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Monday, November 03, 1997 Friday, Iomega closed at 26 13/16, up $1 (+3.87%). THIS WEEKEND'S RECAP: Many different issues occupied the Iomega message board over the weekend -- some topics tinged with a ghoulish flavor. Some discussion of Iomega's competitors -- SyQuest and Imation -- was mixed in with debate over Iomega's future, the usefulness of short interest in a stock and the practical knowledge that channel checking provides investors and the company itself. 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++ NovW calls for paid Iomega channel checkers.
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 10/30/97. 1+++++++++++++++++++++++++++
Subject: Get Off Their Butts To Check Relating to almost never seeing enough Iomega products on the retail shelves (his experience was at Fry's), MarkRogo stated in "Notes from the valley..." : << Iomega needs to hire some retail channel folks to visit stores and make sure their product is being shown. Without being seen, it can't be bought. >> I totally agree. Iomega desparately needs some retail sales reps to visit retail stores more often. Before, Iomega may have some product shortage excuses. But not now. I would say CompUSA stores seem to have a bigger problem. It may be CompUSA's internal distribution problem. Or CompUSA may have been shipping lots of Iomega and Zip products to Corporate accounts recently, and therefore pulled the products off from the retail shelves (or they would get shipped out before ever getting there) and left not enough for the walk-in retail customers. Anyway, aren't there supposed to be computers tying Iomega and CompUSA together so that Iomega may know what is going on with Iomega product inventories at retail level at CompUSA stores? Maybe those computer numbers don't reflect the actual situation of IOMEGA PRODUCT AVAILABILITIES ON THE RETAIL SHELVES FOR WALK-IN CUSTOMERS. You can't rely numbers in the computers 100%. Retailers themselves may not care. They may be satisfied and making enough money. Manufacturers should care. If other manufacturers don't, Iomega should. That is how you get the EDGE. Someones at Iomega should get off their butts and get down to retail stores like CompUSA to check it out more often --- and work with the retailers to find ways to correct the problem if there is any. There seems to be definitely room for improvement at retail operations. No questions about that. Just a lay person's humble opinions. As "usaul", I may be wrong. 2+++++++++++++++++++++++++++
Subject: Re: Fantasy vs. Fact!! << Their present outstanding is meaningless going forward, so IMO, in their minds, they MUST assume full conversion to the total 111,000,000 in their business models going forward. In other words, all those shares might as well be thought of as "out there" since they eventually will be. It wouldn't be prudent for any analysts (or individual investor for that matter) to ignore the eventual dilution when looking forward. >> Agree wholeheartedly. Nice to see a rational response. Warren was correct in his statements, and should not be shot down because they are not negative enough for the Board. I might add that this was the only "investor's" view I heard on the subject, the rest was ..........The issues aren't personal, they are meant to be discussed. The issues of Syquest and Imation as competitors going forward in the removeable disk marketplace have absolutely nothing to do with their current financial statements. Look at various companies over the last 3-5 years and their successful attempt to finance future market share and profits with initial and current losses. (hint:you are on such a service right now). Syquest has made a corporate decision to issue equity for suppliers, marketing, etc... Obviously, this isn't a move made by a company that has many choices. It either succeeds or they go bust. No surprise there. Those who paid $35 per share for the Iomega secondary offering know what it's like to take a chance. However, their product lines going forward are signs that the company at least has developed products that could possibly give them a glimmer of hope for the future. The company had to issue shares so as not to drive the company into complete bankruptcy during this period. Obviously, there are many investors willing to risk their money to bet on this company. So be it. Imation is another type of beast. Their financials are also of secondary importance to me. They have a competing product in the Superdisk. That's the issue here, or it should be. The Sony product has yet to hit any market, but the future implications could be very important, no matter what the ZIP's installed base is now. Iomega is currently being contested both in the marketplace and in the Court systems. The most serious issue going forward, in my opinion, is Nomai. As the companies battle in Court in various venues, this issue is still an unknown. Iomega obviously cannot make more than cursory comments on the topic. This issue is so important going forward because it has a Direct impact on future earnings. Most IOM valuations going forward show the Zip disk revenues being compounded yearly as the installed base gets larger and larger. What if the Drives show slower and slower growth due to competitive pressures? This directly impacts future tie-ratio calculations and thus, earnings. If Iomega loses the Nomai battle, revenues could possibly be severly impaired. For the Iomega model to succeed, ZIP drives have to be "included" in OEM models, and the laptop ZIP must be an included item. If the future of removeable disks is left up to customer choice and price, the model will fail. These are the issues I feel are important in any fundamental discussion of Iomega, or any company going forward. I support Iomega, and feel that they still have a pretty good chance to succeed in making the Zip standard equipment and a future cash cow for years to come. Discussions concerning o/s shares or quarterly margins from competitors are not relevent yet. The competitors are taking aim at Iomega, and are willing to pay dearly for trying to catch up. Just items to think about, pro or con. Steve Hinchey 3+++++++++++++++++++++++++++
Subject: LS-120 Review in MacWorld Hi, Don't know if this has been posted, so I'll do it. The LS-120 for the Mac (SLS-120 by Winstation Systems) is reviewed in the newest issue of MacWorld magazine. The title of the article is, "SLS-120, Floppy and Zip Drives have Nothing to Fear". The article basically pans the drive as being way to slow and expensive. ("Compatibility at a huge cost".) The drive was approximately 3 times slower than a zip in almost every area tested. Price is $269-external, and $199 internal. The driver software (read Mac extension) takes 45 seconds to load. The included software doesn't always work. They also state that "......this drive costs as much as both drives (floppy and zip) together". 4+++++++++++++++++++++++++++
Subject: Re: IOM short interest Oct. report << I don't think a high short interest is healthy for a company's stock, and I'm sick of the 'die shorty' posts around here >> This could be discussed to death and none of us would ever change our mind. But anyway I thought I'd add my 2 cents. Many people believe that shorts play a very vital role in the market today. It is believed that they add some stability to falling prices. The idea goes that as the stock price is dropping people that are short will add buying pressure as they cover their short. I for one do not blame the dramatic fall in IOM's stock price on the shorts. Shorts lost huge $$ on the way up and am sure added some fuel to the fire as the price rose. As the weak (those who could not stand the losses) shorts were forced to cover on the way up they actually added to the spike in price. When IOM finally hit a point where there was no longer buying pressure it began its decent. I explain the dramatic drop on Over extended Longs, myself included, who continued to buy every share of IOM that their margin account would allow them to buy on the way up. As the price fell these Over extended longs developed margin problems. They were forced to liquidate their shares further driving the price lower causing more margin pressure. If I had a choice I would prefer to see IOM with a huge short interest. Huge short interest represents future buying pressure. With low short interest you have the possibility that someone will be able to sell short huge amounts of stock driving the price down. Just my thoughts. In the long run none of this will actually matter. Harry L. Roberts 5+++++++++++++++++++++++++++
Subject: Japan Best Sellers List According to December issue of Computer Shopper Japan (http://zdnet.co.jp/magazine/cshop/9712/ranking/remove.html -- in Japanese), the top 5 brands in removable drives in Japan (based on sales in 16 stores) are: 1. Panasonic LF-1500JDN (PD drive) w/ street price of 46,400 - 49,800 yen 2. FujiFilm ZDR 100 SCDS C (SCSI Zip) 16,700 - 18,800 yen 3. Logitec LMO-230H (230MB MO drive) 35,800 - 39,800 yen 4. FujiFilm ZDR100 PRDS C (PP Zip) 17,799 - 19,800 yen 5. Logitec LMO-640F (640 MB MO) 47,800 - 59,800 yen 5. Melco MOS-S230 (230 MB MO) 29,800 - 33,800 yen I'm very satisfied with Zip positions in a country dominated by PD & MO drives. I'm surprised FujiFilm brands are in the top 5 but not Iomega/Memorex brand since I found the most popular brand switched from Epson to Fuji to Iomega/Memorex last month I visited Tokyo from my survey of several stores. 6+++++++++++++++++++++++++++
Subject: The Omen This halloween one of the cable channels aired "The Omen" (starring Gregory Peck) in the middle of the night. I'm sure most here remember the movie. In it, there were certain verses from the Book of Revelations, that predicted a set of circumstances which would mark the end of the world. Well, it's now one day since I saw the movie, and I'm reading this board.. and I'm getting scared. I'm not talking about Armaggeden. I'm talking about something much more frightening.. ..my decision to stay invested in IOM may be changing. (if I were able to insert a sound clip to this message, I would have inserted a blood curdling scream here!) Here are just a few of the circumstances that marks the end of iomega as a good investment. 1) This board is falling apart. Skichang says he is no longer going to post. Benjamin isn't posting as much. A new group of strange people (agents of the devil? ) like Pauline, are haunting us, driving us mad. 2) The world stock markets, including the U.S., are scary. This last week was scary. Did any of you ever read the "Big Kahuna" posters on S.I? It's a group of folks that are convinced that a market crash of biblical proportions is at hand. 3) The analysts are all recommending IOM. The press coverage is mostly favorable. It's generally true that the best time to get out of a stock is when the whole world knows about it and likes it and had bought in. 4) The laptop zips will soon be here. n.hand will be shown at Comdex. The Jaz2 is here. These used to be the 'future' of IOM. They will soon be the 'present'. Again, when everything is known about a company, and liked, that's the time to leave. (There is one favorable point here: n.hand news should be good for a nice pop, as I really don't believe it was ever discounted in to the stock price, yet. After Comdex, that too may change). 5) This quarter, Q4, should be great. Another quarter showing amazing growth. But even though I expect IOM to grow after this, the percentage growth will start to slow. 6) In the movie, the anti-Christ had a number. It was 666. In my mind, IOM has a number too. It's $35. That's the number that many analysts place as fair value, That's the number that the secondary offering came out as. And, although this doesn't mean much to any of you..... ....that's the number where I'm going to sell my stock. I can only pray that I don't get decapitated, or impaled by a pole, or thrown out of a window first. Please Lord, get us to $35, Bruce Damien Brantman 7+++++++++++++++++++++++++++
Subject: Re: The Omen << Please Lord, get us to $35, >> It always amazes me how some people see a movie, read a book, read an article, see something on TV and blow everything out of proportion. Your arguments make sense only if you believe that IOM will stop with the 2 Gig Jaz, N-Hand, and the laptop Zip. That is a gross assumption I will not make based on the history of this company. If you think $35 is Valhalla for you then go for it, but don't try to persuade others to sell and jump off this juggernaut before it has slowed down a little bit. That is bad advicve IMO. The fundamentals have been getting better not worse. When that starts occuring is the time to think seriously of selling part or all of IOM, not before. Patience comes with wisdom, fear comes with lack of information or bad news. _______________________________ End Report. Posts covered through 10:00pm ET 11/2/97. _______________________________
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