: Kuttappan
Even if IOMG comes in a penny over street estimates, that will be an approximate 18% drop over the last quarter and will be reported as such and repeated over and over on CNBC. The average investor, IMO, is not going to like that statement. I believe CHiCHi does have a point when he says that for high growth stocks, Wall Street expects them to beat estimates quarter by quarter demonstrating or confirming their high growth.
I also think ChiChix's analogy of CUBE is correct. A previous poster said "CUBE dropped 11/2, big deal". What is unsaid is that CUBE traded for most of that day (day earnings was released) around 50 and dropped 4 points in the last 5-10 minutes (fishy, isn't it, considering that the earnings report was released after the bell, similar to IOMG). On Friday CUBE closed at 45.75 an almost 9.5% drop. All this after CUBE beat analyst estimates, followed by a very impressive conference call, with a very promising outlook for fourth quarter.
Summarily, IMHO, all the 'dog and pony' shows (OEMS, new product etc., etc.) that IOMG can put up will not significantly affect the stock price. It will be an ideal trading vehicle ranging between 25-35 for most of the third quarter, probably below 30 most of the time (remember, there will be selling in December to offset profits) until fourth quarter earnings are released. It will probably trade down after 3rd quarter earnings are released, even if they beat estimates by a penny.
I hope I am wrong. I am long, too deep in the hole, to get out. A good spike will benefit all of us, but reality is harsh.
Good luck and may the Force be with you. 7+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: IOMG and DVD Date: 96-10-12 17:04:25 EDT From: MF Ben
<<<"The new product is going to make Zip and Jaz secondary products." That is a quote from the source. He has heard that it is that big. It seems that it will be introduced at Comdex in November. The details as to what the product is are still not concrete, but I am hearing the word DVD mentioned. What is known is that it will come at Comdex and be much larger for the future of Iomega than Zip or Jaz. >>>
I know everyone is just so excited about this "new product" (so much so that no one posted the CONFIRMATION of the RUMOR -- whatever the heck that means -- that SyQuest is working on a 4 gig drive from the newest MacWeek -- the same source that CONFIRMED the Apple Rumor last week) but I thought it just might help us to look at DVD and Iomega and see what makes sense.
1) DVD is an optical product. Iomega has no experience with optical 2) DVD is a consortium managed "standard". Iomega would have to pay licensing fees and compete on a huge playing field with the giants of CE 3) DVD will not be recordable for well over a year
Why would Iomega want to get into the content business? That's what the ROM business is.
Why would Iomega want to make an optical product? Sure, they could buy the talent but it isn't their forte.
Why manufacture what will certainly be a commodity product when you own standards yourself?
Why would Iomega want to step on the oh-so-massive toes of Philips, Toshiba, and Sony (to name a few) to play in an arena they have never played in and promises to be extremely low margin?
Why? Why? Why? Why? Why? Why?
Bill, perhaps you heard "DVD" but the facts of the DVD industry, what DVD is, who owns the technology, and when the actual recordable products will be available to the general public (NOT November), tell me that it just ain't so.
It doesn't add up. Unsubstantiated rumors are one thing, but this doesn't make much sense. DVD is going to be a ROM product and storage companies that like their razor/blade business so much don't sell ROM products.
Other that that, you have said that Iomega will have a new product LINE (as in not a updated Zip, jaz, or Ditto product) in November at Comdex. There is a good possibility that Iomega will introduce a new line this year (they have yet to) as they did in '94 with Zip and late '95 with Jaz. Possibility. I have wondered. I've also wondered about the timing of the introduction on the 200 meg Zip. Don't need sources to wonder.
If Iomega does introduce a new line based on a different core technology than Zip or Jaz, I don't see how it could possibly have anything to do with DVD. How about you speculate (I'm even ASKING YOU to speculate) how in the world Iomega could have a DVD related product/product line in November. I'd love to see how Iomega fits into the DVD world in the next 24 months (no one can realistically look further out than that) 'cause I just don't see why the should spend their capital on such an endeavour. It would be like Iomega going into the CD-Rom business.
I patiently awake your speculation on how DVD fits into Iomega's mission statement
Benjamin
P.S. I do find it ironic that DVD has been previously dismissed as a "loser" technology (by virtue of being optically based) by some posters and is now worthy of Iomega attention. 8+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:IOMG and DVD Date: 96-10-12 17:30:56 EDT From: Chipcorder
MF Ben asks why, why, why about IO and DVD.
Well, Iomega should go into dvd first of all because they can. Iomega now has tremendous brand name recognition in the personal computer industry. They should be able to grab significant if not a leading position in external "add-on" dvd-rom business.
Second, IO has had expertise in Floptical technology. Anyway, IO only needs to buy the parts and follow the directions in putting together such a product. Now, the key is the value they add in brand name and STYLE. Ergonomics is the key here.
Third, they need to be in position once DVD-R is on the market and available at a price that consumers can afford (<$500). I don't think that will happen until Jan 2000. Industry should have a $700-1,000 model sometime in 1999. (for news here I reply on C-Cube's announcement that cheap mpeg-2 encoders will not be available for quite some time; Also LSI recent (last week) announcement that they are withdrawing from the mpeg encoder market, but plan on still working towards a dvd encoder (recordable) chip for the '98-99 timeframe)
Would DVD introduction be a good move for Iomega?
It's ESSENTIAL and surely will happen, when it can be introduced at an affordable price, continuing the IOMEGA strategy.
Wonderful news and thanks to CynicalGuy for all his informative posts. 9+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:IOMG and DVD Date: 96-10-12 17:55:50 EDT From: MF Ben
<<<Well, Iomega should go into dvd first of all because they can.>>>
Chipcorder,
They could also go into the restaurant business. Just because they "can" does not mean they "should." Contrary to anyone's belief, DVD will ONLY be read only for the next 12 or so months. The only DVD markets available in the next year plus will be the read-only drives, content production, disk duplication. I see no reason for Iomega to be in ANY of those businesses. All will be LOW MARGIN and, except for content production, all are VERY CAPITAL INTENSIVE. Eats lots of cash, returns little profit. Doesn't sound like a great combination to me.
<<<Iomega now has tremendous brand name recognition in the personal computer industry. They should be able to grab significant if not a leading position in external "add-on" dvd-rom business.>>>
There is no way Sony, Toshiba, et. al will allow Iomega to grab a significant portion of the DVD-ROM business. Iomega does not have the manufacturing capacity to build the units in the first place. Pick your fights carefully. Better to bet on proprietary technology then compete with giants on THEIR OWN turf. Remember, Iomega must FIRST license the rights from Toshiba/Sony.
Remember who CONTROLS DVD technology. Not Iomega. Hard to get a leading position when you don't own the technology or it's not an open standard. Hard? Almost impossible. Think about how Iomega controls the Zip patents and how those license deals work. Do you think Iomega will allow anyone to eat a huge portion of their disk business next year? Me neither. Why should the DVD license owners let IOMG step up to the table and eat their lunch?
<<<Second, IO has had expertise in Floptical technology. Anyway, IO only needs to buy the parts and follow the directions in putting together such a product. Now, the key is the value they add in brand name and STYLE. Ergonomics is the key here>>>
No, the key is economy of scale. Floptical won't help them a damn with DVD. The technology for DVD-ROM has already been developed. They need only PAY (through the nose) for it.
<<<Third, they need to be in position once DVD-R is on the market and available at a price that consumers can afford (<$500). I don't think that will happen until Jan 2000.>>>
Why should they CARE about DVD? I don't understand.
<<<Would DVD introduction be a good move for Iomega?
It's ESSENTIAL and surely will happen, when it can be introduced at an affordable price, continuing the IOMEGA strategy.>>>
WHY is it "essential"?
Radius got into the clone business, away from their core mission statement of best video products anywhere, and got clobbered. Kodak went into all kinds of ancillary stupidities and got hammered in the '80s. Sure, there is something to be said for not noticing the changing trends (Xerox and the personal copier market in the '80s) but to enter a market that is a COMMODITY market, that is controlled by an elite few powerhouses, that has little to do with the company's mission statement is dumb.
I asked Bill to speculate how Iomega fits into the DVD market. I only ask because I don't see how the fit would make sense. They should spend their capital on other things.
Sure, they COULD go into the DVD market. They could also make bicycle tires and lampshades. Should they? Would they?
Does the lesson of Iomega's leanings AWAY from the Travan tape standard (and going with their own with Sony) mean anything here? Iomega, smartly, knows that licensing is a hard way to make the bottom line grow. Being the licensor, on the other hand, means fat profits with very little capital. That is one of the VERY attractive elements of Iomega. Better to be the owner of IP than the ones who have to pay for it with every unit.
Why Iomega would suddenly abandon this hard earned lesson, as well as their enviable position as a licensor on two major product lines and one minor one, and become a licensee to produce a commodity product in a field crowded with the largest companies in the world?
On Planet Earth,
Benjamin 10++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:IOMG and DVD Date: 96-10-12 23:01:31 EDT From: PKeeler
MF Ben wrote: >>> 1) DVD is an optical product. Iomega has no experience with optical <<<
Look up the word Lasersafe. A M-O product formerly made by Iomega.
>>> There is no way Sony, Toshiba, et. al will allow Iomega to grab a significant portion of the DVD-ROM business <<<
Iomega is in the personal storage business. DVD-ROM does not fit into this. Give KE some credit, I don't think they are that stupid to compete with Sony, Panasonic, Phillips, et al on commodity products. OTOH, Iomega makes tape drives which are licensed and compete with huge players like HP and Seagate. They compete very well and make decent money.
>>> Why should they CARE about DVD? I don't understand. <<<
Because some day optical will replace magnetic. As they've been saying since 1983. ;)
>>> P.S. I do find it ironic that DVD has been previously dismissed as a "loser" technology (by virtue of being optically based) by some posters and is now worthy of Iomega attention <<<
As the person I look to for DVD info, you should know that DVD is vaporware which can be manipulated by Iomega nay-sayers to fit the perfect competition for Zip/Jaz. DVD-ROM is not competition, never will be. DVD-E (re-recordable DVD), if ever allowed to be made by Hollywood, would be competition for Jaz, and to some extent Zip. It would depend on price, performance, ease of installation, etc. Personally, I've never dismissed this other than it probably won't be around for 3-4 years. That's why I would be excited if Iomega showed one this November. Also, why I'm a little skeptical.
Iomega has turned the entire personal storage industry on its head by doing the following:
1. Introduce a product that is marketed towards the mass consumer. 2. Price the product where the consumer wants to buy it (usually way under where competitors have it priced).
If Iomega's research shows that consumers will buy a DVD-E at a certain price, and its the kind of thing they want to store stuff on, and Iomega can make the drive at that price and sell the media at the consumer's price, and make money they will. If consumers want to store stuff on DVD-E than I would hope its an Iomega DVD-E.
Or maybe they will buy out Pinnacle and market a PD/DVD. :D
Anyone going to be at Comdex?
PKeeler Patrick Keeler
P.S. Syquest has been talking about a 'bigfoot' drive (5.25" 4-5 GB) for over a year. Syquest talks about a lot of things. SCSI EZFlyer recently shipped (was suppose to ship 6/15/96). My motto: don't worry about vaporware. This will save sleepless nights worrying about Olympus 230, LS-120, UHC-130, SyJet. 11++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: The Computer of 2000 AD Date: 96-10-12 23:55:40 EDT From: Hal Rubel
My crystal Ball: I see the Computer of the year 2000 to have a 3" floppy (sorry) and a 3" 2.6 Gb Iomega (yeah!) removable media disk in place of a hard drive. The disk will not be magnetic since it is removable. The disks will be a double headed two sided 10 ms fast Magneto - Optical, immune to kitchen magnets, boiling coffee, and hot automobiles in summer.
The removable disk will contain not just the user's lifetime of files, but the user' programs, games, and the user's customized version of the Operating System; the whole user experience in portable form.
Iomega will be in the enviably profitable position of having a favorable Magneto-Optical patent position because in Q4 1996 they had such great Zip sales and the stock rose so nicely that it enabled them to acquire struggling Pinacle Systems of Irvine, CA, lock, stock and barrel for a pittance in late January of that year.
Key Pinacle employees became millionaires that year due to the stock swap and the resultant rise in Iomega shares as the investment community came to realize the immense ambitions of Iomega to dominate not only the storage industry but the hard drive market as well. The Pinacle Systems acquisition announcement was called the "Iomega Shock of January, 1997".
On a somber note in a related matter, in an ignominious act of gracelessness, Iomega also acted to acquire a humble competitor called Syquest, also for a pittance, reportedly for their mailing list. What Iomega ended up doing with Syquest personnel and its other assets, history does not record.
Even Microsoft's Bill Gates will have joined the band wagon, saying in Dec, 1999: " This is not a case of the-tail-wagging-the-dog. Hey, what's a buck a disk! Its worth it to us to be licensed to be allowed to put our operating system on such a clever product."
Every business executive zipping around America or to and from work now carries an Iomega M-O disk in a pocket or briefcase. School children zipping to and from home will carry with them every picture, quiz, report card, attendance record, teacher evaluation, and reprimand they ever earned since first grade for teachers and parents to review. And, that hard earned Letter for Football athletics will never loose its shine. Unfortunately, due to the hardy nature of the M-O disk, school children are no longer be able to say that a dog ate their homework. But as some (mostly teachers) say, that's progress.
Also in January, 2000, President Al Kemp .... cqt sworn in ... inauguration dkkox%s...
Sorry, at this point the crystal becomes cloudy.
H. R. 12++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:DVD Date: 96-10-13 15:33:38 EDT From: MF DrJimbo
Bill's mention of DVD really surprised me. As some of you know, I've been quite negative on DVD's prospects, since I see it as a bid by large consumer electronics companies to create a big selling item where current demand does not exist. Of course we'll eventually move to higher capacities for computer storage, but I still don't see DVD selling in VCR-like numbers for the foreseeable future. I believe that broadband digital to homes is more likely to occupy the digital video delivery niche.
But at the same time, I often think about what Iomega will do as an encore. Zip and Jaz are both based on old technology, but created completely new markets. I'm ready for Iomega to surprise us with a new technology.
I'll buy the idea that the DVD niche area is one that Iomega would like to enter. Just on the general idea that they want to be _THE_ removable storage company. And very large, very cheap storage at the consumer level is one area that is still up for grabs.
Now my understanding is that the DVD-ROM standards are not yet fully agreed upon by the consortium. How about this from the largest US manufacturer of CD-ROM disks:
<<according to Rushton Capers, Disc Manufacturing Inc. (DMI) vice president, CD-ROM business development.
"The economic rationale behind all the positioning to be `first' in the market, however, does not take into account the lingering specification details yet to be resolved. Because of this, any DVD discs produced today will not necessarily run on all players.
"The marketing concern we have is that if DVD goes out of the starting gate with anything less than a top grade, plug-and-play product, it could fail with the public over the long term," Capers said. "ues to be settled.">>
I'm wondering to what extent Iomega could use its marketing muscle to be first with a writable product and make it the defacto standard. After all, big companies like 3M, Compaq and MKE didn't like Iomega becoming the leading candidate for the floppy replacement with a proprietary format. What's to stop Iomega from doing the same thing with writable DVD? Create and sell a product while the big boys squabble with each other. It was a bold strategy that worked with Zip. 13++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: my thoughts on DVD Date: 96-10-13 17:01:22 EDT From: DJIA101362
Lately, theres been a whole lot of speculation about this DVD stuff. Frankly, I dont really understand DVD nor do I want to.
The reason I bought my Iomega shares is because of Zip. I know some think that technology companies are only as good as their next great product but Zip is suppose to become the next floppy standard. Standards IMO, are not criteria that change every year. I think they call those things "fads". If Zip is to become the standard, I would surely hope that it would last more than a year or two.
Both Zip and Jaz have been out only about a year, Zip a little more than and Jaz a little less than one year. Are these two products obsolete already? I just bought my Jaz about two months ago and I like it. Im quite sure I will still like it one year from today and am not thrilled at the prospect of having this be yesterdays news overnight.
CGuy, dont get the wrong idea from me. I love ya to death and I hope you keep coming up with these great pieces on info. Its an amazing knack you have and Im just glad were on the same side. But this is one piece of info that I hope you got your signals crossed on. I would much rather see IO introduce some new version of a higher capacity Zip or Jaz at Comdex, rather than some DVD thingy.
If KE and the rest of Iomega management feel they need to come up new products every year to replace the products of last year, Im not sure this is the kind of company I want to own. If youre going to play that kind of game, eventually youre going to lose because someone is bound to come up with something better.
Standards are just that, a standard, not because they are better than everything else out there but because they are the most widely accepted. There is more to gaining acceptance than just being good. Affordability, market penetration, quality, and brand recognition are just some of the factors.
Establishing a standard takes time, and it only seems fitting that a company that can establish their product as "the standard" should be able to reap the benefits for a significant time span. Id like to think Zip is still in its infancy, after all, laptop Zip is still no where in sight and I firmly believe laptop Zip will be huge. As a percentage of computers shipped, I think laptop Zip has the potential to ship in greater numbers much faster than desktop Zip simply because the need to transport data is much more important to users of portable computers.
Microsoft and Intel are the behemoths they are today because they ship in most computers that go out the door today, tomorrow, and the foreseeable future. Iomegas number one priority should be to have Zip go out the door in as many computers as possible today, tomorrow, and the foreseeable future. Yes, Intel makes more than just CPUs and Microsoft makes more than just operating systems. But it is CPUs and O/Ss that have allowed INTC and MSFT to venture into these other areas. The same holds true for IO. Zip will allow IO to venture anywhere they like.
If KE is concerned about getting Zip into this years computers, and DVD into those computers next year, and BVD the next year, and ATV the next, and MTV the next, this company is in trouble.
Zip is the key. Zip is the key. Zip is the key. Thats just one Fools opinion.
Only 73 days to Xmas Fools. 14++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:my thoughts on DVD Date: 96-10-13 19:36:50 EDT From: MF DrJimbo
DJIA-
If you're not looking past the time when Zip becomes a mature product, you may want to rethink your investment long term. If Zip does ship with high penetration into new computers, the margins on drives will become smaller and smaller.Especially as OEMs have Iomega and its licensees bid against each other. It becomes like the hard drive industry, where margins are low because of the commodity nature of the product. True there are still disk sales, but margins will drop there as well.
If Iomega's business model in 3 or 4 years is to simply collect royalties on Zip and sell disks into a market growing at 10 to 15% per year, I will no longer be an owner. A fair P/E on a mature business like that is no more than 15, especially given the cyclical nature of sales.
No, I believe the true value of Iomega is in its marketing and brand name. That should be an engine to fuel growth even after Zip becomes mature. 15++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Miscellaneous Thoughts Date: 96-10-13 20:53:29 EDT From: JeffV27982
First I will give my status: I have been long Iomega since 3-4 and have been reading these boards since.
A few thoughts have crossed my mind regarding Iomega and earnings estimates.
1. I recently got a chance to see and Aunt and Uncle of mine who I hadn't talked to in a couple years and I opened up a little discussion on Iomega. I found out he was short Iomega a number of times on the way up. I asked WHY? .. He said that the company, ITT, had bought a hundred Zip drives early in the year and had substantial problems with defects. He said that they just finished returning them all. This is surprising to me but family wouldn't mislead me. Maybe just a bad lot or have others seen problems like this?
2. I see plenty of talk about margins going down because of competition over time. I can see the drive coming down in cost quickly for positive reasons but I just can't see why Iomega would have any reason to bring the disk cost down. If I could buy a drive for $50-$100 and can pay $15 for 100 megs I would do it in an instant. If they can bring the price of the drive down fast enough and can manufacture enough of these drives, why make the disks cheaper? What would be really great is if someone could come up with a way to sell the disks and make them "permanently write-protected". Then give those away to Microsoft, etc. for software distribution. I guess this hindsight is probably too late?
3. Do people think that Iomega's products have penetrated the "corporate" marketplace much at this point? I think home sales have been great but in the companies I've been in, large corporations are just starting to realize the value of these products. Seems like the market is huge in this area. Especially for Jazz.
4. Finally, when he is not bragging about his new house, Bill Gates has a couple cool points in "The Road Ahead" that remind me why I invest in Iomega:
A) He states that the first to market is usually the standard. Once a standard is made, something must be twice as good or twice as cheap to break that standard. I don't see LS120 or anything else as being twice as good or cheap in the near future.
B) He also talks about the positive feedback cycle with the VCR example:
"While the duel between the Betamax and VHS formats was going on, sales of prerecorded videocassettes to U.S. tape-rental dealers were almost flat, just a few million copies a year. Once VHS emerged as the apparent standard, in about 1983, an acceptance threshold was crossed and the use of the machines, as measured by tape sales, turned abruptly upward. That year, over 9.5 million tapes were sold, a more than 50 percent increase over the year before. In 1984, tape sales reached 22 million. Then, in successive years: 52 million, 84 million, and 110 million units in 1987, by which time renting movies had become one of the most popular forms of home entertainment, and the VHS machine had become ubiquitous."
He also talks about television:
1946 10,000 television sets sold 1947 16,000 1948 190,000 - threshold crossed this year. 1949 1,000,000 1950 4,000,000 1951 10,000,000 1955 32,000,000
He is simply showing that once a product becomes popular and everyone wants one because someone else has one, growth spirals upward. Have we crossed this threshold with Iomega yet?
A final point if anyone is still reading this long message:
I have a comment on the "not posting estimates". If the stock dropped last quarter because of our whisper number, then it probably went up in May partially because of our whisper number also. Overall, if there was no whisper number, we would have probably ended up in the same price with less volatility. I personally enjoy the volatility and the education from seeing analysis of the stock.
Jeff V.
End Report. Posts covered through 3 a.m. 10/14/96. _______________________________
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