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Iomega was down $2 31/32 Thursday, closing at $22 7/8 (-11.49%). TODAY'S RECAP: Iomega shares traded down sharply Thursday, with most of the decline coming in panic selling at the close of trading. Once the bell rang, however, things started to look a little different. Iomega turned in a surprisingly strong performance for the 3rd quarter of this year, posting 9 cents in earnings per share, and $310 million in gross revenues. These numbers bested the street estimates of 7 cents in earnings and $285 million in revenues. Iomega impressed analysts by maintaining quarter-to-quarter revenue growth in the face of a seasonally-weak quarter. Some, naturally, pointed out that the estimates Iomega beat had been revised sharply downward only a few weeks ago. The more bullishly-minded replied that those lowered expectations have already been factored into the stock price. Those of us who follow The Motley Fool's Iomega Folder have come to regard such differences of opinion as one of life's constants, like the push and pull of the tides, the bough bending in the wind, or the weird guy who always seems to be hanging out at the guacamole dish at every cocktail party we go to. We have collected a large sampling of this discussion in today's bulging, two-part report. In other news, Iomega announced that it would seek to list its shares on the prestigious New York Stock Exchange, rather than the Nasdaq, where it currently trades under the symbol IOMG. The new ticker symbol will be IOM, and the move should take place in several weeks, once all the paperwork is filed. This announcement, along with Iomega's earnings release, are available to America Online members at Keyword: Market News. WANT TO HEAR IOMEGA'S CONFERENCE CALL? Just dial (800) 633-8284 and enter the reservation # 2021724 when prompted. ALSO: Get complete Foolish Coverage of Iomega's 3Q report by clicking the "Iomega Earnings Special" button on the main Fool screen! Once it leaves the main screen, you'll find it in Earnings Central, accessible via the Evening News/Lunchtime News/Fool's Gold button. 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++NOVWOO reposts comments from Wall Street analyst James Cramer, whose remarks
have gained poignancy in hindsight. And now, the Best of the Board...Started 3 a.m. 10/17/96. |
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Subj: Jj Cramer's Posted Viewpoint Date: 96-10-17 05:55:54 EDT From: NOVWOO
MF ETurkey made a fair roundup of the Q3 EPS estimate situation in his post: <<Subj: The Press Date: 96-10-16 18:16:02 EDT From: MF ETurkey>>
MF ETurkey< <<Folks, the press knows that the board is infected with plenty of clowns and mischief makers......... ........... The few analysts covering the stock have published their number, of EPS in the .06 range. James Cramer (~jjcramerco~), a money manager (who was on Charlie Rose last night with Tom/Dave by the way) said he and the folks he was talking with expected .05 or less. So be it. (And that was several weeks ago) >>>
James Cramer posted an article on this board about a month ago that is worth reading again now:
<<<Subj: Re: a columnists response Date: 96-09-12 06:33:51 EDT From: Jjcramerco
To watchers of IOMG: BB correctly summarizes my thinking on Iomega. I got intrigued enough to go back on this board because my thinking is that if Iomega does anything better than a nickel for the quarter--and certainly no loss--the stock will rally from where it reports the number. I know many of you out there are rolling their eyes at a post by someone who is "wise" (meaning from the money management establishment--but nobody in my business views me as an establishment player) but I have been a big backer of MF in my columns and writing and resent being lumped in to the offline professional pigeon hole. Regardless, my thinking is that CNBC bears have put it into the Street's collective head that IOMG could have a loss. The only number that really matters from the institutions' perspective is that of H&Q's Todd Bakar, who happens to be a very good analyst. He thinks they can do 9 cents in print (NOVWOO's note: since then it has been revised downward to 6 or 7 cents). I used to think that IOMG had to beat 9 cents to go up. Now I think IOMG only has to do 5-6 cents to go up, regardless of the first call number. I think that because Edwards "challenging" comments on the conference call took away the "need" to beat street numbers. I don't want to reveal how I am playing this, because it will just cause ill will and lots of angry E-mails and postings from people who don't understand that I am simply trying to gauge what number would make people here buy/sell/hold. I respect this constituency more than the Wall Street constituency/milieu that I am in because it is more informed and closer to the truth. But I have to know what both camps are thinking in order to make a good buy/sell judgment. respectfully, James J. Cramer>>>
Jj Cramer's more recent post:
<<<Subj: Like it here Date: 96-10-15 07:24:20 EDT From: Jjcramerco
I smell victory. Anything 7 cents or above with a good outlook--which we should get--and we are off to the races. As a long-time shareholder of Western Dig and Seagate--two other storage companies telling me that things are on fire) and a renewed shareholder in IOMG (I won't say where I bought it, but you can check my postings), I think we will see a move worthy of the October 25 calls (which I am long). James J. Cramer>>>
We will find out the EPS and the reactions soon enough. Please judge for yourself and good luck. 2+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:LONGS R WRONG Date: 96-10-17 17:22:58 EDT From: MF Bogey
A few thoughts from the dope gallery:
1. $.09 is better than the expected $0.06 (according to Zack's)
2. The original estimate was for $0.13 and that had to be revised lower. This is a half victory for Iomega. The quarter, as Mr. Edwards said, was challenging.
I have some questions going forward that make me wonder about Iomega:
1. I have a Zip drive and one disk. I bought the drive because I thought it was cool and because I needed something to back up my spreadsheets and larger files. I don't think I'll ever buy another Zip disk. I just have no need for it. Am I not in the mainstream or are people storing things left and right on their Zip disks and actually being productive with them?
2. With hard drives now coming out in the 3 Gig size, what use is a 100 MB disk going to be? 200 MB? I certainly can fit anything I need right on my hard drive and can purchase storage cheaply if I want to upgrade.
3. At what point does the cyclicality of the storage market take over and the novelty of the Zip diminish?
4. I can buy an internal Jaz for $399 now. Why bother with Zip?
5. If Zip is just a step along the way, what's beyond Jaz?
I know I;m gonna get flamed for raising these seemingly neanderthal questions, but so be it. It's the basic tenants of need versus want that drive industries and I have basic concerns.
Best to all,
Bogey 3+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Shorts Date: 96-10-17 17:51:21 EDT From: RobertsonG
Earnings est were from .06 to .09 cents, so the .09 cents only met one firms estimates. The drop of over .05 cents in estimates is far more critical. In any case, one quarters earnings with only 3 analysts covering the stock, on a stock trading at high PEG and PE is about as ludicrous as it gets. The story is not whether it is .09 or even .04 - the point is that this one number is considered at all important. Far more important for a growth stock is the appointment of a new VP of research. Who is he?
In fact, the focus on one number, the "gaming" of the stock, the hype, the confrontational attitude, and the importance of this environment for IOMG - all make for a very disturbing context. Usually this is considered "market excess". I would sell IOMG until this board goes back to dealing with long term fundamentals as it did last year and loses any focus on day to day price changes. As this is likely not going to happen via a sudden change of approach by the majority of the traders in IOMG......well I leave it to your own conclusion as to what would make focus change to fundamentals versus speculative price action. Not a calming consideration. 4+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Conf. Call Brief Date: 96-10-17 17:55:17 EDT From: MF Chiros
Kim Edwards and Len Purkis
Level of details comparable to past quarters.
Highlights:
Forward looking statements, actual results may vary from expectations.
Review the last quarter's statements. I stated 3Q will be challenging. Europe hit summer slowdown, as well as U.S. PC shipments were falling. How did it turn out? As expected, Europe stayed slow, July and "August stayed low. Our strategy increased sell-through in U.S. U.S. sell-through was positively impacted by the rebate. OEM Zip drive accounted for 10% of Total Zip shipped. Softness in Europe cost us on the top line.
Net Income of 12.8 million in 310M in revenue. Considering the seasonal softness, price rebates, we did well. Tie-ratios were better than expected. Compared to last year, Zip and Ditto margin was flat, and Jaz was down. Operating Expense increased to 19.6%. U.S. and Asia was ?
Ted Briscoe is now responsible for Europe as well... Tim Hill is now responsible for global marketing.
Building the European Team to the level of desired expertise will take 12 months.
Sales for the DItto, Zip and Jaz was 301m. Ditto was 33m. Up 14% from last quarter. 269m for Zip and Jaz.
Zip tie ratio was the largest contributor to the earnings performance this year.
Revenue is up 9% in a seasonally slow quarter. Margin is 26.3% vs. 26.9% 2Q. Margin was challenging this quarter as we moved new distributors and took price actions.
R&D and 10.4m is still short of the 5% target. But, we are continuing to add, we added over 100 people so far in 1996.
Cash flow: repurchased 300k of common stock. Penang acquisition and inventory buildup left us with about 102m in cash. 100m revolving cash with Wells Fargo remains wholly available.
Bad Dept Reserve is 10m? Other Reserve 23m up from 7m in 2Q 96.
Inventory is up from 148m to 176m
65% raw 30% finished
comparable to 2Q.
YTD, we have invested 98m. Penang factory was a major challenge, new distributor in Germany. I feel we have met these challenges and are in sound financial condition going into 4Q.
Primary Focus: Building a strong corporate foundation. Sept. We had the grand opening of Penang manufacturing capacity. Production of Jaz drive and Ditto was impressive. Ramp-up, very impressive.
We took over the production of Zip drive from Epson. Negotiating with Sequel to take Jaz back.
It is our intent to move most or all of our sub-contracting relationship over to Penang.
Sept 30, we announced our dream team of TI, MOT, Intel. They are designing new chips. This is key to meeting our target for price. MCI deal. Branch of Matsushita. We will supply them access to our suppliers.
Re-locating the European center. Moving us closer to customer base.
Price cut of Zip was well received by the customers. We would like to offer Zip at 99 retail.
Price cuts critical to achieving broad customer base.
Canon is the latest addition of PC OEM. Our focus changes to SKU more and more.
Customer Support change is cutting down the wait time. Selectively charge the customers.
Order backlog declined from 109 to 98m. This is primarily due to our ability to response quicker to retail demand.
New R&D director is from HP. (Sounds like a top guy)
We will move to NYSE for the best interest of shareholders.
Jaz tie-ratio was lower than planned, and came in at lower than expectation. We are working on it.
European management team takes a lot of work to build up to where we really want to be.
Penang has come on-line faster than we expected. We are reviewing all our manufacturing relationships.
Focus is getting Zip inside the boxes. We still need to get the remaining big ones to include Zip in their boxes.
Knowing that 4Q is the strongest quarter, we need to position ourselves to take advantage. We expect to have a very strong presence in all of U.S. retail space.
I hope that this 4Q we create so much demand that it is a challenge to meet it
Q1-Q3 totaled 816m in revenue. International business grew to 250m.
Zip, Jaz, Ditto totaled 789m. We killed Bernoulli.
Zip, Jaz totaled 700m.
We have a dream team supplier, Penang factory, etc. We made good progress. Thank you Iomegans. We expect to have an exciting and fun Comdex.
Q&A:
JPM: Congratulations everybody. Who's the largest OEM? Can't provide it, because it's confidential. IBM couldn't get internal Zip fast enough, so they were forced to bundle Aptiva with external Zips. Number 1 priority is to get in the boxes.
% of redemption? rebate is step down to 99 dollars. order of magnitude, it is closer to 50% than to 100%. Not everybody turns in. It just doesn't happen.
Joe Garner, Emerald: Marketing strategy going forward? Ad was cut going into summer. Xmas season starts with Back to school. Looking at SG&A, we really turned the knob up. You are going to see very, very strong presence of Iomega products here in U.S. everywhere. We will have one of the loudest voices of anybody in Computer retail business.
Cliff Josephy: Competition? Competitively, HP and Conner are still around on the tape side. Industry feedback says we are growing faster than the industry. Jaz has no competition. Zip side, we talk about LS-120, Swan, or Syqt. They are out there. But, nobody ships in high volume. We have good handle on the retail side. We have pretty good handle on OEM side. That doesn't mean we will ignore them, we will watch them very carefully, but they are not a huge concern.
Significance of the dream team? They are going to apply their technical expertise to develope their IC for Zip, Jaz, and Ditto. In this case, they have committed their resources to develope the ICs. They will set aside chip space for Iomega ICs. (Hooray!!!)
Sony, Epson, etc all thought they will have easier time than Iomega Brand name, because of traditional strength in their name. But, they found it difficult to go against Iomega brand name...
Howard Rosencrans: Jaz line, how well is it doing? Biggest disappointment on Jaz was the tie-ratio, relative to Zip, and relative to our internal expectations. However, we were able to hold our margin even with price reductions. So, we did all right...
Tony: Epson relationship. Taking over the manufacturing. What financial implication does this have? Epson is acting as an intermediary, as a Philippine firm, EAI, was manufacturing. Now that we have the manufacturing capacity to build ourselves, we will have slight cost reductions to go direct to EAI. Penang ramp-up came up so fast, it paid dividends, even our own manufacturing people are surprised about how well it went, so we are not concerned about moving Zip production over there.
Rebate is continuing. We are considering various different angles, but essentially similar.
We burn about 10-15m per month. We have 103m in cash left as well as Wells Fargo...
How many Zips were sold in 3Q? No comment on the quantities of Zip. Impact of rebate was about 50%. Is this experience or reserved? It's based on experience, and forecasting.
Backlog is down, explanation? We believe that the decline is attributable to our ability to respond to retail demand. They don't have to carry inventory, we can respond to their demand.
Sell-through data on weekly basis from the retailers give us the sense of how well we are doing.
Shapiro: Can we expect the circumstances of better performance continue into 4Q?
Corker: Congratulations, guys. We all know the importance of licensing agreement with MCI. Can you help us better understand the future strategy? More licensing? What impact on drive margin
Corker: Congratulations, guys. We all know the importance of licensing agreement with MCI. Can you help us better understand the future strategy? More licensing? What impact on drive margin?
We are willing to license drives, continuing to look for licensing partners, under normal terms. On the disk side, if licensing occurred, the terms will be "unusual." Royalties go to the top line, and affect the margin. Drive side, royalty is not going to be very, very high.
Bakar: On Jaz, why is the tie-ratio underperforming? Retail Jaz users have lower tie-ratios. We shipped a lot to retail, and over-estimated retail tie ratio. On the OEM front, can you tell us how many SKUs you are in today? Ballpark, it's 15-20. Where would you like to see that number this time a year from now? Large percent of SKUs we are in now are retail side. We need to expand broader into corporate base. Can we expect any swing on GM in 4Q? We can't provide that guidance. We want to get more and more OEM business which is lower margin, but 4Q is the strongest retail season, so you expect to sell a lot of retail drives which has better margin.
Besecker: Inventory turns for 3Q was 5? What is the channel inventory turn? We have increased the sell-through for both Zip and Jaz at retail. Through program effort. We have increased the inventory in anticipation of 4Q. Is the Europe's objective 1/3 of revenue? Yes. Germany had softness... We don't have whole lot of control about, but we are meeting the organizational challenge.
Rocker: Rebate went up by 16m, but doesn't seem high enough for 4Q. Given your boost in sales, this reserve should be whole lot higher? This reserve is not for all rebate to be done in 4Q, It's for reserves against the products already in the channel.
(I have to go get some dinner. I don't think much more will come up.... I'm sure the transcript will come on board tonight. So, good luck, everybody!!! It was a lot better quarter than anticipated!!! :) )
Foolishly, MF Chiros :) 5+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Margins Date: 96-10-17 18:15:15 EDT From: RobertsonG
That margin short fall is very significant. The explanation of backlog was not convincing in my mind. To me it means that the IOMG BTB has dropped substantially. (What would you do if this was a semi company?) The response about no competition is not true 3M is closing in and so is Mitsubishi. If IOMG does not become standard, ie. in the box for majority of new computer sales, it will be just one of many. Extremely high risk situation.
And earnings were lackluster. Say 9 cents to yourself over and over a few times. 6+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Kudos to Mr. Edwards Date: 96-10-17 18:50:54 EDT From: MF Jeanie
Since I've always suspected that the people at Iomega read this message board, I would like to say congratulations to Kim Edwards, Tim Hill, and all of the Iomega employees.
You said the 3rd quarter would be challenging. And you met the challenge of seasonality, European problems, rebates, buying a factory and negotiating major partners .... and STILL managed to post pretty impressive revenues.
I'd say you met that challenge very well. I don't much care what the stock price is tomorrow, or next week, or the week after that. You keep growing this company and the stock price will take care of itself. (I think those were your words).
My hat's off to IOM - The Blue Chip of the 21st Century!
Congratulations. 7+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:CHALLENGING Date: 96-10-17 19:06:31 EDT From: Ind Sales
We were mostly expecting 330 mil last quarter, which by the way came in at .11.
Growth slowed from astronomical pace set in late '95 to mid '96. That is to be expected, but none of us expected it so soon. Tough being a company with so few products. Luckily, IOMG management has proved their worth many times over.
But, that said, the stock should not move much on fundamentals this quarter, until maybe January. Then we will see how the Hot season did. 8+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Iomega Date: 96-10-17 20:45:05 EDT From: MonirM
Hey Fools, simple math:
Assume Iomega's Zip becomes THE standard. Assume it sells 20 million a year. Assume that Iomega's earnings go up 7 times from today's level (based on 3 million Zips). Assume .09*4 quarters*7=$2.50 net earnings per share per year.
If that happens, and Iomega hits the stratosphere, and it sells at a PE of 20, then the stock will be worth $50.
$50 represents a 100% gain in the price of the stock over today's price of about $25, i.e. Iomega would double in value if it became the standard, which would take Iomega at least a year to accomplish.
At its current valuation, Iomega represents half its market value assuming a best-case scenario.
In other words, Iomega HAS to become the market standard in order to justify its current price.
But here's another thorn in the equation: the profit forecast I described above assumes that Iomega's profits per drive remain stable. Isn't it much more likely that margins will fall as prices for the Iomega drives fall? Remember, they used to sell for $199. Now they sell for $99. When they are mass produced, these drives will sell for $40 apiece to computer companies. With a ten percent profit margin, Iomega will make $4 profit per drive, i.e. $80 or $100 million profit a year from the Zip line. With the company already valued at $3 billion, and throwing in the profits from the Ditto and Jaz lines, that represents a PE in the high 20s assuming the best case scenario!
Where is the growth? THE MATH DOES NOT ADD UP! Iomega has a great product line, but how does that justify today's $3 billion market capitalization? This company is already fully valued for the best case scenario.
What will happen if this company reports one bad quarter?
Please, please, please, will someone tell me, from the viewpoint of fundamental analysis, why this company is a good deal at today's prices? 9+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Iomega Date: 96-10-17 20:54:17 EDT From: BHaber
Here's some more simple math:
Assume Iomega does $4 billion in revenues three years from now.
Assume you give it half of Microsoft's 7:1 ratio: you go with 3.5 times sales.
You take the sum and divide by 135,000,000 shares.
You get 103.7.
Or a 450% increase from today's levels.
See, there's all kinds of math.
Blake 10++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Last minute downturn Date: 96-10-17 21:49:18 EDT From: Hal Rubel
Observation: I was watching the last 10 min in real time on E-Trade. In the last seven min IOMG started to drop swiftly. Then it got faster. Every time I called up the quote on the screen, it was 1/8 or more lower!
Finally, I realized what was going on. Share holders who did not want to risk holding the stock before earnings release were standing by hoping to sell if it went up on short buying. It did not go up before the closing bell as expected so they sold. They must have thought bad news leaked out early. But, come on! Leaking just 10 minutes before it is going to be announced anyway?! No way!! This firm is run better than that! It looked like a panic because it was too late in the final hour to place an well considered order and expect it to be executed. It had to be people already on line hoping to lock in to a last min. rise by shorts bailing out.
So, fool that I am, I thought I would try to place an order. I requested 400 shares at market. Within 15 seconds, I had a confirmation at 22 7/8! (Very unusual to get a confirmation message that fast.) I looked at the clock on the screen which read 12:59 then jumped to 1:00. (California time.) The market was closed. And, strangely, I was happy.
After averaging up my new Iomega share cost, I posted what I thought might be an encouraging message on our board to the effect that even though the price went down at least one guy was happy and confident.
After posting, I noticed a bunch of strange messages all reading ".09!" and nothing else on the Iomega board. Then "NYSE!" Then it sunk in...
So, since there was no bad news, the drop must have been blind selling by shareholders that did not want to endure the suspense of earnings. They must have been on margin is all I can surmise. IOMG then is not the most hated stock if people were willing to go margin.
The Shorts, where they today?! When they saw little rise during the day and falling prices near the close, they must have been feeling vindicated into inaction.
Truly a fool's paradise all the way around.
H. R. 11++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Conference call Date: 96-10-17 23:29:12 EDT From: MRMENSA3
What a difference in the tone of the call this quarter! Any shareholders, long and short, need to listen to the call, it may be the deciding factor as to how you will proceed for the short term ie. buying more or covering etc.
A few of the biggest positive surprises from my POV in no particular order:
EPS of .09 cents Increased revenues in a "challenging" 1/4 Closer to 50% than 100% rebate redemptions on Zip Ditto sales up 14% from 2Q and I believe 68% from 95 ACTUALLY repurchased 300K shares of common stock Moving to NYSE OEM's=10% of sales, up from "insignificant" in 2Q Almost all questions to KE started with "Congratulations!"
And for the not-so-impressive:
Jaz tie ratio down Gross margins down slightly Inventory turns down to 5 from 6 No new OEM or product announcements, did hint that Comdex will be exciting though :)
Again, listen to the call for yourself, it's worth the time and is free. The # is 800-633-8284. The reservation number is 2021724.
Jeff 12++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Devil's Advocate Date: 96-10-17 23:54:39 EDT From: MF DTurkey
Everything seems to have turned out pretty good with the big news today.
There was one thing, however, that I wasn't thrilled with.
<<<In connection with this shift, the Company recently took over from Seiko Epson control of a subcontractor producing Zip drives in the Philippines>>>
I tossed this out during the big Fool Iomega chat tonight, and the general response seemed to be that Epson might have had trouble selling Zip drives that weren't "Iomega brand".
Now the idea that Iomega has built up such a great brand name that folks will settle for nothing but Iomega brand Zips sounds great. BUT: this might have the effect of scaring other company's away from trying to sell Zips on their own. When Epson was announced as a new Zip reseller, it was hailed as a huge moment because folks would now have another source for Zips other than Iomega, and this was a big step towards becoming a standard. From that perspective, Seiko Epson dropping out could be considered a small step backwards. From that perspective.
Other than that, everything sounds okey dokey with me.
Dan 13++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Devil's Advocate Date: 96-10-18 00:13:14 EDT From: SGOWLER
I am way more concerned about the Jaz tie ratio. I listened to the call and thought the shift in Zip manufacturing from the Philippines to Penang was bullish. Why? Adds to IO bottom line putting a little extra in our pocket from every Zip Epson sells in addition to the royalty. Epson was subcontracting some part of the assembly or manufacturing to (EAI?). So now that moves to Penang. Why not? I did note that the co-branders(?) were a little surprised to find that Iomega had established a competitive advantage with strong brand recognition in such a short period of time. Also whats up with the Rocker guys, line of reasoning on the reserves held for the rebate.... they wanted to see 50M. I realize they are way short and have a rather obvious agenda, but is Iomega's # of 16M enough? 14++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Devil's Advocate Date: 96-10-18 00:22:33 EDT From: Huibs pht
>> There was one thing, however, that I wasn't thrilled with.
<<<In connection with this shift, the Company recently took over from Seiko Epson control of a subcontractor producing Zip drives in the Philippines>>>
I tossed this out during the big Fool Iomega chat tonight, and the general response seemed to be that Epson might have had trouble selling Zip drives that weren't "Iomega brand".
<<
..sorry to have missed the fun...man, why do I have to work ALL the time?..:)..
..my first take is that Epson has gone the route of IMPX....that is, with Matsu on board, who needs Epson??..
..IMPX crunched by INTC et al....Epson crunched by Penang/Matsu..
..huibs.. 15++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Shorts Date: 96-10-18 00:27:27 EDT From: MF Equity
The amazing rush of posts from bears with new screen names is comical.
The fact is that IOMG came through with a very nice qtr in a tough environment. This was much, much better than the shorts were expecting. You could hear it in the conference call. The Rocker and Compass guys were scrambling to find a negative spin. Reminds me of the 1Q conference call when the Compass guy accused KE with making up the Sony/Jaz news.
The revelation that Sony and Fuji branded Zip products don't sell as well as the Iomega branded ones is a great testament to the marketing prowess of IOMG. Name identification is so very, very important and tough to achieve.
The last conference call sounded like a funeral. This one sounded like a baptism.
MIKE 16++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Conf Call Date: 96-10-18 00:36:03 EDT From: SLCKing68
I agree that the tone and content were much more upbeat this quarter. The comments I liked from KE were that he saw no immediate competition for the Zip or Jaz, the consumers preferred the IOMEGA brand to Sony,Fuji, etc., and that he hopes that in the 4th Q it will be challenging to try to keep up with the demand for IOMG products. I expect good upward action tomorrow and for the 4thQ. Stay LONG! It was a tough hold but it will be worth it as the Zip infiltrates and takes over the PC world.
By the way, that was the longest conference call I've heard in a while (esp the Q&A). 17++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Devil's Advocate Date: 96-10-18 00:40:22 EDT From: Ken1Marcus
>>Also whats up with the Rocker guys, line of reasoning on the reserves held for the rebate.... they wanted to see 50M. I realize they are way short and have a rather obvious agenda, but is Iomega's # of 16M enough?<<
I think 16M will be enough. They have seen the actual return rate and their accountants have approved the number. Also, if I'm understanding this correctly, that number does not include what they have paid out already. IMHO, all they have to do is look at zip sales from the beginning of the quarter and see what percent were redeemed. If they haven't been redeemed so far, then most likely they won't be.
Take myself as an example. I wanted a zip to take apart and look at and took the opportunity to see how the AOL order system works. I got my zip, but didn't see and paperwork for the rebate with it, no instructions. So, I never did get around to it. Where is my receipt now? Who knows?
ken 18++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Kim's Performance Date: 96-10-18 01:42:22 EDT From: BB MD
I listened to the conference call and the Q&A period. I was expecting worse numbers (.05-.07) but a great conference call.
Instead we get good, arguably great numbers, but in my view, a slightly disappointing conference. There was no "I am bullish on the stock" (he said that last q), there was no forward looking cheerleading at all. There was no hint of signing on new OEM's, or developing new products. KE was very careful not to say anything "forward looking". Who knows? There might be fantastic news just around the corner as C-guy predicts.... but from what KE said, there was nothing mentioned to get excited about. This doesn't really affect MY outlook, but analysts who don't know the company as well as us, may be less enthusiastic than expected had KE at least done a LITTLE cheerleading. 19++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:shorts hurting? Date: 96-10-18 04:49:39 EDT From: JohnKess
>>Instead we get good, arguably great numbers, but in my view, a slightly disappointing conference. There was no "I am bullish on the stock" (he said that last q), there was no forward looking cheerleading at all. There was no hint of signing on new OEM's, or developing new products. KE was very careful not to say anything "forward looking". Who knows? There might be fantastic news just around the corner as C-guy predicts.... but from what KE said, there was nothing mentioned to get excited about. This doesn't really affect MY outlook, but analysts who don't know the company as well as us, may be less enthusiastic than expected had KE at least done a LITTLE cheerleading.<<
Having listened to a number of these IOMG conference calls I found KEs tone to be quite bullish this time. KE cranked up the bullish comments in the first two quarters, but the sharing offering is over and its back to his old style. His comment that he hoped this quarter would be challenging with respect to meeting consumer demand was positive. As were his comments about Comdex and the strong marketing presence in the retail outlets.
>>>You guys long in IOMG are so greedy and so blind that you deserve to lose everything. And I will be there to pick up the pieces. Three months from now you guys will wonder what went wrong. And when IOMEGA hits $8 bucks a share, its fair market value, I will be laughing all the way to the bank.<<<
Don't lose your head sport or you could get hurt bad waiting for this stock to hit $8. Emotional investing on the short side is particularly dangerous. You get my vote as the hothead of the night. Perspective man! BTW, just what do you think will happen this quarter?
Lots of angry shorts on the board tonight.
<<When iomega was 14, the company was supposed to have earnings of 12cts per share on revenues of $300m. forget the head fake from the company's two out of touch analysts from jp morgan and hambrecht with their misguided(or misled)earnings revision of sept 17. bottom line the company made 9cts on $310m.---lower earnings with lower margins. what is good about that? and now the stock is 23-24. those of you getting excited about this performance need to get real.the stock is up 70% despite missing the quarter, a falling backlog, and negative cash flow which is six times reported earnings. >> From DR7200
Expectations for Q3 earnings dropped instantly following the second quarter earnings release. Misguided revisions? They lowered their estimates -- that was appropriate and buy-side analysts are better off erring on the conservative side. So what do you make of that falling backlog? Sales gonna be down this quarter? Or what?
>>Thanks to all the believers! yeah im short oct 30 calls and they will expire WORTHLESS tomorrow. Thank you suckers one and all. BTW, I will sell more calls tomorrow for all you FOOLS who are interested. Come and get em!! Thanks Again, my accountant thanks you, my family, etc. May this dream continue as an annuity to my heirs.<<<
Relax.
End Report. Posts covered through 6 a.m. 10/18/96.
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