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Tuesday, October 07, 1997 Monday, Iomega closed at $25 3/16, down $1/8 (-0.49%).
TODAY'S RECAP: A very slow day on the Iomega board -- a lull before the company's October 16th earning announcement. Some posters discussed such topics as SyQuest, Iomega's drive licensees (MCI and NEC), potential Zip sales and shortages, and the Zip + floppy drive combo. Enjoy! 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++ Huibs pht comments on a possible 1.44" floppy adapter for the Zip drive
(and reposts earlier comments).
Recap written by TMF Weekly; posts
compiled by TMF Weekly. As always, the following posts represent the thoughts of our contributors, not those of The Motley Fool.
And now, the Best of the Board...Started 9:01pm ET 10/5/97. 1+++++++++++++++++++++++++++
Subject: Re: Is this true? Great news if so... ..ahh, but it could make sense in the laptop Zip.. ..remember, the only thing the laptop Zip doesn't have, even though it's my contention that it's not needed, is the ability to read 1.44MB floppy's.. ..I still think MOST laptop owners are owners of desktop machines.. ..for only 50 bucks IF YOU NEED IT, makes alot of sense to me.. << Now that just doesn't make sense. The adaptor costs more than a 1.44 drive. The idea of spending anything to get backward compatibility is enough to "blow away" the fears. I want separate 1.44 floppy in my machine as long as I am too lazy to move archived files which may be a while. "Iomega is testing a new adaptor that will allow you to put a standard 3.5" 1.44Mb floppy into a small drive unit that plugs into a Zip drive to allow you to read and write to 1.44s. It is expected to retail for $49.95 once it goes into production. Now that will definitely blow away any competition that thinks it can capitalize on being able to read and write to 1.44s. Now tell me that this won't run down the stupid fears of so-called Backwards compatibility?" >> 2+++++++++++++++++++++++++++
Subject: Waxing bullish (was Re: Ingram backorders) << All I'm saying is that I beleive it is jumping to conclusions to say that its inexcusable before we know why the channel is not stocked. >> I agree. Further, Ingram-Micro is not the entire channel. It is probably one of the last places that will see a build up of inventory. Inventory in the retail stores has not been as bad as the 2Q from what I've seen. Inventory this past week from what I've seen, and read here, is back to near full levels. I think its entirely possible that Iomega exceeds 9 million Zip drives sold sometime in the next two weeks (or fortnight...don't get to use that word much). Of course, they might not announce that for a month... ;-) All vendor Zip drive sales will certainly reach 10 million before 1998, I think its possible maybe by mid-December. It is also my opinion that all vendor Zip drive capacity will be 1 million per month at the start of 1998. 12 million Zip drives in 1998 would put the installed base at 22 million drives by the start of 1999. If Iomega did not sell a single drive after that, and if they simply sold one disk to each of the existing drives, they could make close to $0.25/share. $0.25 and not lifting a finger. Not bad considering trailing earnings right now are $0.60. I've never been a big believer in the Zip replaces floppy idea. If it happens, great. Stock will certainly be worth far more than $25. What I'm invested in is a great growth company. One with a killer product that could see sales of the Zip drive increase 50% next year after probably doubling in 1997. What makes me really bullish is that disk sales will rise at a percentage greater than drive sales going forward. Simply because drives already sold will have owners who buy disks. There are a thousand anecdotes and reasons why this tie ratio or that will improve or decline. They are all valid but many cancel each other out. To me, as the installed base gets larger than the annual sales rate it would be hard for tie ratios in a given quarter to not improve. Patrick Keeler 3+++++++++++++++++++++++++++
Subject: Re: Ingram backorders << Why ramp your own production when the licensees are planning on ramping theirs. Iomega may have forecasted demand perfectly for all we know. But, they cannot control the ramp of the licensees. If Iomega ramped drive production, that would be a total waste of capital and force the licensees to try to penetrate a fully satisfied market. >> Ken: I understand Iomega can't control the licensees ramp up speed. But certainly this must have been discussed when the agreements were signed. It's hard to imagine they signed up MCI and NEC and left the date at which the two would have high volume production up and running open. We just passed the first anniversary of the MCI deal: ROY, Utah, Sept. 10, 1996 - Iomega Corporatio (NASDAQ:IOMG) announced today the Company has agreed to license Matsushita Communication Industrial Co., Ltd. of Japan (MCI) to manufacture and sell Zip drives compatible with Iomega's award winning design. It was 6 months ago that Io signed up NEC, signed the second deal with MCI, and said MCI "commenced production" in the fourth quater of '96: (April 11, 1997) Under the previous agreements, MCI was granted a non-exclusive worldwide license to produce Zip drives and sell them under Matsushita's brand names as well as to OEM's. MCI commenced production of Zip drives in the fourth quarter of 1996. So it's a little over 1 year since the first of the existing licensees was signed, and 3 quarters since MCI commenced production. And we still hear stories of shortages. And by the spacing of the million Zip announcements, it dosen't seem like Zip sales have taken a radical turn upwards. If this is all part of the master plan, and Edwards and company knew there would be shortages here and there and were willing to tolerate them, so be it. Perhaps they saw rather lackluster competition, and decided there was no need to rush things. All I'm saying is, there should be a point at which you say there shouldn't be anymore shortages. A point at which the company has successfully forecast demand, and has it completley covered. When is that point? Does it exist? Or are some shoratges now and then always going to be acceptable? Will we always be able to excuse shortages as a sign of demand? 4+++++++++++++++++++++++++++
Subject: SYQUEST CEO SPEAKS OUT! Today I listened to a Bloomberg interview with Syquest, CEO Ed Harper. Here are a few notes. Big improvement in Q4 orders; seen as the result of adjusting their price points. They will have a very large showing at Comdex. Best seller is definitely the Syjet. On Iomega, Said, and I quote " Iomega has done an extremely good job at popularizing technology that Syquest invented ". Do you believe this guy? Stressed that Iomega and Syquest use different media techonology. When asked if a settlement could be achieved instead of going to court over the Syjet issue he responded by saying that he didn't know. I found this odd because right after that he was ask about the possiblity of cross licensing and had no comment, then he turns right around and says that the court outcome should be by the end of the year and then repeated his famous words about Iomega taking this from the market to the courtroom. Was asked about the ' NEW ' investors from this summers $20,000,000 warrant sale. While he would not name names, he did say that it was a group that already had a large investment in Syquest. About Legend ( China partner ). Making good progess. Thinks there is a tremendous opportunity in China and that it is already producing revenue. Two minutes later he says that the amount of revenue is small. Once again, I get the feeling this guy is A) not too bright and B) not telling the whole truth ! _______________________________ End Report. Posts covered through 10:30pm ET 10/6/97. _______________________________
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