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Monday, November 18, 1996 Iomega was down $1/2 Friday, closing at $22 1/2 (-2.17%). TODAY'S RECAP: Iomega CEO Kim Edwards may well be pleased this morning, knowing that his company is already a winner at the Comdex Trade Show in Las Vegas. Iomega's Jaz drive has received PC Computing's MVP Award in the "Innovation of the Year" category. The Jaz drive, notes PC Computing, "single-handedly created a new market for 'personal hard drives.'" "Every MVP Award-winning product carries the distinction of being judged the best in its class -- by a tough panel of uncompromising computing experts," said Wendy Taylor, editor of PC Computing. For more information, America Online members can review the complete PCC press release at Keyword: Market News. If the PC Computing award wasn't praise enough, it seems that Kim Edwards has apparently been named Entrepreneur of the Year by Ernst & Young. This development is unrelated to Comdex, but still nice timing. Discussion in our Iomega folder ranged far and wide over the weekend. From the last three days' action, we have collected posts analysing Iomega's prospects for the 4th Quarter, some guesswork on the outlook for Iomega's showing at Comdex, and part of an interesting debate over the meaning of the word "vaporware." Finally, an article about Iomega's new n.hand product appears in this mornings Investor's Business Daily. America Online members can find it at Keyword: IBD; the rest of the world can read the dead tree edition at their local newsstands. 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 IOM Today window and try again.
1++MF DTurkey alerts Iomega watchers to a Macworld Magazine article which
praises the Swan drive at the expense of the Zip and the LS-120. And now, the Best of the Board...Started 3 am ET 11/15/96.
1++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Macworld on the Swan drive Date: 96-11-15 08:49:15 EST From: MF DTurkey
So far the Mac publications have been fairly kind in their treatment of Iomega's stuff. Today, one goes for the other guy. This from the most recent (January 1997, page 39) issue of Macworld Magazine
<<<But now there's a new (yet to be named) floppy drive being developed by Swan Instruments and Mitsumi that uses high-density 130MB disks--and it looks to be a better prospect than either the Zip or the LS-120 for replacing the floppy drive. Not only does it read and write to standard floppies, but it also has a simpler mechanism than the LS-120 -- and it can be made easily in a size thin enough to fit inside a laptop.>>>
To see the whole article, point your browser to
http://www.macworld.com/cgi-bin/pages.pl/pages/january.97/News.3166.html
Dan 2++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Zip and GPS Date: 96-11-15 12:54:47 EST From: MF CapnWil
<<<<<<From: Skideep955
My two cents worth...GPS and Zip...with the potential storage of the N-hand wouldnt it be possible to store maps of areas you were going into...thus using the GPS to navigate from point to point on the map stored inside a new GPS...just like the GPS maps that are in some cars..>>>
The aviation airway system is being constantly changed and updated. Routes (airways) are realigned, frequencies of navigation facilities are changed, or the facility may be relocated, renamed or shut down. The US Govt, makes charts that are mostly used by the military, and Jeppeson Co makes charts that are used by all airlines and most other commercial and private operators.
These charts (maps) and approach plates (map of an approach and landing system at an airport), are revised and sent out to subscribers on a weekly basis. Even for very minor changes, a revision is made.
For the airlines, I don't see the Zip as a potential replacement for these charts in the foreseeable future. The onboard computers provide all of the navigational guidance. The pilot punches in the route of flight with information from a chart and the computer, (actually 3 navigation computers, for back up purposes), does the rest.
For more redundancy, in the name of safety, one pilot inputs the route info from a chart, and the other pilot checks the computer against his/her chart. I do not believe the airlines would trust info input from another computer disk (Zip)
But even for this to be a possibility, the Jeppeson Co. would have to make a very expensive modification to their manufacturing facilities in order to distribute charts on Zips. In the distant future it may be feasible, but I can't see it. Even if the paper charts in the airlines were to be illuminated, I believe the airlines, FAA, and the Airline Pilots Asc.would require a much more sophisticated system of transfer and update of airway information than the Zip disks.
The private pilot may wish to have a Zip input directly into the GPS, provided there was a map display in the GPS that could be viewed. The airways are *invisible* highways, so the pilot needs a map for visual orientation. The present small GPS units only give headings, and other navigation information, but no graphic representation of the airways, which is necessary.
So I believe the following is necessary before Zip (or other electronic) map technology will be used in aviation.
1. Jeppeson must modify their mfg facilities to begin developing maps on disks, or other technology which the airlines would require.
2. GPS units must be developed which will display the charts and approach plates in graphic form (for the private aircraft sector).
3. A fail safe back up system must be developed in case the GPS system fails or the Satellites fail, because there would be no paper chart back ups. (Why have the Zips if you still have to have the maps as back up?)
4. All of these developments require FAA approval and the GPS units would have to be manufactured so as to receive FAA approval. In addition any Zip disk and drive would have to receive FAA approval. That could increase the mfg cost for the drive and disk dramatically and the market most likely would not be large enough to pursue.
For ground travel, I see the possibilities for Zip. For air travel, not yet. For small boat travel, I doubt it. One only needs a few charts to go long distances, and they are updated infrequently.
Hope to hear more opinions.
Bill 3++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Macworld on the Swan driv Date: 96-11-15 16:16:04 EST From: PKeeler
The premise of the article:
>>> Iomega's 100MB Zip drive can't replace the floppy because it can't read floppy disks. <<<
Personally, I don't agree with this premise. I think Ben has posted several technologies that replaced ageing standards without backwards compatibility. Of course the biggies were:
LPs ---> CDs 5.25" Floppies ----> 3.5" Floppies
It remains to be seen. With Iomega's stock price in the low twenties, the market is telling us that the Zip will not replace the floppy, nor come close. Also saying that Jaz and Ditto sales will not increase going forward, and that n.hand is not ever going to make a dime. IOM at less than $25 also says that H&Q and JP Morgan have no clue about the business as IOM could never make $0.80 in eps next year. We shall see, I've got time...
PKeeler Patrick Keeler 4++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Zip speed question Date: 96-11-15 16:40:43 EST From: DJIA101362
Has anyone tried to calculate the actual time it would take to copy 100 floppies onto one LS120 disk vs. copying 100 floppies onto a Zip? Well, actually it would take 2 Zip disks.
The biggest argument for the LS120 in the corporate world is backwards compatibility. In business where time = money, spending hours transferring data from floppies to LS120 disks would not seem prudent.
Transferring data from floppies to the LS120 is a two step process whereas copying to a Zip would only be a one step process. Seems to me you would save half the time going via the Zip route. If time = money, thats a lot of extra money spent for businesses who may choose to adopt the LS120 drives over the Zip, not to mention the initial cost of the LS120 that should be higher than current Zip prices.
Maybe the LS120 camp is telling businesses and consumers they will need to buy at least 2 LS120 drives so they dont have to remove the floppies when performing copy functions. What a marketing pitch that would be. A good way to sell twice as many drives I suppose.
Im sure someone who is familiar with the transfer rates of both drives could come up with an answer for us.
Only 40 days till Xmas Fools. 5++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Zip speed question Date: 96-11-15 18:25:32 EST From: PKeeler
>>> The biggest argument for the LS120 in the corporate world is backwards compatibility. In business where time = money, spending hours transferring data from floppies to LS120 disks would not seem prudent. <<<
Actually in a setting where a computer is connected to a LAN, backwards compatibility is a bigger non-issue. On a LAN, if you have one computer with a floppy drive, all the non-floppy computers can still easily access a file on some long forgotten floppy.
Zips in this setting (a LAN) are only useful for a sneaker-net between home and office. But, that is where a large number of Zips are in use today. Its a significant and growing market. 3.5" floppy compatible LS-120s and Swan/Mitsumi drives cannot serve this market as they are internal only.
Nobody in our office has touched a 3.5" 1.44 MB floppy since around November 1992. Coincidentally that was the day they installed our LAN. ;-)
PKeeler Patrick Keeler 6++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: PKeeler - Macworld Article Date: 96-11-15 22:49:10 EST From: HYPEMENOT
Earlier today Patrick Keeler posted the following in reaction to a recent Macworld article. ________________________________________________________________________________ >>> Iomega's 100MB Zip drive can't replace the floppy because it can't read floppy disks. <<< Personally, I don't agree with this premise. I think Ben has posted several technologies that replaced aging standards without backwards compatibility. Of course the biggies were:
LPs ---> CDs 5.25" Floppies ----> 3.5" Floppies
It remains to be seen. With Iomega's stock price in the low twenties, the market is telling us that the Zip will not replace the floppy, nor come close. Also saying that Jaz and Ditto sales will not increase going forward, and that n.hand is not ever going to make a dime. IOM at less than $25 also says that H&Q and JP Morgan have no clue about the business as IOM could never make $0.80 in eps next year. We shall see, I've got time... ________________________________________________________________________________
First, citing the 5.25 to 3.5 history as an example of a change that took place without backward compatibility is misleading, because the need for backward compatibility was made UNNECESSARY by the fact that all software manufacturers began to offer their programs on BOTH 3 1/2 and 5 1/4 disks. Therefore, back then, if you bought a new computer with a 3 1/2 floppy drive, you did not have to be concerned, because you could purchase whatever program you wanted on 3 1/2 disks. Actually, most publishers included both 3 1/2 and 5 1/4 in the same box - others provided one or the other, but included a form that allowed the buyer to obtain the program on the alternative size disk, usually at no charge.
Therefore, the only way Keelers analogy could properly be applied to a transition from the 1.44MB drive to the Zip drive, would be if all new software programs were provided on Zip disks (which is obviously not the case) along with 3 1/2 floppies and/or CD-ROMs.
As for his comments re the current valuation of IOM, he is certainly entitled to his opinion. And, he may be right in saying that the present valuation << is telling us that the Zip will not replace the floppy >>, but that is a VALID attitude for the market to have, since despite a declaration of victory on this question by many participants here, there are others - myself included - who think the battle for replacement of the 1.44MB floppy is far from resolved. Next, FWIW, I dont believe the present valuation means that the market expects no further growth in Jaz, but it may well reflect skepticism about whether it will sell in the very large quantities regularly predicted here just a few months ago (recall MF Chiros 1997 projections in which he thought 1 million Jaz drives was CONSERVATIVE).
With respect to the n.Hand, rather than concluding that the device is << never going to make a dime>>, the market is merely saying that this is a product still in development, about which so little detail is known, that it is impossible to assess its merits at this time. Finally, at 22 5/8 IOM is now trading at approximately 50X estimated 1996 EPS, and 28X JPMs projection for 1997. While the proper valuation of IOM is subject to a wide range of opinion, especially depending on ones view of the future competitive framework within which the IO is likely to operate, for comparative purposes it may be useful to keep in mind that computer hardware companies (even the more exotic ones) do not typically command very high multiples. Indeed U.S. Robotics, which has compiled an impressive growth record over an extended number of years, sells at a noticeably lower valuation than Iomega.
HYPEMENOT 7++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:PKeeler - Macworld Articl Date: 96-11-15 23:31:51 EST From: PKeeler
>>> Therefore, the only way Keelers analogy could properly be applied to a transition from the 1.44MB drive to the Zip drive, would be if all new software programs were provided on Zip disks (which is obviously not the case) along with 3 1/2 floppies and/or CD-ROMs. <<<
New software can be distributed on CD-ROM, no need for a floppy whatsoever. I haven't installed any software from a floppy in over two years. You have to look very hard to find stuff on floppy. No games come on floppies anymore. Software distribution is a factor going forward. As bandwidth grows from 56Kbps this January to maybe 1Mbps with ADSL in 2 years, a great bulk of software distribution will occur over the internet. You will need a catcher's mitt for that ;-)
>>> (recall MF Chiros 1997 projections in which he thought 1 million Jaz drives was CONSERVATIVE). <<<
This was conservative. My model shows that Iomega sold around 225K Jaz drives last quarter. They will probably sell close to 350K drives this quarter. That is a pace in excess of 1 million on a yearly basis. MF Chiros gets a bum rap for being wildly optimistic. I believe that he predicted $6.00/share for 1997 in mid-1995. Well...if you adjust for splits that's $1.00/share which is right around where Brous came in today. Not too bad, if you factor in the dilution of the two offerings it looks like he is squarely in the middle of the Wise analysts. .
>>> Indeed U.S. Robotics, which has compiled an impressive growth record over an extended number of years, sells at a noticeably lower valuation than Iomega. <<<
The problem with this argument is that US Robotics is more undervalued than even Iomega. US Robotics has more competition and sales than Iomega also. Run a YPEG on US Robotics and even you might go long... :) But that is another folder.
PKeeler Patrick Keeler 8++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Floppies, Chiros etc. Date: 96-11-16 00:43:39 EST From: HYPEMENOT
Pkeeler
In your last post you state << New software can be distributed on CD-ROM, no need for a floppy whatsoever. >> And, << You have to look very hard to find stuff on floppy. >>
Actually its not hard at all, just walk into any CompUSA, Egghead etc., and youll still find lots of software on floppy disks. I agree, however, that measured in dollar value, more software is now distributed on CD ROM than on floppies, and the trend is certain to keep moving in that direction. Having said this, the likelihood is that small programs (especially those occupying 1-4 floppies) are going to continue to be published on 1.44 disks for at least a few more years. Also, almost all utility programs distributed with new modems, video cards, sound cards, scanners, and hard disks (Ive probably left at least a couple of others out) continue to be distributed on 3 1/2 floppies. And, even when this is no longer the case, there will still be millions of users who have important software originally purchased on floppies. Those people are going to want to continue to be able to access their original program disks, if only to deal with emergencies (like having to reinstall one of them - like I and Ill bet plenty of others have had to do from time to time).
As for the Jaz drive sales, the truth is neither you or I have any VERIFIABLE basis for determining what the level is (thanks to the fact that IO refuses to disclose the figures publicly). You state your MODEL shows IO sold 225K Jaz drives last quarter, and then go on to predict 350K this quarter. Well, with all due respect, unless you can show that your model has some factual underpinnings, the reality is that these numbers represent nothing more than your OPINION (to which you are entitled, but no more than I am to mine).
Finally, with respect to MF Chiros, you may recall, that I had a detailed dispute with him about his projections five months ago. Specifically, on the current share base (after the 2 for 1 split) he was looking for 1997 EPS of $2.93. When I challenged him on the (IMO absurd) magnitude of earnings he was expecting next year, he then responded that this was his OPTIMISTIC projection (which is pretty interesting because he labeled just about every building block within it as conservative) adding that his conservative projection for 1997 was $1.43 (or maybe a couple of pennies higher). Of course, to bring this down to where the rubber meets the road, his conclusion from this was that IO was quite reasonably valued at $50+. Unfortunately, from that point forward (as you know) the shares fell rapidly, giving up more than 75% of their peak price before bottoming at 12 5/8 during the Summer.
Given this recent history, I can understand why you would want to focus, instead, on what Chiros was saying a year earlier. I wasnt around at that time, but Ill take your word for it.
P.S. FWIW I happen to have made more money in U.S. Robotics (in both directions) over the last six months than any other single stock this year.
HYPEMENOT 9++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: PEG/H. D. Brous Date: 96-11-16 09:58:25 EST From: DR IMBECIL
If we assume IOM doesn't move a whit in price from now til Dec we have a PE of 49. 22.5 (price) / 46 (1996 earnings First Call).
If we assume H.D. Brous earnings for next year at .90 are correct, we have a 96% increase in earnings from .46 in 1996 to .90 in 1997.
Taking this year's PE of 49 and dividing by next year's growth 96% we get a PEG of .51. A .51 is a borderline buy and hold on the Fool PEG.
We have an expected price of 44.12 based on a PEG that says IOM is currently valued at 51% of its expected value. And this is assuming that IOMG doesn't develop products that allow it to maintain its current level of sequential growth. 10++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Earnings growth Date: 96-11-16 13:46:20 EST From: KarlW12733
OK, Now that I can predict stock price closings(;>) I shall cast my predictive powers to 4th quarter earnings.
Revenues and net margins are the key.
Lets see, IO has grown revenues over the last 3 quarters a total of 110%, or an average of 36% per quarter, . so thats a good place to start. Everyone seems quite excited about this quarter because of "seasonality", so presumably revenues should rise better than average. Looking around at other companies that might be affected the same as IO by the season, I chose hard drive companies and other peripheral companies. Many of these companies did experience a significant increase in quarter over quarter revenues in last year's 4th quarter ranging from 35%(western digital) to 86% (diamond multimedia). Prior quarter over quarter increases that year averaged 8% and 13% respectively. So I have convinced myself that there really is a demonstrable Christmas affect. (Many of you already know that but I needed to see it myself) IO should feel this affect and has also been expanding store presence, marketing channels, OEM's etc. so I am comfortable giving IO a 40% increase quarter over quarter. That gives us revs of 435 million.( (.4x310million) + 310 million )
Now, net profit margins: for IO these have ranged from 6.7% to 4.1% and have been trending down. Sometime, the improved margins from discs should kick in but I don't know if that will happen soon, Also production costs should drop. But for now, I will assume the circumstances won't change from last quarter (4.1%). This gives 17.8 million in Net income.Dividing this by shares outstanding, 137 million (obtained from Silicon Investor Profiles) gives a net income of 13 cents. The analysts average estimate is 18 cents.
There are only two explanations for this discrepancy, either they expect much large revenues or that net margins will increase.
Lets give IO a 50% increase quarter over quarter, and a 5% margin. This gives .17 per share, a little closer.
I don't think my original numbers are absurdly conservative, and being long on IO (longer as of yesterday at 22.5) this makes me a little nervous. I hope this generates some discussion and that you smart folks, MF Ben, Chiros, etc. can show where these numbers might fall and why.
It all comes down to revenues and net margins. Hopefully they will both be up but I would like to hear why or why not from both sides.
Lets also not start the whole debate about predicting quarter end numbers, this exercise has helped me tremendously to understand the fundamentals of this company and isn't that what this board is all about?
If my baseline numbers are off, I apologize, I got most of them from the profiles on Silicon Investor.
Karl. 11++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Earnings growth Date: 96-11-16 14:16:49 EST From: Ken1Marcus
Karl. You assume that net margins will not improve with increased sales. You're forgetting that fixed expenses do not increase proportionately with increased sales. look at the eps increases for the companies that you cited and I believe you will see that their eps increase much more on a percentage basis than their revenues do. Look at the 1995 actual and the 1996 expected increase in eps for Comp Usa, from the September quarter to the December quarter. You'll see that .18 is right in line with logic.
I made a post on this exact topic somewhere in the last 3 folders. I don't see it in the Electronic Fool section yet, or I would have reposted it.
Ken http://205.216.138.19/~websites/kmarcus/iomega/ 12++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Earnings growth Date: 96-11-16 14:54:01 EST From: KarlW12733
Ken,
You make a good point and I hope you are right. The only problem is IO grew revenues at a tremendous rate over the last few quarters but their net margin declined (6.7% in Dec., 4.6% in March, 5.0% in June and 4.1% in September. That is why I chose to just use last quarter's margins, as the Rebates and all of that are still in place and I don't think a lot of the cost cutting measures are fully in place. Anyone feel free to convince me that margins will be better. I'd love to see them up around INTC's, ie 25%, or even USRX at 10-11%.
I recognize that IO is sacrificing margins to get as many drives as possible out there so they can reap the margin benefits of the discs, but when might that kick in and how good could those margins be?
Karl 13++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Earnings growth Date: 96-11-16 15:12:30 EST From: KarlW12733
To all,
One thing the calculations posted previously did for me was make me realize that IO is not as wildly undervalued as I assumed it was from my prior relatively superficial reviews. The only way that it could be considered undervalued at these prices is if margins are going to significantly increase or revenues are really going to jump.
IO's market cap is 3.1 billion., This happens to be KE's revenue goal for 2000 and represents a 1 X's Price to Sales ratio looking forward. Lots of tech companies with reasonable growth sell for 1 X's CURRENT sales. USRX is at 3.2 X's current revenues, IO is also 3.2 X's current revenues. USRX has double the margins. Which is a better buy? I own both because I can't decide.
Karl 14++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Just got back from Vegas!!! Date: 96-11-16 23:05:42 EST From: Foxonstump
Just came back from Vegas an hour ago. Iomega was EVERYWHERE. They have a big billboard on the strip next to the MGM in bright Iomega colors (gold and red). They also had signs on many,many of the Taxis (the only other noticeable taxi signs were Acer and USRX). On the back of the taxis where the same bright signs with different sayings like "I can download from the internet" or "I can move applications" (or something like that). Each of the sayings has the "I" in Iomega script. It was all very noticeable.
Also, on the front insert of my Delta inflight magazine was a two page ad for Iomega!!
Looks like there is some heavy marketing going on!
Foxonstump 15++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: MARGINS/KARL Date: 96-11-17 09:06:56 EST From: JKnuth5871
Karl, In the quarterly model I posted previously I held margins at the same percentage (26.34) as in Q3. The key is how much revenue growth can be accomplished without more fixed costs. Iomega appears to be managing it's fixed cost growth by licensing drives to Matsushita, thereby allowing use of their assets to increase production of higher margin products. If Iomega continues on this path, you will see mature product lines such as Zip licensed, and other new products such as laptop zip, n-hand, and others as they come out built in Roy. The migration to other production facilities or to licensing will happen as the kinks are worked out in Roy. In my opinion, Iomega will use higher gross margins to further drive down retail on drives as opposed to increasing EPS. They certainly have targets for gross margin percentage, etc. internally. The strategy was clearly stated in the convertible bond conference call in february. The cheapest possible drive costs, and 99 at retail some point between july 96 and feb.97. (If I remember correctly 99 at retail within 18 to 24 months from the time of the conference call) Matsushita, if they build zips in quantity, will aid immensely in achieving this goal due to higher production volumes. Iomega retains all disk revenues. Tie-ratio of Iomega drives to Iomega disks will increase quarter over quarter as matsushita builds a higher percentage of total drives. Think of it this way. If 1 million drives were produced at Iomega in the third quarter, and 7 million disks, drive revenue (total) was higher than disk revenue(total). If, on the other hand Matsushita produces 1 million drives, Iomega produces 1 million drives and 14 million disks. Tie-ratios remain at 7 to 1, yet gross revenues for disks overtakes gross revenues for drives. This is one factor that will impact margins, without any cost to Iomega. Royalties from matsushita will be another. Intel and motorola will be another. What to watch, in my opinion, is how Iomega uses that increase in gross margins. My bet would be to lower drive costs still further to both OEMS and retail in order to drive the path of dependance towards a possible standard while maintaining gross margins in a range of 26-28 percent. They want to be the new floppy. The only way to enjoy high gross margins over time is to own the market. Look at Intel and Microsoft. They own their markets, and consequently enjoy the fruits of their labor. That did not happen in 1 quarter. Time, vision, and the people able to carry out that vision all played a part. I think Mr. Edwards and company have the people and the vision. That's why I am long. I have time to let the seeds grow.
Jim Knuth
16++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: margins\JKnuth, Skichang Date: 96-11-17 11:27:57 EST From: KarlW12733
Thanks for the helpful responses. Taking what both of you are saying, it would appear that EPS may not be the best parameter to use to gauge IO's success short term. They appear willing to sacrifice short term profits to lock up the market, a strategy I don't disagree with. Revenues then would be the best thing to follow in the next few quarters until the margin benefits you described become apparent. (IO has had revenue increases quarter over quarter since at least 3/95, while EPS actually fell last quarter, this discussion makes me feel a lot better about that fall).
Jim, I take it you believe that even when the margins improve IO will use this to drive down costs of the drives, continuing to sacrifice EPS. So again, revenues appear to be the better number to follow, and I guess the number of Zip/Jaz drives sold if the company provides these numbers.
That is all well and good for the company, but the STOCK is another thing. IF the market is waiting for a lower PE with higher EPS then we may be in for a slow time for this stock, probably with some volatility thrown in depending on press releases, mag. articles, CNBC comments, and other nonfundamental influences.
Understanding all this makes it easier for me to hold through the volatility, at least I know what to be watching for.
Lets hope for the best.
Thanks again,
Karl 17++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: OK, I gotta post! Date: 96-11-17 14:47:06 EST From: Haiyaku33
friday night i gave a workshop to about 300 parents in my school district. subject was "all you were afraid to ask about computers but your kids already know".
most popular questions? >>my kid wants a zip. what is a zip? should i buy em one for Christmas?<< i loved this one>> i bought a zip disk for my kid, now he wants another one. how many do you think i should buy?<<
i, of course, never uttered a word about being a stockholder!
now, in our 5 computer labs, we have bought zip drives but they haven't been installed yet. security cables haven't arrived. the kids are chomping at the bit...and quite envious of those kids who are bringing in their personal zip drives. they are driving me crazy asking when the zips will be ready for em!
i am not making this up!
d. g. singer 18++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Vaporware vs. FUD Date: 96-11-17 16:51:33 EST From: MF Bootup
Eric (Arentz65) wrote:
<<Since the n-hand announcement i have seen the word 'Vaporware' used many times. The problem is that i don't think i have once seen the word used properly. Vaporware does not mean 'any product that is announced but not yet shipping'. Those products are simply, announced products. >> [continues with etymology of the word from software that missed ship dates, and then goes to general use and misuse of the word.]
I would pretty much agree, but I also think that people describing products like n-hand as vaporware are thinking of the FUD effect. FUD, which expands to "Fear - Uncertainty -Doubt" refers to the practice of announcing a product that doesn't exist yet, or at least isn't market ready, as a way of discouraging potential customers from buying competitors' products that are currently available. When successful, FUD causes customers to postpone purchases of existing and available products for fear that such products will become obsolete or hopelessly inferior as soon as the FUDorama special appears. When really well done, it may even scare off potential competitors.
IBM was the first technology company credited with FUDing rivals, but Microsoft is now the acknowledged master. Intel's pretty darn good at it as well. Witness all the hype about the MMX chip, which is successfully discouraging some who might buy Apples for their supposed multimedia advantages, but are now waiting for Intel's preannounced processor breakthrough to actually arrive.
Iomega, Syquest, Compaq/LS-120, and Swan have all played dueling FUDs over the last year in the removable drive biz. It remains to be seen how well n-hand FUD will work.
Steve Kahn MF Bootup 19++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: MARGINS/KARL Date: 96-11-17 18:40:45 EST From: JKnuth5871
Karl, iomega may double EPS from 96 into 97, while maintaining gross margins at 27% . Revenue growth that expands faster than fixed costs is all it takes. 27% gross margin 19% sga and r and d and interest 8% net before taxes about 5% net margin 1996 46 cents EPS
maintain 27% gross margin 15% sg and a and r andd and interest 12% net before taxes 7% net margin on 1.5-1.8 billion in revenues = more than 90 cents EPS
Jim Knuth 20++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Backward Compatibility Date: 96-11-18 00:35:45 EST From: Sunraydoc
Ok, this is my last chance to get in a few thoughts before Comdex, so here goes...
There has been a lot of talk on this board, and in the computer industry, about the LS-120 as competition to the Zip. The main issue in this debate has been backward compatibility, the only real advantage possessed by the LS-120. So how important is backward compatibility? To many of us here, it's no issue at all, since the Zip is faster, already widely available, and likely to eclipse the 1.44 floppy, which is fading technology anyway, already largely supplanted by CD-ROM for software distribution, and without sufficient capacity for backups or sharing files. When greater bandwidth allows the internet to become a major software delivery vehicle, as has been suggested here, the Zip may well shine as the "catcher's mitt" for these programs.
Still, there are those who think that backward compatibility is important, especially in the cramped environment of the laptop computer, where manufacturers and users may not be too hot on the idea of having both a Zip and a Floppy consuming limited space. Admittedly, one could just swap from Zip to floppy and back using one bay, but face it, this is a hassle, albeit a small one. Thus the hope by Compaq et al that they can establish a beachhead in laptops with the Slimline version of the LS-120. This I think is a reasonable strategy, and one that Iomega will likely choose to answer in some way. How? we'll know this week.
Some possibilities: Iomega could unveil a backward compatible, single slot Zip-floppy combo. Doesn't seem very likely to me; they'd have to re-engineer the basic mechanism to some extent to pull this off--too expensive, too much retooling, and anyway, why fool around with such a successful design to create what is essentially a transitional product?
A dual-slot Zip-floppy would make sense in many ways...such a drive would allow users to copy from floppy to Zip directly, unlike the LS-120. I seem to recall that a prototype dual slot Zip-floppy unit was seen at Comdex last year, though in desktop size. Could this be one reason behind the recently announced 12.7mm Zip? CuyugaDan and our other computer folks---any comment on whether a floppy could be paired with this thinner Zip and fit within the size constraints required for a laptop unit?
Third and most likely, IMO, is that a higher capacity, and maybe faster Zip will be unveiled this week, making the backward compatibility of the LS120 a more dubious advantage.
Sunraydoc 21++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Vapor and FUD Date: 96-11-18 00:58:11 EST From: Arentz65
<<from Merriam Webster's va*por*ware (noun) First appeared 1984 : a new computer-related product that has been widely advertised but is not yet available>>
You posted this earlier and to me it just makes my point. Merriam Webster is as mainstream as you can get. As i said the mainstream does not use the word correctly. Which definition do you think they are going to write down? The correct one or the one they use(the mainstream)?
They write a definition and all of a sudden it is the 'correct' one? Arguments from authority are never very strong(at least not to me). The 'Church' used to say the Earth was the center of the Universe. When they proclaimed it so, did that make it so?
<< Now with the jargon of the computer field moving into the mainstream it seems that the meanings of the TRENDY words are getting lost. People are now using Vaporware(which carries a negative connotation) to mean ANY announced product that is not yet shipping. >>
As to the FUD theory put forth by MF Bootup i agree completely. The iom detractors on this board have always seen io as some sort of flaccid noodle that was going to be gobbled up by some stronger, faster, better competition. All the while iom has gone about the business at hand(i.e. growing the business and smashing the paradigms of the storage business).
One thing the detractors have not understood is that the people at io ARE the Strong, the Fast and the Better. You just have to talk to them, listen to them. You can see how they have brought the company to where its at today.
As much as i despise Microsoft one thing i do have to grant them is that they are supreme competitors. One thing i do see in common between Microsoft and iom is that competitive spirit. FUD is a part of that. As long as you back it up with real products and strong execution. Something io has done extremely well for two years now. Unlike Two years ago i think the storage industry has taken notice of the n-hand. I bet they are worried about it. Some on here have said that the n-hand is only a thought right now at io. That it's not close to being done. Those people don't know this company. If io is talking about having the n-hand in devices during the second half of 97 than the n-hand is already working and nearing beta testing stage. io is just too conservative to announce something that they do not have working yet. It may not be completely ready but it is working in some form.
I believe we will see the n-hand working in a Kodak camera tomorrow. Kodak will announce the inclusion of the n-hand in some of its cameras next year. Some here might view the n-hand as Vapor i don't think kodak does.
Eric
End Report. Posts covered through 3 am ET 11/18/96. _______________________________
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