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Monday, December 02, 1996 Iomega was up $1/4 Friday, closing at $22 5/8 (+1.12%). TODAY'S RECAP: The long weekend gave Fools plenty of time to mull over Iomega's outlook heading into the big Christmas retail season and beyond. In today's report we have collected several posts which consider Iomega's sales rates in this major shopping period, and some others which cast a forward glance to earnings in the current quarter and in 1997. It's nice to know that between bites of pumpkin pie and the 387 televised football games, a few of us took a little time out to do some actual thinking. The best of it is arrayed for you in a nice buffet. Grab a plate... the line forms to your left... 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++DAVID911 reports a Jaz drive appearance on the Today Show. And now, the Best of the Board...Started 3 am ET 11/29/96.
1++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: "Today" show Date: 96-11-29 09:07:57 EST From: DAVID911
On the Today show this morning the Jaz drive was highlighted among other Christmas gift ideas as a quality gift idea that gives you the most "bang for your buck"!!!!!
They had a stack of floppies showing the amount of disks needed compared to one jaz disk......quoted a price of $500.
David 2++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:"Today" show Date: 96-11-29 11:16:44 EST From: Ind Sales
I did not see the Today show, but to contrast the amount of disks needed to equal a JAZ disk is meaningless. How does the JAZ compare in terms of storage to my 3.2 GB hard drive?
How does a ZIP compare to my 1 GB hard drive? Meaningless comparisons. Like the number of printed pages they can store. How about graphics files? Spreadsheets?
Most of the advertising and stories I read about the ZIP and JAZ really miss the point, IMHO.
The ZIP is really great for bringing files home from the office, storing annual data, publishing documents, advertising flyers, tax returns & data, etc..... Much more friendly than storing on floppies or tape.
The JAZ, on the other hand, really takes over when more speed and storage is needed. And yes, you pay for the privilege. I can take home my entire accounting system, windows directories, marketing files, most of what I use on my hard drive, on one JAZ disk. Even better, Complete offsite backup of last year's records. Much easier than trying to cram files into a ZIP, but a different purpose for each.
I wish shows and ads could better portray the computer user that would benefit the most from these products. Show the small businessman tucking the JAZ disk into his briefcase and go home for the night. Show the laptop user storing spreadsheet files from his office on one ZIP disk to take on a trip. The average SOHO user would benefit greatly from both products, IMHO. But the ads I have seen, and the reviews I have read, would not really encourage me to investigate them further. Videos are worth a thousand ads. More TV ads would be great.
Steve Hinchey
IND SALES 3++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: PKeeler's 1997 Model Date: 96-11-29 16:42:42 EST From: HYPEMENOT
From: PKeeler <<Total Revenues = $1.4 Billion Total Net Margin = $143.15 Net Margin % = 10.2 Shares Outstanding I estimate at 165 million, therefore: EPS = $0.87
So I come up with $0.87 which is only $0.07 higher than First Call at $0.80; why do I think Iomega will "crush" $0.80 then? Because some of the assumptions in the above model are so conservative as to border on the ridiculous. >>> ____________________________________________________________________________________ PKeeler,
I quickly learned on this board, that when it comes to technical matters, its best to defer to you and other experts. Having read your post forecasting IOs 1997 EPS (a small portion of which is reproduced above), I suggest that you adopt the same approach regarding your attempts at serious financial analysis. Without going into a lot of detail, let me say that what you refer to as a simplistic model, isnt that at all. Rather, it is a series of largely undocumented assertions that you have made regarding 1997 unit sales and net after-tax margins for each of IOs key products.
Just because Iomega sees fit to continue to withhold disclosing basic information about most of the items covered in your model, that doesnt make it appropriate for you (or anyone) to simply ASSERT that a given number of units of a specific product will be sold or, even more ridiculous, that a specific profit margin, on each, will be realized. Fact is that IO has only been forthcoming on a regular basis about the number of Zip drives shipped (even that has been done in such a way that none of us has an accurate count of how many Zip drives have been shipped in 1996). To continue, the Zip disk tie ratio was only revealed once (in March) and has NEVER been updated in a PRECISE way. Indeed, in IOs October conference call October, all KE really said was that the Zip ratio was better than expected, while the Jaz ratio was disappointing. So even with respect to the couple of areas of disclosure where Iomega has been somewhat vocal, the guidance has been either GENERAL, or not tied to SPECIFIC accounting periods.
Some of what you say is laughable, e.g. your 1997 assumption of << 14% growth in Jaz drive sales over 3Q96 annualized level (est.). >> Estimated by who? You? So the message here is what, that the Jaz unit projection you make for 1997 (800,000 units) is reasonable, because it represents only a 14% increase over YOUR OWN undocumented guess at what Jaz units sales were in 3Q96? As an analytical technique, this is nothing less than PREPOSTEROUS.
But this is the easy stuff, at least when compared to your assertions about the margins of profitability for each of IOs products. No one outside of IOs senior management has the knowledge to do anything more than guess at these numbers, and that is with respect to PAST results. Ill bet KE himself, would be happy to be able to even LOOSELY APPROXIMATE what these individual product margins might be in 1997.
But lets get away from all your unsubstantiated building blocks, and look instead at the absurdity of your overall conclusion, which is that IO will CRUSH the $0.80 EPS First Call consensus for 1997. You say that this will happen because your Model, which produces EPS of $0.87, uses assumptions that << are so conservative as to border on the ridiculous >>. Well, lets see if that statement really is justified.
There are, in fact, three summary assumptions involved in arriving at your Models result: (1) total 1997 revenue, (2) Net (after-tax) Margin and (3) # of shares outstanding. I have to admit that two of these summary assumptions - revenues (which you project at only $1.4 billion) and shares outstanding (which you arbitrarily increase 20% to 165 million) are very conservatively stated. However, they are far more than merely offset by, what any reasonable analysis would conclude, is a VASTLY OVERSTATED assumption of the Net Margin - which you peg at an INCREDIBLE 10.2% (or nearly 2 1/2 times greater than the 4.1% margin IO realized last quarter).
I submit that your projection of a 10.2% net margin for IO in 1997 is so excessive that it literally offends sensibility. Keep in mind that the 4.1% margin realized in the Sept. quarter (which is well below the level of the three previous quarters) didnt occur by accident. It came primarily as a result of IOs decision to cut the selling price of Jaz drives (the external by 16 2/3% and the internal by 20%), and offer cash rebates on Zip drives and Zip disk 10-packs. We all know from the October conference call that the EFFECTIVE cut in the Zip drive price was approximately $25 (50% hit rate on rebates ), and while the Zip disk rebate was never discussed, a 70% hit rate, for example, would translate into $14 per 10-pack. Its also fair to assume that some of the margin slippage was transitory, reflecting seasonal factors.
In listing the assumptions underlying your model you indicate that you expect << average 50% price cut by end of 1997 for Zip and Jaz drives and Jaz disks >> and << average 25% price cut by end of 1997 for Zip disks >>. Considering these assumptions in the context of the margin pressure caused in 3Q 96 by the first round of price cuts on the Zip and Jaz product lines, how can you possibly defend a projection that says margins will be dramatically higher in 1997 (nearly 2 1/2 X the 3Q96 level) in the face of further substantial price reductions? Ill grant you that a shift in mix towards higher margin disk sales would help, but not nearly to the degree suggested by the results of your Model.
IMO, a realistic framework for next years earnings possibilities would be as follows:
1) Revenue - $1.7 billion (up about 40% from est.96 revenue of $1.2 - $1.225 billion).
2) Shares Outstanding - 137 million (unchanged from 3Q96)
3) Net Margin - 5.5% - 6% (vs. slightly more than 4.5% for first 9 months of 1996)
These factors yield 1997 EPS of $0.68 (5.5% margin) or $0.74 (6.0% margin)
BTW - to reach the First Call consensus of $0.80 EPS, either the margin would have to expand to 6.5%, or revenues would have to expand to $1.825 billion (or some combination of the two).
HYPEMENOT 4++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:PKeeler 1997 Model Date: 96-11-29 18:08:17 EST From: PKeeler
HYPEMENOT wrote: >>> I quickly learned on this board, that when it comes to technical matters, its best to defer to you and other experts. Having read your post forecasting IOs 1997 EPS (a small portion of which is reproduced above), I suggest that you adopt the same approach regarding your attempts at serious financial analysis. <<<
I think the above is not only insulting to me personally, but is an affront to the Gardner brothers and all the people who enjoy this service. I've never tried to do anything but learn from fellow individual investors on this site. That is the mission of the Gardner's, and I think this is the most useful site on the internet for individual investors. I'm not an auto mechanic but I think I could understand the combustible engine if I took the time to learn. I could not learn without asking questions or postulating hypothesis and working them out. If I share those thoughts with the readers of this board, its so that their constructive criticism will help me learn. I learned something from every response I got to those posts. If you can learn by having people tell you what to think, then good for you.
>>> Rather, it is a series of largely undocumented assertions that you have made regarding 1997 unit sales and net after-tax margins for each of IOs key products. <<<
I thought I documented every assumption. Since you go on to discuss many of the assumptions I don't think you missed them. You continuously lambast me for guessing, then say that with the info we have one can only guess.
I will not trade insults with you as its not worth my, or anyone's time.
In discussing 3Q96 results, you attributed all the margin decline to price reductions. You do not take into account the start-up of the Penang facility and the build-up of inventory in expectation of the 4th quarter (one time events). Here you are plainly wrong.
>>> how can you possibly defend a projection that says margins will be dramatically higher in 1997 (nearly 2 1/2 X the 3Q96 level) in the face of further substantial price reductions? Ill grant you that a shift in mix towards higher margin disk sales would help, but not nearly to the degree suggested by the results of your Model. <<<
US Robotics has improved net margin steadily as modem prices have dropped. In your world this is impossible. Maybe you should enter the real world where the cost of producing something can fall. KE doesn't say much but he has said that the cost of making a Zip drive has fallen every month they've been for sale.
I challenge you to show a model where Iomega and Matsushita sell a like amount of drives and Iomega's net margin does not double. I believe JPM and Brous have stated that Gross Margin on Zip disks is 55%. I showed plainly how I arrived at each disk having a net margin of 22%. I have to assume you agreed since you didn't take exception to that. If Zip disk revenue is equal to Zip drive revenue then net margin on Zip products (assuming 0% net margin on drives) would equal 11%. Unless you think Jaz is going to sell in huge (over 1 million units) numbers next year, Zip sales will be the clear majority of Iomega's revenue and earnings.
>>> I submit that your projection of a 10.2% net margin for IO in 1997 is so excessive that it literally offends sensibility. <<<
We will see. If you are still around on 1/18/98, and if your short I doubt you will be, we can discuss it then. I showed how I got to 10.2%, you have not showed any such calculations. I'm looking forward to them. IMO, your flame filled post has to be backed up with something. Let us pick your post apart. What you did was easy.
PKeeler Patrick Keeler 5++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Make or break month... Date: 96-11-29 19:28:08 EST From: GoLong
TO move this stock, we need: 1) 4 millionth zip drive sales announcement 2) 5 millionth zip drive sales announcement 3) Apple or DELL to announce OEM relationship. 1 will do, both will be better. If we don't get these, we probably won't get diddly. -- 6++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Make or break month... Date: 96-11-30 02:16:04 EST From: Arentz65
<<From: GoLong
TO move this stock, we need: 1) 4 millionth zip drive sales announcement 2) 5 millionth zip drive sales announcement 3) Apple or DELL to announce OEM relationship. 1 will do, both will be better. If we don't get these, we probably won't get diddly.>>
Many people on here still don't get 'IT'. The only thing that is going to 'move' this stock Is good solid earnings GROWTH. The first two announcements might be good for a short lived $1.5 bounce, more if they are released at the same time.:)
Your third might be good for $2 or $3.
What the 'street' is looking for is not Announcements but solid growth In earnings, not just the prospect of future growth.
My ex had Thanksgiving dinner at her Aunts this year(first year in five that we were apart :( )
She called me afterwards to tell me part of the dinner discussion. She asked many of the guest what they thought of iomega as an investment. They ALL said iom was a hyped company, and that NO ONE they knew would invest in something like iom. While these weren't market pros, They have been around investing for quite awhile. They are conservative and get much of their input from Two sources; the Brokers they deal with and coworkers(they are Lawyers, Doctors and College officials) While many on here scoff at Brokers abilities that does not really matter to my point. My point is that much of the street and by extension their clients see iom as a hyped company. More 'hype' In the form of 'Announcement' is not going to change that. It will only reinforce the view as a hypster company.
There is a world outside this board, and much of it is hostile to iom as an investment. So unless your a trader looking for a few points to make some money on the best thing i think you should be asking for is a couple of good years earnings growth.
Eric 7++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Make or break month... Date: 96-11-30 02:25:18 EST From: Arentz65
<<..I say that if Merrill Lynch came out with a BUY rating on Monday that IOM would move up quickly. So, what is holding these big brokers back?....got me....I don't get it.>>
They want EARNINGS!!!
We may not see coverage begin after the 4Q either. They may wait to see what io does the quarter after that. After all replacing the floppy is a very slow process. The main revenue stream from that is still more than a year away IMOP. They have time so why rush in? It makes more sense to wait and see than to rush in on a 'hype' story. Most people on here don't realize that iomega has been here before. In the 80's, the first time io' stock was hot It got a lot of coverage.
The company Could not compete with Syquest though and started to falter. The stock crashed and burnt a lot of people. The street still remembers io and what happened the first time.
Eric 8++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Make or break month... Date: 96-11-30 14:32:37 EST From: MNNML
>><<..I say that if Merrill Lynch came out with a BUY rating on Monday that IOM would move up quickly. So, what is holding these big brokers back?....got me....I don't get it.>> They want EARNINGS!!!<<
Eric - They want earnings in the long run. In the short run, what they want is some proof that IOM will be able to take the building blocks they have created, and put them together into a long-term company with a long-term potential. The biggest concern right now is not so much earnings, but that IOM and the Zip will be a flash in the pan.
You are implying that the earnings are a 'sure thing', and that people need only sit back and wait for them to roll in. This, IMHO, ignores how the street views this company. There is a huge skepticism about the Zip drive itself (with regards to being replaced by a competitor).
The bottom line - IOM is a great company has a great product, but IMHO, 3 years from now, the picture may look quite a bit different. I fundamentally disagree with the opinion that 4 or 5 million zips is anything but a drop in the bucket as compared to the numbers of PCs out there.... Zip is a great product. Jaz is a great product. The question is, is IOM a good long-term investment? Short-term - I'm long. 9++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Zips in Sweden Date: 96-11-30 16:10:17 EST From: PKeeler
Here is a post from the SI board with some great info from Sweden:
>>> From: David Tilles Nov 30 1996 2:32PM EST Reply #12221 of 12222
MORE ZIPS IN SWEDEN
Iomega has not had much of a presence here in Sweden: I have never seen an ad for Iomega products in our local Uppsala newspaper, and none of systems advertised in the paper have built-in zips. Furthermore, most my acquaintances with computers have never heard of zip drives. Still, last summer I started noticing externals in stores. Last weekend I was at dinner with a guy who works at one of the larger computer retailers in Uppsala (pop. ca 100 000). I asked him about Iomega . He had heard of the Zip but had never installed them in any boxes. He said that their major suppliers did not provide them with Zips. On Thanksgiving Day he called me with some interesting news:
During the morning he had received faxes pushing Iomega products from three of his major suppliers! He faxed the faxes to me: One supplier writes: "Now we are selling Iomega!". Another writes: "Iomega Discount Campaign, Today only!. The third also had discounts on all Iomega stuff. So it sounds like things may be changing up North here. Maybe this reflects a trend in other European countries?
Dave Tilles <<<
The 2nd half of the 4th quarter last year was the first where Zips were readily available in the U.S. This year it could be that December 1996 marks the first time Zips are readily available worldwide. :)
PKeeler Patrick Keeler 10++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:PKeeler's 1997 Model Date: 96-11-30 21:07:16 EST From: MF Logman
HYPEMENOT wrote:
<<To continue, the Zip disk tie ratio was only revealed once (in March) and has NEVER been updated in a PRECISE way.>>
HYPEMENOT, PKeeler, et al;
Contrary to popular belief, the Zip disk tie ratio was NOT revealed in a precise way in March either. In typical Iomega fashion, they worded the press release in such a way that one would have to make some assumptions and/or wild guesses in order to calculate the implied tie ratio.
More specifically, the March press release indicated that "more than" 1 million Zip drives had been shipped, and "nearly" 10 million disks had been shipped as well. The problem comes in trying to determine how exactly Iomega defines "more than" and "nearly". . . a couple or three hundred-thousand units either way makes a big difference in the tie ratio.
Examples:
9.8 million disks / 1.2 million drives = 7.16:1 tie ratio (not including the freebie that ships with the drive) 9.7 million disks / 1.1 million drives = 7.81:1 tie ratio (not including the freebie that ships with the drive) 9.6 million disks / 1.3 million drives = 6.38:1 tie ratio (not including the freebie that ships with the drive)
Furthermore, the company didn't indicate in the press release whether or not the "nearly 10 million disks" cited included the free disk that ships with each drive. The conservative (and I think prudent) thing to do is assume that the free disk was counted. However, it's certainly within the realm of possibility that it was not. Again, one has to make an assumption one way or the other.
I know I've brought all this up before and am probably starting to sound like a broken record on it, but I think my point is a valid one and needs to be kept in mind when making "assumptions" about the Zip tie ratio. . . especially considering the large impact that disks sales have on the overall net margin.
Logman 11++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: No Zips in NYC Date: 96-12-01 01:02:17 EST From: Cipper2
I believe the prospects for OEM zip sales are greatly exaggerated on these boards.
This weekend in NYC I went to the Comp USA superstore on 57 street in Manhattan. Comp USA carries Compaq, HP, Apple, Packard Bell, IBM, Sony, NEC etc. The ONLY computer that they sell with an internal Zip is the Packard Bell! Even though IOM has agreements with all those OEM's. Everybody seems to be making a big deal of national commercials and all these agreements but.. It doesn't matter if they are not being carried by the big retailers like comp USA.
I also received two or three major mail order catalogs. Again, one model in each only with a zip, even though they carried all the brands.
I feel the immediate impact of the internal zips is being exaggerated on these boards. I am sure that in time they will be big sellers but for the time being I still see no evidence that computers with zips are going to add a lot to the bottom line this quarter.
Side point: I should point out that no salespeople even knew what the LS120 was. They also said the the regular Zips have really been moving like hotcakes.
Back to my original point, if anybody can tell me where exactly all these computers with zips are going to be sold. As for now I'm not really going for it.
Cipper2 12++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Zips Sold Out Date: 96-12-01 15:41:07 EST From: Shig2
Over the weekend I visited 4 stores in Nashua, NH, a suburb town of Boston. In CompUSA and Computer City, they sold out all of the systems with built-in Zip drives. In Lecmere they still had 2 models with internal Zip, but they ran out of Zip drives (both internal & external). The shelf space for Zip cartridges were also two-thirds empty. At Circuit City 7 models out of 32 models had built-in Zip drives, but Zip drives (both external and internal) supplies had become very scarce. Christmas sales for Iomega seem very brisk.
Back to my home state in New Jersey, I found in an ad, Nationwide is selling Iomega Zip drives for $79 with the purchase of an AST model. PC Warehouse is selling Iomega Zip drives for $99 with the purchase of any systems. Apparently, they are making Zip as the main tool to attract customers. A very good sign.
Shig 13++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Jaz in Back Order at Merisel Date: 96-12-01 15:41:57 EST From: Shig2
At Merisel, a major distributor of computer hardware / software, shows Jaz cartridges are in back order for the last 4 weeks. This is the first time Jaz cartridges became back order since early June when there were still manufacturing problems. It could mean better than planned Jaz drive-cartridge tie ratio. Meanwhile, Jaz drive supplies are very tight for the last few weeks. Zip drive supply is also getting tighter. For example, Zip external SCSI inventory level at Merisel were consistently between 10,000 and 15,000 units throught the 3rd quarter, but now it has fallen to approximately 3,000 despite almost daily receipts of shipments. It briefly became back order situation last week. 4th quarter sales seem really great.
Shig 14++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Jaz in Back Order at Merise Date: 96-12-01 18:49:04 EST From: MF DrJimbo
Shig-
I think your post regarding the Zip and Jaz supply is one of the more important I've read. I've been a little puzzled at the Iomega promotional machine the last few weeks. It seems that the coop advertising is decreasing in volume as we go into the heart of the XMas selling season. Zip is much less prominently featured in Best Buy, CompUSA, and Computer City circulars. Its there, but less prominent. Best Buy has not repeated its free Zip promotion.
I was beginning to wonder why the company wasn't pulling out all the stops for marketing this month. I half expected to see Iomega newspaper ads this fall.
Well, I've seen a Best Buy store sold out of Zip drives and there have been several other similar reports here. I'm coming to the opinion that Iomega is selling everything it can produce. This is good in that the profit will be maximized, but unfortunate if sales are lost this year because supply is again constrained.
What's the advertising situation outside of Baltimore? Lower profile than earlier in the Fall? Does the supply of Zip drives look infinite like it did earlier in the year? 15++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Keeler Apology Date: 96-12-01 21:04:19 EST From: HYPEMENOT
Patrick Keeler
After reading your response to my message severely criticizing your 1997 earnings model, I have to agree that the overall tone of my post was excessive and inappropriate, and one of the statements I made does not reflect my real belief and needs to be withdrawn. Therefore, I want to apologize to you, and hope you will accept the fact that I acted in haste and regret it.
The remark I want to withdraw (and from your response really aggravated you) was my statement that you should, in effect, stick to writing posts that deal with technical subjects, and leave serious financial analysis to those with experience and expertise in that arena. As I said at the outset that statement does not reflect my honest beliefs. To the contrary, anyone with reasonable intelligence who can think logically and rationally, is capable of doing worthwhile financial analysis, and I have seen numerous examples of that on this board (including several of yours). If I didnt believe that, I would never spend the amount of time I do in this forum, both absorbing what others have to say, and posting my own thoughts.
Having said this, I do want to make it clear to you that I still do stand behind the substance of my critique of your 1997 Model. It seems to me that there are times, when the information necessary to do an analysis that can be (even loosely) relied on is simply unavailable, that it is better not to attempt it at all. Even if you vigorously disagree with my views on this, let me at least suggest that an analysis, such as is represented by your 1997 MODEL should only be presented if it is accompanied by a candid statement(s) properly qualifying it and pointing out the highly tenuous nature of the exercise. Now, you and I, understand that any financial forecast is, by nature, a string of (hopefully) intelligent guesses. But there is a big difference between extrapolating from a SERIES of hard data, such as four or five quarters worth of numbers on Gross margins, or Revenues or Net margins, versus making extensions into the future based on an historical data series which, in turn, is WHOLLY estimated.
This is what you did with several crucial elements in your model (i.e Jaz & Zip drive units, disk tie ratios, and net margins on all key products). That is why I think any conclusions drawn from this type of analysis ought to be SEVERELY qualified. Maybe you feel you did this, but I submit that your unequivocal conclusion << Using a very simplistic model, I think I can demonstrate how the sale of Zip and Jaz disks to people who bought drives in 1996 and, to a lesser extent, the royalties from Matsushita will let Iomega EASILY ECLIPSE (my emphasis) $0.80 a share, does not send a signal that there is anything at all tenuous about the series of estimates that went into your Model.
One final thought. I find it surprising and, frankly dismaying, that the basic underlying cause of all this need for estimating relatively basic items of information, namely Iomegas continued adherence to an excessively restrictive disclosure policy, is almost never criticized on this board (with the exception of MF Ben and perhaps one or two others). IMO opinion, the excuse about not revealing information that could be useful to competitors is way overdone. If it is valid, then I wish someone would explain to me how it is that IO was willing to talk openly about the n.Hand a full year before the product will become available? And it isnt as if these rigid disclosure policies arent without their cost. IMO the failure of Iomega to be more forthcoming with information vital to the conduct of reliable analysis, is the single most important reason why Wall Streets coverage of the Company has remained so limited.
HYPEMENOT 16++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Why the n-hand now? Date: 96-12-01 22:44:27 EST From: MF ETurkey
Hypemenot:
My theory on why iomega released the n-hand drive now, instead of waiting for a working model is as follows (the basis being my own theory, not data or press releases)...
Ultimately it makes logical sense to have such a drive, that is a "standard", for the digital camera industry. Unfortunately, the competition in creating such a thing is going to be tremendous... just between Kodak, Fuji and Agfa alone.
It therefore makes sense to move as quickly as possible to create a standard, not by rushing ahead into a vacuum the way they did with Zip and Jaz (and keeping everything secret), but rather, to have one major hand in the standardization of the product. This means all the camera makers come on board as partners. It also means that iomega must get out front ASAP as a major player so as not to be sidestepped.
With that, they go on to some kind of deal(s) with respect to the licensing of the device AND the film (since Kodak, Fiji and Agfa would not stand for anything less), with iomega sitting back and making just pennies on each one, but pennies that add up to a ton of money if the drive is successful. The ultimate question would be how many pennies.
They also then hope to get the spinoff rights to related areas that the camera makers are not involved with (the PDAs, the game carts, GPS, and stand alone devices to get installed into TVs?) After all, once the drive is standard in the huge film business, it makes sense to use the same medium in other areas if possible.
Hey, it's a theory.
Eric 17++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: My SKU List Date: 96-12-01 23:51:12 EST From: IAmErgoSum
Here is my list of SKUs in which Zip is standard. The total number is 16. Someone posted earlier that they thought the total number was 20, so if I've missed any please add which ones.
PACKARD BELL - (4 w/Zip)
Packard Bell has two lines: the Platinum Series and the Multimedia Series. The Platinum Series has nine models, 3 of which have the Zip as standard: the Platinum Pro 755, the Platinum 55 and the Platinum 61. The Platinum Pro 755 comes with a 200 MHz Pentium, 32MB of RAM, a 2.5 GB hard drive and an 8x CD-ROM. It retails for $2,400. The Platinum 55 comes with a 133 MHz Pentium, 16MB of RAM, a 1.6GB hard drive and an 8x CD-ROM. It retails for $1,900. The Platinum 61 comes with a 166 MHz Pentium, 16 MB of RAM, a 2.0 GB hard drive and an 8x CD-ROM. I do not have a retail price for this model. The Multimedia Series has 10 models, 1 with Zip as standard: the D136. This model comes with a 133MHz Pentium, 16MB of RAM, a 1.2 GB hard drive and a 6x CD-ROM. I do not have a retail price for this model.
IBM - (1 w/Zip)
IBM's Aptiva line has 12 models (not including the new Aptiva S series). The Aptiva with the Zip is the C6Y. According to an IBM Aptiva salesperson, the C6Y is packaged for Circuit City. It comes with a 166MHz Pentium, 16MB of RAM, 2.0 GB hard drive and an 8x CD-ROM. The Zip drive is external. I do not have a retail price on this model. Zip is available on all the other Aptiva models as an "add-on", according the the salesperson, for $199.99 (you send in the rebate).
NEC - (6 w/Zip)
NEC offers two lines with Zip: the NEC Ready and the NEC Ready Office series. The Ready line has 11 models, two with Zip standard: the Ready 9624 and the Ready 9628. The 9624 comes with a 133 MHz Pentium, 16MB RAM, a 2.0 GB hard drive and an 8x CD-ROM. It lists for $2,000. The 9628 comes with a 166 MHz Pentium, 32MB RAM, 3.2 MB hard drive and an 8x CD-ROM. It lists for $2,700. The Ready Office series has 4 models in it: the 1620, 1625, 1628 and 1629. All come with Zip as standard.
HEWLETT-PACKARD - (2 w/Zip)
The Pavilion line has 11 models, two with Zip as standard: the Pavilion 7110Z and the Pavilion 7275Z. The 7110Z comes with a 120 MHz Pentium, 16 MB RAM, 1.2 GB hard drive and an 6X CD-ROM. I do not have a current retail price on this model. The 7275Z comes with a 166 MHz Pentium, 32 MB RAM, 2.5 GB hard drive and an 8X CD-ROM. It retails for $2,400.
CANON - (2 w/Zip)
Canon's main PC line is the Innova Media MT line which has 6 models, two with Zip as standard: the MT 9350 and the MT 9800. The MT 9350 comes with a 133 MHz Pentium, 16 MB RAM, 1.6 GB hard drive and an 8X CD-ROM. The suggested retail is $1,900. The MT 9800 comes with a 200 MHz Pentium, 32 MB RAM, a 3.1 GB hard drive and a 12X CD-ROM. Its suggested retail price is $3,300.
ACER - (1 w/Zip)
I understand the Acer Basic line has 3 models, one of which will have the Zip as standard. The other models are "Zip compatible" which I take to mean "Iomega Ready". The Basic comes with a 133 MHz Non-Pentium 5x86 and 4 MB of RAM.
Regards,
Bill Polk 18++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Coverage Date: 96-12-02 01:13:18 EST From: DILLIGF
The reasons are not hard to understand why other major Wall St. firms do not cover Io.
1. Io is a dangerous company to cover from an analyst's point view. The company does not and most will not provide much if any guidance.
2. It offers a high opportunity to embarrass ones self. Look at last quarter both analysts missed the revenue and profit margin by a wide margin.
3. Most analysts are directly involved in a firms investment banking relationships and unless it became clear that Io would be involved in major additional funding activities or potential mergers, there is no carrot.
4. Most analysts do not understand the Io model. The one who did have a grasp of Io and who had developed a better than average model no longer covers Io; however, based on the companies that he is currently covering I suspect that he wishes that he did.
5. Io's management believes and preaches that marketing of the company to Wall St. is in appropriate and that if the employees do their job the price of the stock will reflect IO actual performance. I personally know of many company who are substantially undervalued because management or the B of D operates under this mistaken belief. The stock market is not unlike the retail market. There are many choices that the investment community can make and in many cases the decision is based on who has the best investor communication's personnel. Io has possibly one but he is not willing to be the featured player.
5. As a number of posters have stated the institutional market and possibly one or two analysts want to see growth in earning in addition to revenues and some objective information that reinforces the notion that Zip is becoming a standard and not a flash and that Jazz has no serious competition and that the production ramp has been accomplished. If the latter were accomplished the Gross Margins would improve in a very positive way.
6. The low profile Zip combined with the major integration of the EB is accomplished and that there are no quality issues involved.
7. The next generation of capacity is introduce and the price of the 100mb Zip is reduced to $99.
8. The next generation of Jazz is introduced by June of '97 and the price is reduced to 299/370 by the end of '97. The Jazz offers substantial cost reductions if the integration effort succeeds in a timely fashion.
9. Io demonstrates the ability to double revenues in '97. This could occur this qt. if the sales are as strong as this board is presently indicating
10. As always, time will tell all.
End Report. Posts covered through 3 am ET 12/2/96. _______________________________
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