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Tuesday, October 29, 1996 Iomega was down $1/2 Thursday, closing at $21 3/4 (-2.25%). TODAY'S RECAP: We had a refreshingly quiet day in the Iomega Folder Monday as tensions between the shorts and longs eased enough for a genuine exchange of ideas to take place. As is typical on these slow news days, no single topic dominated the discussion, although Iomega's rebate program and the prospect of possible short covering led the hit parade. As it stands now, no major news is expected from Iomega until the Comdex Trade Show in Las Vegas, still three weeks away (November 18-22). We can all wait three weeks, can't we?
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++JHenrie offers "A Shareholder's Perspective" on a year of holding (and
trading) Iomega stock. And now, the Best of the Board...Started 3 a.m. 10/28/96.
1+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: A shareholder's Perspective Date: 96-10-28 13:02:56 EST From: JHenrie
Just a Few thoughts....
To give you a little background on myself. I began investing in Iomega back in October of 1995. I had an initial goal of doubling my investment within 12 months. Little did I know the ride I was in for. Within a period of six months, I had my first ten bagger. In the following months my investment has shrunk to a five bagger (where I stand today). During this time period, I sold some shares on the way up and bought some shares on the way down. Given hindsight, I wished I would have sold more shares at times and bought more at others. However, the fact is I didn't.
Lately, I have caught myself wondering when will Iomega's stock price regain the ground it lost during the Summer. I have, at times, become impatient and even a little nervous. So, this last weekend I reevaluated my reasons for investing in Iomega. A lot of the facts I reviewed have been discussed at various points in time on this thread. Once again, I could see a very promising picture.
I saw an expanding market for computer information storage needs (both corporate and individual consumers). I saw a management team and company who has consistently met the challenge to identify and meet the needs of consumers. I saw products that were user friendly, dependable, and affordable. In particular, I saw the zip drive which has been widely accepted by consumers and with definite potential of becoming the next floppy standard. The zip has met probably three of the most critical requirements for the next standard -- price, user friendliness, and performance. The recent announcement of the "Dream Team" has pretty much assured that the price of the Zip drive will be reduced to a level that manufacturers will be willing to include it in all the boxes. If this occurs, then the zip disk annuity is huge -- work the numbers for yourselves. That alone is pretty significant, but we also have the ditto and jazz drives. The ditto drive uses new, proprietary tapes that were developed by Iomega. Sony is including them in their work stations. There appears to be significant opportunity to increase Iomega's share in this market. The ditto provides us with a profit equation similar to the zip just on a different scale. Penetrate market with low margin drives and make the profit on high margin tapes. A lot of companies are realizing this profit potential in other areas (e.g., computer printers and ink cartridges). It has become clear to me, once again, that Iomega is not a company with limited future prospects.
So for now, I will relax a little more and not wait so anxiously for the stock price to go up. As Iomega business expands, and revenues and profits increase, so should the price of its stock. I have quintupled my investment so far and to more than double that within the next year is a reasonable return to me.
Enjoying the ride and willing to wait,
JPH 2+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: A: Date: 96-10-28 13:40:01 EST From: CayugaDan
<<<<<Cayuga Dan...you said last week that Ingram had 200 units of the LS-120 in stock. Can you check back and see how many there are this week. I would love to know how many of those 200 drives they sold. Thanks. Jeff Starin>>>>>>
It appears that the number is about the same.. There are still about 200 in stock. Of course theoretically Ingram could have received 400 drives in and sold 400... but I am pretty sure that's not the case (based on what I remember being in stock at different warehouses).
From what I can tell, there is very little demand from Ingram Micro dealers for this product.
Dan Rapaport 3+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: A; drive stock Date: 96-10-28 13:47:27 EST From: CayugaDan Here are the number in stock of the A: drive at Ingram today. There are two SKUs Fremont, CA 13,8 Carol Stream, IL 0,32 Harrisburg, PA 47,36 Dallas, TX 10,16 Fullerton, CA 7,0 Memphis, TN 0,0 Clarkston, GA 10,15 Miami, FL * 0,0 4+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Zip Rebate Date: 96-10-28 15:28:40 EST From: FONZ 1921
We just received our Zip rebate from the Hold Everything offer. We mailed our rebate in on July 25,1996.Our rebate check for $70.00 covering the Zip drive and 10 pack disk purchase was received today 10/28/96. Funny thing is the check was cut and dated on 9/25/96. They held the check for 1 month after cutting it. Some of my largest corporate customers use this practice, whereas they book the expense in 1 quarter and wait for money to come in then release the check in the next quarter when business and cash flow will be better.We also received a nice letter with the rebate check explaining that due to an overwhelming response to the Hold Everything promotion, our Zip carrying case and Zip media caddies will be shipped separately and we can expect to receive them in the next 2 to 4 weeks.
I like that overwhelming stuff. FWIW Fonz 1921
Al Pascarelli Jr. 5+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Do Shorts=enemies? ( Part 1) Date: 96-10-28 15:57:26 EST From: MF 2Aruba
Dear Fools,
With the Iomega board looking more like a war zone with people taking sides, and taking shots at one another, it has occurred to me that it might be worthwhile to cross over for a visit to the "other side" to examine a different point of view.
It seems to me that there is an overwhelming thinking that anyone who shorts IOMG is anti-Iomega. While there certainly are people who post sounding like they have a vendetta against the company and the stock, there are just as many "longs" who make posts with implications that they'd like anyone who shorts the stock to crawl back under the rock from which they came.
I believe it could be prudent and beneficial for a rational discussion to take place on the merits/pitfalls of shorting. This might even lead to a better understanding of the two sides, and with hope, add some substance to the sharing taking place on the boards.
With that said, let me tell you that I have had many very interesting conversations with many who frequent the IO boards. One such conversation was with Exit4Cash, whom I asked to email me his thoughts on the subject of shorting. I found his thoughts intelligent and insightful. With his permission, I have posted the email which Exit sent to me. Here's hoping this will lead to an interesting and intelligent conversation on the topic. Please share your thoughts.
I'm MF 2Aruba... ...but I still am...
Off2Aruba
<<<Date: Thu, Oct 24, 1996 12:25 AM EDT From: Exit 4cash Subj: The need for shorting To: MF 2Aruba
MF 2Aruba, my friend, Here is an explanation of what I think about short selling and IOMG. Feel free to post it if you like.
One of the implications that comes from reading the IOMG folder is that those who sell short are wrong, evil, or something less than human. Many who read the Fool have made many ignorant comments about those who short.
Shorting is a benefit to the market as a whole. When stocks run up it is not only profit taking that keeps prices realistic but shorting shares as well. Just as longs find it irresistible to buy on dips, shorts find it irresistible to short on peaks. Many think that shorting a stock drives the price down, which it temporarily does, but they forget to remember that shorts also hold up a stock after it falls because that is where they profit take. When a stock runs up and then has a free fall, there are many shorts who are profit taking near the bottom of the free fall which then drives the price back up.
Shorting and IOMG are a rare exception. IOMG went through what I would call six stages of one squeeze after another last spring. 9 to 12, 12 to 18, 18 to 28, 28 to 35, 35 to 46 and 46 to 55. I am dividing the stages by free falls for price adjustments. Just as in the last month there was a 2 stage squeeze. 15 to 19, 19 to 26.
The big difference with IOMG and shorting is that shorting has not kept the price of IOMG stable but rather shorting has brought about more volatility than is normal. On the way up to 55 institutional buying was looking for points where squeezes would take place. Institutions didn't think that IOMG was a stable value above 30 but they didn't care because they were going after squeeze points. The run to 55 cleaned out the majority of short interest. At that point new shorts that came in above 45 would have had to have seen above 60 or so to get squeezed out.
In the 40's there were many that were coming into IOMG with blind euphoria. They thought that this stock only went up, They got caught up in all the great stories of how IOMG made people rich and Iomegans were bragging about how much they had on margin. Iomegans at this point began thinking that anything under 45 was a good buy.
When the tide turned it was short interest that was in control. With all the longs that were on margin the big shorters were looking for stop loss points and margin calls. Many big shorters bought long shares and short shares at the same time, called "shorting against the box." As the price fell they were then able to go into a short position by simply selling their long shares and driving the price down even more. This technique gets around the rule of not being able to sell short on a down tick. As history showed us all, stop losses were triggered and margins were called.
Just as the bulls had their excess in the ride to 55, the shorts had their excess in the fall to 13.
Now that IOMG has come up significantly from 13, I believe that we are somewhat close to a stable price. That is, if one can use the word stable to describe the price of IOMG. IOMG looks to have strong support around 21 to 22. In the future I think it is likely that there will be more squeezes but not one after the other like last spring. I think the next squeeze will be from 26 to about 30 or 31. The exception would be if significant fundamentals change which kill IOMG. At this time that does not look likely.
I would like to point out some important facts to those who think that market manipulation took place that was unfair. If IOMG was manipulated it was done both ways. First with institutions buying to reach squeeze points and then by short sellers looking for stop losses and margin calls. No manipulation, just part of the market process. If you don't like volatility then you should not own volatile stocks.
My key point is that without the short interest IOMG would never have seen 55. Many got rich or made big gains because of this. How hypocritical it is to read that Iomegans think that short sellers took away their profits when short selling is also the reason why profits ran so high.
Exit 4cash....>>> 6+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Newest OEM Date: 96-10-28 18:07:44 EST From: MF DTurkey
It would appear we have another name to put on the Iomega OEM list.
APS, long a Mac peripherals mail order house, has started selling MAc clones.
In their add in this week's MacWEEK magazine, they have a list of internal drive options to tack on to the basic systems. In the list is the Jaz drive, at $400. They also sell an external Jaz drive with 1 cartridge for $500, and with 3 cartridges for $600.
No Zip on the list.
Dan 7+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Disappointing Chan. Check Date: 96-10-28 19:11:13 EST From: JeffTF1
I've heard so many great things about Iomega's displays and store space so I decided to check here on Long Island. I went to the Comp USA in Garden City (by Roosevelt Field). There was virtually NO Iomega stuff around. They only carry one PC with built in ZIP (the Pack Bell). I asked if they would have more...salesman said, "NO". When I asked him why he seemed peeved and just said that they sell what corporate sends them.
In regard to ZIP, DITTO and JAZ, there was hardly a good showing. They had eight feet MAX of shelf space for Zip and Ditto...for those who've been to a COMP USA, that's not much. There was no display, and the shelf was stuck kind of in the back with no way of knowing it was there. Interestingly enough they had more Epson drives than Iomega drives.
I was VERY disappointed. This is the highest volume COMP on the Island, and to see such a lack of visibility was upsetting. I will check back in a few weeks. 8+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Short covering Date: 96-10-28 20:09:14 EST From: MRMENSA3
For the # junkies, some calculations on Short covering:
Iomega has ~26MM shares sold Short on a 30 day average daily volume of 7.3MM. This takes only 3.5 trading days to cover. FWIW, notice the volume table below is heavily weighted by 6 days of over 10MM shares traded, which account for 47% of the last 30 days trading volume. These days will drop off of the last 30 days calculation after 9 more trading days.
Last 30 day volume is as follows:
Ticker: IOMG
Date Volume High/Ask Low/Bid Close ----------- ------------- ---------- -------- -------- 09/17/96 5,915,400 15 13 5/8 14 3/8 09/18/96 3,041,100 15 14 1/4 14 7/8 09/19/96 14,689,000 18 5/8 14 1/2 17 7/8 09/20/96 18,559,200 19 7/8 17 3/8 17 7/8 09/23/96 6,200,800 19 1/8 18 18 13/16 09/24/96 10,563,800 20 1/4 18 3/4 20 09/25/96 22,417,400 24 1/2 20 1/2 24 1/8 09/26/96 27,414,200 27 22 1/8 22 3/4 09/27/96 11,240,000 24 5/8 22 1/16 23 1/4 09/30/96 7,612,500 25 1/8 23 7/8 24 1/4 10/01/96 6,875,200 24 5/8 22 3/4 23 1/2 10/02/96 3,100,700 24 22 7/8 23 1/4 10/03/96 6,649,500 23 3/8 21 1/4 22 1/8 10/04/96 6,890,700 22 5/8 20 7/8 21 5/8 10/07/96 2,781,300 22 1/8 20 1/2 21 7/8 10/08/96 7,717,400 23 7/8 22 1/8 23 5/8 10/09/96 5,357,600 24 5/8 23 23 1/8 10/10/96 3,196,000 23 7/8 22 1/2 23 1/4 10/11/96 2,626,500 23 7/8 22 5/8 23 10/14/96 4,543,300 24 3/8 22 7/8 24 10/15/96 5,129,300 24 7/8 23 5/8 24 5/16 10/16/96 7,679,400 26 23 3/4 25 7/8 10/17/96 9,412,800 26 5/8 22 3/4 22 7/8 10/18/96 8,447,300 25 7/8 23 3/4 24 1/16 10/21/96 3,334,900 24 1/8 23 23 1/8 10/22/96 5,309,800 22 7/8 21 5/8 22 1/8 10/23/96 4,138,500 23 3/4 21 5/8 23 3/8 10/24/96 1,864,200 23 7/8 22 3/8 22 1/2 10/25/96 1,445,800 23 1/4 22 22 1/4 10/28/96 2,017,200 22 1/4 21 3/8 21 3/4 ------------------------------------------------------------------ 30 Day Avg. Vol.- 7,341,846 on 26,398,514 shares Short = 3.59 days to cover
As the volume is drying up, which means Shorts are NOT covering en masse, the # of days to cover 26MM shares will be around 6 assuming daily volume is about 2MM over the next 9 days, which is quite an assumption! Regardless, the # of days to cover should increase.
With Comdex looming, November should be a Long month :)
Jeff 9+++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Zip Rebate Date: 96-10-28 20:32:00 EST From: RunngMoose
>>>>>We just received our Zip rebate from the Hold Everything offer. We mailed our rebate in on July 25,1996.Our rebate check for $70.00 covering the Zip drive and 10 pack disk purchase was received today 10/28/96. Funny thing is the check was cut and dated on 9/25/96. They held the check for 1 month after cutting it. Some of my largest corporate customers use this practice, whereas they book the expense in 1 quarter and wait for money to come in then release the check in the next quarter when business and cash flow will be better.We also received a nice letter with the rebate check explaining that due to an overwhelming response to the Hold Everything promotion, our Zip carrying case and Zip media caddies will be shipped separately and we can expect to receive them in the next 2 to 4 weeks.<<<<<<<<
By now most of you have probably seen the vitriolic posts on the net threatening IO with class action suites because people had still not received their $50+$20=$70 rebate after 15 weeks despite a promise of 6-8 weeks on the form. People who were upset over the tech support experience they had from IO poured gasoline on this fire, and they have been flaming IO big time on some of the newsgroups. Tonight reports of rebates received have been showing up on the web. I hope that the situation can be alleviated now that rebates are shipping. I'm still waiting for mine, but IO told me it has been authorized, and will be received in 1-2 weeks.
dave 10++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Short covering Date: 96-10-29 01:41:53 EST From: MRMENSA3
>>>>>>>>>> Subj: Re:Short covering Date: 96-10-29 00:25:43 EST From: Ken1Marcus
I think with the Nasdaq double or triple counted that the real volume is less than what is reported. Therefore days to cover is more.
Ken >>>>>>>>>>>
You're correct of course. I forgot the old Nasdaq 2-step in my quest for the #'s. This would of course double all the #'s I posted. Yikes, even better :)
Thanks for pointing that out.
Jeff 11++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Zip problems Date: 96-10-29 02:38:26 EST From: MonirM
The delays in mailing out rebates are Iomega's method of shifting accounting charges from one quarter to the next, artificially boosting its quarterly profit for Q3.
Remember, Iomega had prepared its financial statements to reflect an anticipated refund redemption rate of 50%, which is the figure that earnings estimates were based on for Q3. But it will not be until Q4 that the "adjustments" to the refund rate are finally recorded on the bottom line, since most of the refunds issued in Q3 were actually deducted from the corporate bank accounts in Q4.
In addition, since the rebate offer extends to the end of the Q4, the unpleasant drag on earnings will continue into Q1 of 1997.
A $50 refund is not trivial, and it is clear now that the redemption rate will come in somewhere over 50%.
The only question now is, how long can the true effect on Iomega's bottom line be deferred? 12++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Zip problems Date: 96-10-29 02:48:01 EST From: MF Cheeze
MonirM: <<<The delays in mailing out rebates are Iomega's method of shifting accounting charges from one quarter to the next, artificially boosting its quarterly profit for Q3.>>>
According to FONZ 1921, it seems that precisely the opposite is happening: <<<Our rebate check for $70.00 covering the Zip drive and 10 pack disk purchase was received today 10/28/96. Funny thing is the check was cut and dated on 9/25/96. They held the check for 1 month after cutting it. Some of my largest corporate customers use this practice, whereas they book the expense in 1 quarter and wait for money to come in then release the check in the next quarter when business and cash flow will be better.>>>
Would any Fools with an accounting background care to look into this matter?
Cheeze :-)
End Report. Posts covered through 3 a.m. 10/29/96. _______________________________
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