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Monday, October 28, 1996 Iomega was down $1/4 Friday, closing at $22 1/4 (-1.11%). TODAY'S RECAP: The world will little note nor long remember what was said in the Iomega Folder this past weekend. Friday's trading was tepid, with fewer than 20% of the usual number of shares changing hands, and this dearth of activity was repeated in our world-famous online forum. However, reports began to trickle in about Iomega's Fall advertising campaign. Also, Fools were still wondering how Iomega might be accounting for the Zip rebate program. Since posting was so sparse, today's report comes in only 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++RunngMoose relays a report from the 'net on Iomega's management of the
rebate program. And now, the Best of the Board...Started 3 a.m. 10/25/96.
1+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Effect of Rebate on Sales Date: 96-10-25 09:58:34 EDT From: RunngMoose
Here's a post from the net that sheds some light regarding the extent of sales generated by the rebates:
>>>>>>>>>>>>>>>>>>> From: Mark <mal@midohio.net> Newsgroups: comp.sys.ibm.pc.hardware.storage Subject: Iomega Zip Rebate: Info about when Date: Thu, 24 Oct 1996 22:09:52 -0400
I called the 1-800-818-9728 and waited on hold for about 30 minutes, then askd the person that answered the phone if I could talk to someone about when I would get my rebate since I had sent the coupon and other data in around mid July.
The person took my phone number and checked the system for my information - I was in their system.
He said that I was approved for the $70 and items, and that I would be getting a check in mid November, and that the items would be shipping by UPS in a couple weeks. He also offered to put a "RUSH" note on my rebate, but I told him to just let it take it's normal course since I was in no hurry (I've learned not to try and hurry a system that is slow - seems to always take longer when you do).
He also said that Iomega expected about 50,000 rebate responses, but that they were swamped with over 300,000 rebate requests and that they were not setup to handle that many in such a short amount of time.
He also said that he and Iomega were sorry for any delay.
I still like to SCSI Zip drive, and I like the Ditto 2 gig external tape drive too.
Just thought that you people waiting on the rebate would like to hear what I foundout tonight. 2+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: National Best Buy Promotion Date: 96-10-25 12:56:21 EDT From: SHERRMEYER
Dear Fools,
I called the advertising department Best Buy Corps Corporate Headquarters to ask about the TV add rollout schedule on the ZIP DRIVE promotion. The TV media advertising person there seemed kind of surprised that the Promotion had already started (see last nights post from MF Gameboy who reported on the airing in Minneapolis last night at 2:00AM ).
She was very happy that the commercial was getting blowout reviews!!
She did say that this Best Buys Promotion "would be a MONSTER when it finally started.". The Best Buy add spending budget goes "off the scale during the Christmas season", she said. They had "very high expectations" for this promotion.
The spokeswoman also said that ALL of the Promotional Add Flyers wouldn't be going out on Friday alone as had previously been reported. She said that in a lot of markets, the flyers wouldn't be going out until Sunday (10/27/96).
So don't be discouraged if you don't see the Iomega Flyer in todays newspaper.
But make sure to buy a Sunday paper!!!!
Keep those channel checks coming!!!
Thanks Alot,
Sheree 3+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Iomega's Big Giveaway Date: 96-10-25 17:14:24 EDT From: JustBearIt
Egghead is running a special (Im told that its a corporate-wide promotion): You can buy a Western Digital Caviar 1.6 Gig Hard-drive and an Iomega Zip, both for $299.96 after mail-in rebates, which consist of $30 from Western Digital and $50 from Iomega.
What does this suggest about profitability on Zip drives? Egghead will sell you the Caviar 1.6 Gig by itself for $239.98 (which includes Western Digitals $30 mail-in rebate and Eggheads 5% Que discount) Suggesting that Iomegas actual revenue is $59.98 per Zip drive when they likely booked $80 - $100 per drive for shipments in the third quarter and going forward.
At Best Buy, if you purchases a Tower model PC (any brand), they will install an internal Zip at no additional charge (remember from the Q3 conference call, management said that 10% of Zip sales were OEM Did Iomega jam the OEM channel with excess inventory in a big profitless giveaway? I wonder what Q3 OEM sales was in terms of units.)
The possibility of an adjustment for inadequate reserves taken for rebates is another matter. Iomega assumes that 50% of its customers who are eligible for $50 mail-in rebates throw away their coupons. By my arithmetic Iomega hasnt even taken enough reserve for 50%
Viz: If Iomega sold one million Zip drives in Q3, 900-thousand of which qualify for $50 rebate and only 50% of the buyers remit their coupons, then Iomega should have somewhere in the neighborhood of $22.5 million reserved. For its third quarter, Iomega revealed that they had only $16 million reserved for the rebate program (the gap represents revenue of a little more than 5America Online a share). Under the above unit sales assumptions, a 5% adjustment in reserves represents a corresponding loss or gain of $2.25 million in revenue. If 75% of the Zip customers who are eligible for mail-in rebates redeem their coupons, Iomega will have to adjust their revenue down $11.25 million.
Accounting latitude during unaudited quarters is marvelous. 4+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Iomega's Big Giveaway Date: 96-10-26 09:54:22 EDT From: MF KarenK
Date: 96-10-25 17:14:24 EDT <<From: JustBearIt
Egghead is running a special (Im told that its a corporate-wide promotion): You can buy a Western Digital Caviar 1.6 Gig Hard-drive and an Iomega Zip, both for $299.96 after mail-in rebates, which consist of $30 from Western Digital and $50 from Iomega.
What does this suggest about profitability on Zip drives? Egghead will sell you the Caviar 1.6 Gig by itself for $239.98 (which includes Western Digitals $30 mail-in rebate and Eggheads 5% Que discount) Suggesting that Iomegas actual revenue is $59.98 per Zip drive when they likely booked $80 - $100 per drive for shipments in the third quarter and going forward.
At Best Buy, if you purchases a Tower model PC (any brand), they will install an internal Zip at no additional charge (remember from the Q3 conference call, management said that 10% of Zip sales were OEM Did Iomega jam the OEM channel with excess inventory in a big profitless giveaway? I wonder what Q3 OEM sales was in terms of units.)
The possibility of an adjustment for inadequate reserves taken for rebates is another matter. Iomega assumes that 50% of its customers who are eligible for $50 mail-in rebates throw away their coupons. By my arithmetic Iomega hasnt even taken enough reserve for 50%
Viz: If Iomega sold one million Zip drives in Q3, 900-thousand of which qualify for $50 rebate and only 50% of the buyers remit their coupons, then Iomega should have somewhere in the neighborhood of $22.5 million reserved. For its third quarter, Iomega revealed that they had only $16 million reserved for the rebate program (the gap represents revenue of a little more than 5America Online a share). Under the above unit sales assumptions, a 5% adjustment in reserves represents a corresponding loss or gain of $2.25 million in revenue. If 75% of the Zip customers who are eligible for mail-in rebates redeem their coupons, Iomega will have to adjust their revenue down $11.25 million.
Accounting latitude during unaudited quarters is marvelous.>>
Dear JustBearIt,
I cannot understand your reasoning. Are you saying that if I go to Egghead, I can buy the zip for $59.00? You can apply your comments the other way too and suggest that WD is shipping for far less . Are you also saying that Best Buy isn't PAYING Iomega for these drives? In addition, you don't seem to factor in cost and production cuts. I think those are VERY important when you are deciding on whether Iomega is profiting or not. I think the cost of zip is significantly lower...and that allows them to cut the price of the zip while maintaining margins.
FWIW, you have been bearish on Iomega for as long as I can remember...but it seems that each quarter (at least to me) the fundamentals are improving. But the bears continue to look for the demise of Iomega. Somehow, I don't think Iomega is going anywhere...and the zip, in my opinion, IS the standard.
Karen PS. Did you include disk revs in your calculations? 5+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: **Opps** EMERALD #'s... Date: 96-10-26 13:07:13 EDT From: Chipcorder
******************************************************* Sorry bad math in original post. This is the original post with ** corrected *** math: ******************************************************** Subj: I got EMERALD #'s... Date: 96-10-26 12:31:07 EDT From: Chipcorder
well I think I do:
last week Emerald had a report on the Bloomberg Terminal Short-term Buy Long-Term Buy
They keep their numbers for '96 and '97 the same as before.
I am trying to remember exactly the '96 number:
'96 EPS = .64 for so ????? I better check this Monday, but YES its way more than consensus which is about .46 cents
'97 EPS = $1.20 which is the same as always.
Interesting to note the predictions for 4th QTR.
Consensus says .46 so that's .08 + .11 + .09 + x = .46 x = .18 cents for the 4th Qtr!!!!! Wow.
Emerald says .65 so that's .08 + .11 + .09 + x = .64 x = .36 cents for the 4th Qtr!!! Breathtaking.
Question is: Did Bloomberg get the numbers right (or did I..I think I did) Has Emerald changed these number in their new report??
.36 cents in the 4th Qtr?? Could happen with a blow-out X-mas and Best Buy and Ditto Tape Revenue.
Sorry about the bad memory, I am at home and don't have the printouts.
Either way 4th Qtr will DESTROY the shorts and we are due for a MASSIVE short squeeze, which I predict will begin on the Thur, Fri before Comdex and the week options expire. I'm holding my Nov calls till 10 minutes before the market closes that Fri. Should be in the 30's by then I bet.
Good luck and thanks to all Fools for making this a great board.
*****************************************
Sorry for the bad memory and bad math
STill the numbers are TREMENDOUS. 6+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Zip Box Date: 96-10-26 15:32:31 EDT From: JonTara
<<The Internet is the next logical step. " Fun and Exciting" would be the introduction of the Zip Box called the Zipper. With a removable storage device to hook up to your computer, if your computer does not already come with one.>>
Well, IF IoMega did this, AND IF they had a device ready for introduction soon (WebTV is gonna be mighty popular this Christmas), this COULD be "the next widget" that IoMega needs.
IoMega needs a new product to move forward, you've heard me say that again and again. They need "the next thing". Most companies are never successful at finding "the next thing" but those that are - and can do it again and again - are long-term successes.
This COULD make some sense, in that, say, each member of a family could have their own Zip disk (little Billy can keep his porno collection from Mom and Dad, and little Susie can keep her diary away from little Billy :) ) which would cache their favorite web sites, etc.
The big electronic manufacturers are not prone to using a removable drive in these devices, as they feel that it makes the device "too complicated".
So, IF IoMega does this, and IF they have a product in the works and ready to roll, and IF it makes sense and IF it goes over with the public, this could save IOMega. And IF this happens, I just might go long IOMG.
Lot of IF's though - let's not pretend that they are anything but that - it is idle speculation. 7+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re: Shorts & Emerald Date: 96-10-26 16:56:51 EDT From: Kuttappan
Why is the 26 million shares short such a big deal? Somebody, mentioned 10% interest.. In the first place if you are paying 10% interest, you should change your broker... Secondly, if interest is a factor, you can be sure that the pressure on longs to sell is much more.... Of the 126 million float, the long margined stock is probably much more than the short interest and the margined longs are paying the same average interest rate.
Personally, I don't believe we will see a short squeeze unless we move 5 or more points in a day with a 10 point gain for the week. Even so this is doubtful based on how the stock moved from 12 5/8 to 26 and change with no further squeeze. Consider this- if you were long and purchased this stock at $25, would you sell immediately if it dropped 3-4 points in a day? If you were a trader, then this is definitely a possibility, but not if you are a die-hard long. In the same manner, the shorts will also wait it out. Most shorts will see no real reason to cover if the stock moves up a couple of points. Since IOMG's fall from its pinnacle in May, the instances when it has been able to move up for three consecutive days are far and few in between. This is further reinforces by the fact that although this is a great Company this a broken stock as indicated by the charts.
Conclusively, unless there is some earth shattering news there is no reason for shorts to cover immediately, and even if there is, the rally may be short lived, and the stock will give up its gains. Keep in mind that there may be a sell of in December!!
Lastly, it appears that a lot of importance is given to Emerald Advisors/Research. IMO, in the world of investment advisors/consultants, Emerald's status does not compare to that of a Merrill Lynch.. Emerald is small fry.. it is my opinion that their upgrade will do nothing to move this stock. It will definitely cause activity on this board, but that is all it will do!! Wait, I take that back.. it will generate a few upticks for the shorts to short this stock again. Emerald has gained more visibility because of IOMG, than IOMG the stock has gained from their upgrades and buy ratings.. I hope I am wrong, but if the only reason IOMG is expected to "break out" next week is Emerald's projection of next quarter earnings, then we are really scraping the bottom of the barrel!!
Good Luck to All
KUTTS ( Long on IOMG, but with paper losses more than enough to pay for an MBA at Stanford) 8+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Zips were EVERYWHERE Date: 96-10-26 20:35:48 EDT From: Carlsmom1
I just returned from a National CUE (Computer Using Educators) conference in Santa Clara, CA. Between Thursday and Saturday afternoon I attended twelve presentations with an average audience at each of 150+. At every presentation except one, Zip drives were integral to the presentation. And, not only were they obvious everywhere you went, they were addressed in the presentation, "of course this isn't possible without the Iomega Zip".
One presentation in particular on a program called the "Web Whacker" which enables one to download a URL with links for a classroom (or any) presentation was really appealing to me as an educator. And, again, without the convenience of loading these memory intensive files onto a Zip cartridge......
All of my educator friends - knowing of my addiction to this company - have a new found respect for my pet stock. There are all buying Zip drives this week.
But I must admit, even I was overwhelmed by what I saw. There was never any mention of Syquest or the LS 120 and I tried to listen and look for them. You can imagine my disappointment.
With more confidence than ever
(as the buttons read) Be Hip With Zip Carol in Monterey 9+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Rebate Received Date: 96-10-27 10:18:23 EST From: MBailey875
My girlfriend just received her rebate from IOM. It was for $50. I figured I would let you all know that they are sending out the rebates, since I read a few days ago that someone was afraid they were not replying to the program. She sent in the rebate in mid-August. So it looks as though it only took just over two months. My opinion that was not too bad. If it matters much I'll give the check number, if requested.
For those of you who are afraid they did not reserve enough cash for the rebates should remember the rebate program was only in the United States and no where else. And that KE said about 50% of the Zip drives bought in the US replied to the rebate offer.
See ya
-BaileyBoo 10++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: New Products Date: 96-10-27 22:16:25 EST From: MF ETurkey
<<<Also any Ideas on what new Product or Products Iomega might have in Stor(age) for us and the World to take a gander at.?>>>
My guesses on iomega R&D, to come at some future date:
1. 200-250 meg Zip
2. 2 gig Jaz
3. Computer w/o hard drive, only Jaz drive
4. Acer/other internet box with no hard drive, but with zip drive
5. A new product oriented to digital photography
6. A new product oriented toward the games market.
Eric 11++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re: the move Date: 96-10-27 22:44:25 EST From: EL0390
the effects of the move to nyse will be: 1. some NASDAQ traders specialize in making money from the "ever changing tiny spread" (1/16, 1/32) will drop out. 2. certain oversea funds are only permitted in trading nyse listed stocks will jump in and pick up a good load. 3. a lot of domestic "nyse only" funds will also pick up a lot shares, some do that because they like the stock. some do that only because the structure of the fund require them to. 4. the stock will pick up several points at the move, after that, its movement will be based on the "value" of the stock, based on the est. 96 earning, the current P/E is 47, I do not see it goes down. (Coke is traded at 30plus p/e right now). 12++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Rebate % Date: 96-10-27 23:32:20 EST From: HYPEMENOT
FWIW, my recollection of the conference call is the same as that of GoBowsGo and MF Ricster. After initially saying it was closer to 50% than 100%, KE responded to at least one (I think there were several) follow up question(s) that focused on 50%, in a way that made you think the number was either 50% or just slightly above it. Another, and still unanswered, question is whether KE meant 50% overall, or that rebates were coming in at a 50% rate on ELIGIBLE drive sales (i.e. excluding OEM sales and non-U.S. sales).
Aparksherb also raised a very important question in an earlier post about whether the rebates would include monies paid to Seiko/Epson re the drives marketed under their name. My own belief is that Seiko/Epson would not receive any payments from IO. Their decision to offer rebates almost certainly would come out of their own pocket. That definitely was the case with the $50 rebate Seiko/Epson offered in May/June prior to the IO rebate program. This is clearly stated in IO's stock offering circular dated June 5. But again, in talking about 50%, KE may have been referring to a 50% rate on ELIGIBLE drives (where eligible also excludes those drives sold under the Seiko/Epson label).
HYPEMENOT 13++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: New IBM Commercial Date: 96-10-28 00:48:34 EST From: PPUSTELNIK
If this was already posted, I apologize -
I was in Southwest Michigan this weekend and happened to catch an IBM commercial on a network station (pretty sure it was NBC) that consisted of the following (this is NOT verbatim and as close as I can to what I remember, I was very tired):
"IBM Aptiva.... faster learning (shot of computer teaching program)... faster flying (flight sim game)... faster surfing (internet shots)...and here's the part that shocked me...FASTER DRIVING - a shot of an INTERNAL ZIP DRIVE w/ THE IOMEGA LABEL!"
IBM is now touting the ZIP as a premium feature! -Paul Pustelnik
(If anyone has the absolute-correct version, sorry for the slight inaccuracies)
End Report. Posts covered through 3 a.m. 10/28/96. _______________________________
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