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Tuesday, November 11, 1997 Monday, Iomega closed at $29, up $13/16 (+2.88%). TODAY'S RECAP: Posters continued debating the plusses and minuses of Kim Edwards' recent stock sale, but this topic was quickly overshadowed by news releases from Iomega -- the biggest regarded Micron, which is launching a Millenia line featuring the Zip drive as the a: drive and the 3.5" floppy as the b: drive. Included in this news release was the tidbit of some newly developed software, Norton Zip Fix. Other posters continued to wonder about Iomega's big announcement, a recent CNBC "spot" on Iomega and even about Iomega's future role in the storage market as a whole. 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++ JoeyRoman announces a new Iomega patent -- rivits instead of screws.
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 2:01pm ET 11/9/97. 1+++++++++++++++++++++++++++
Subject: New Patent involving new method of Zip disk construction/assembly utilizing molded rivets in place of screws. New Iomega patent granted Details; includes drawings There has to be a cost reduction associated with the rivet construction. I have aquired 20 Zip disks over the course of the past 18 months, all Iomega branded, all assembled with four screws. Anyone have a disk utilizing rivets? 2+++++++++++++++++++++++++++
Subject: Re: What does KE selling mean? From Benjamin70: << "KE selling stock is certainly not a positive. It is done, actually last Monday according to Investors Relations (IR)." Patrick, I agree with you, though I'm not very troubled by the sale. Making it a positive or a non-event is difficult. We have a lack of information. I'm always amazed at how some folks can make determined decisions when the information just isn't there to support a thoughtful conclusion. "I don't know" or "I don't have enough information to decide" are both valid answers. The lack of information here forces us to consider the sale in a negative light. >> Actually there are other valid answers than just "I don't know" or I don't have enough information to decide". And nothing that I am aware of forces me to consider the sale in a negative light. I feel that I have enough intelligence to weigh the information and decide for myself what the right answer is for me. As opposed to saying that we don't have enough information to make a thoughtful decision, and sticking our head in the sand saying this is negative, my view is to take the information that is available and make an attempt to decide how this event is going to affect my investment in the future. I don't feel I should wait until everyone else has taken their money and run, leaving me with a worthless piece of paper. There are many large investors in this stock and I feel certain that those people are keenly aware of KE's sale, and if there is anything truly negative going on, they will uncover it and unload their stock. If not, they will will likely hold, and possibly add more if the stock takes a dip on the news. There have been a couple reports, I couldn't find the post, but one stated a call to IR who reported that there was nothing negative going on. I will also be calling IR to get a first hand report. In my previous post (which I believe Ben makes reference to) I made the following statement which I still stand by because the reasons I outlined in the post, IMO, are valid. " I view KE's sale of stock as a non-event. It certainly cannot be taken as a positive because the market never views stock sales by a CEO as positive. It is not a negative for me because I have not seen any evidence of deteriorating fundamentals. As we all know, the evidence points to improving fundamentals. Iomega is a very conservative company and David Dunn, the Chairman, has demonstrated that he wants to avoid shareholder law suits, hence the policy of not giving forward guidance to analysts, nor recognition to their estimates, (along with the competitive reasons). The past conference call was too positive, and the build up to Comdex is all too positive for there to be anything negative going on within this company that may have encouraged KE to sell some of his stock. If he were to sell stock (illegally with insider knowledge) while touting the future as he has recently, while disguising some catostrophic negative information he may have, there would certainly be law suits. If such were the case, I believe David Dunn would have KE out on his ear in the blink of an eye. What I see is a man who has had tremendous success in the past few years building this company, and in turn accumulated a great deal of wealth in stock options. What do people do who create new wealth? They buy stuff. Why the timing of KE's sale, and why the amount, approximately $10 mil I believe? Only KE knows that answer at this time, but I can envision him building a new home and needing to make construction payments, perhaps buying one or more homes for relatives, to share his wealth, and a myriad of other possibilities. We are not sure of the net amount of the stock sale after taxes, but it's probably from 5 to 8 mil. A home in that price range is certainly not extraordinary for the CEO of a rapidly growing company with revenues of approximately $2 bil and rising. As for taking some of the money and diversifying into other investments (as someone reportedly was informed by IR); that is a wise decision. Why have all your eggs in one basket? Warren Buffet, who only owns stock in BRK is well diversified because BRK owns stock (and entire companies) in dozens of well run companies. In the medium and long term, this event means nothing, other than KE wanted some cash to buy stuff and consequently took a payday for himself. He has earned it and I hope he has much enjoyment from the proceeds. In the short term it could have some minor negative consequences due to the pundits attempting to blow it out of proportion to frighten those who know nothing about the company, or to make noise in their columns for their own personal egotistical gain. The Iraqi and Asian situations are likely to have more short term negative consequences than this stock sale news. Ben has suggested that he would like to see KE sell his stock in blocks of 10,000 shares at each open window, if I recall correctly. Maybe we would all like to see that. I don't know how many windows they have annually, (perhaps 4?) but to sell 300,000 shares would take 30 windows. But let's be realistic about this; 10,000 shares is only $280,000 and that probably wouldn't even buy the olives for KE's martini's for a year. 3+++++++++++++++++++++++++++
Subject: New? "BUZ" ad- $199...... I don't know how new this ad is, but here it is: "So Uncle Floyd's belching talents on your home video aren't a hit. Well, lucky for you, there's Buz Multimedia Producer. The complete hardware and software package that lets you create home videos and add digital pictures and sound. The mouse sized Buz box gives you a single connection for your camcorders, VCR's, CD's or DVD players on your desktop. Professsional quality video:720times 480, 30fps,24 bit color, and NTSC/PAL. Includes a wide range of video,graphics, audio software that gives your videos and pictures some really hot special effects. UltraSCSI Controller connects right to your scanner, DVD,CD-ROM, and Jaz or Zip drive. 20 MB/sec. transfer rate, plug and play bootable. So get Buz, because it looks like you're stuck with Uncle Floyd." The caption on the ad says: "You can't pick your relatives. But you can edit them out of your videos" There is a picture of two crazy looking old men on the cover.... 4+++++++++++++++++++++++++++
Subject: Re: Schedule for Television Spots? TMF Keeler posted: << "1) I don't want to miss the "ZIP Built In" television spots. I know that they will be on during: NYPD Blue, Seinfeld, and various sporting events. Could someone post a detailed schedule to include date, time, and show?" All we have been told is that they start next Thursday. I would look for one on Seinfeld then. You could possibly call I.R. and ask for a schedule. If they have it. >> That pretty much settles it then, doesn't it? The "big announcement" is the launch of the Zip Built-in campaign. Contrary to current discussion, iomega.com HAS been used in this way before, specifically with the 4inch square promotion. Of course, I don't know for sure that it's the launch of the new ad campaign, but I don't know why we assume that it's not something we don't know about already. The website is there to promote the products and the company to the general public, not to send subtle hints to Wall Street or clever shareholders. For the really significant news, I'd say we'll probably have to wait a few extra days, for the start of Comdex. 5+++++++++++++++++++++++++++
Subject: The Oncoming Flood New drives seem to get announced every week. Syed's new drive, Sony, Syquest (with two new ones). Comdex ought to have a few gizmos, either under glass or being sold (LS-120, Shark, older Syquest drives). What will be the result? It depends on how one views the market. I remember in the summer of 1995 holding AOL stock and watching the wringing of hands in the AOL folder as folks worried about MSN. My feeling back then was that the more the press focused on it, the more people would want to check out cyberspace in general, adn then graviatte to where they could find the biggest ban for the buck. But to me, the situation back then with AOL and with Iomega today is analagous. The more entrants into the field, the more people will realize that they may need (or want) a drive of this type...thereby increasing awareness (and sales) of the entire category. One decent short argument (rarely made with any style or substantive backing) is that there are only a limited number of people who will want to pay the bucks for a super-floppy...and that the demand just isn't proven to be there. Paradoxically, the more advertisements I see for super-floppies (SyJet had a good one in the NY Times Business section over the weekend), the more I see the whole segment expanding and the better for Iomega. While this sounds odd, I enjoy the competition and don't want it to just fade away. I would prefer to see every computer maker pushing a super-floppy of some kind when a computer purchase is made. Better to have 80% of a huge market than 90% of a small market. Bring on the new drives. Eric Turkewitz 6+++++++++++++++++++++++++++
Subject: Ernst & Young/Iomega ad The more I reflect on this promotion spot I just saw... the more amazed I am about it. Like Ed, it took me totally by surprise and it's just now sinking in what they said. It was presented in two-parts - interrupted by a commercial - so it truly seemed like a promo for some upcoming segment on CNBC. The voice over, as I recall it, was "Want to know how Iomega became a household name?" Something about "all their Zip, Jaz & Ditto products..." and then a sweeping shot of computer shelves full of Iomega products... then a "stay tuned"... When part 2 started, there was a picture of KE with a caption... and then a "don't miss the E&Y Entreprenuer of the Year Awards".... and possibly a time and date for that, but I didn't catch it. What sticks in my mind was the Iomega logo was all over this spot... and the words "household name". Amazing. 7+++++++++++++++++++++++++++
Subject: The Hump For two years Iomega has been climbing the hill, today they crested the top. As an investor I couldn't be more pleased. Micron being the first to configure the zip to "A" drive makes sense. The zip drive being promoted to the primary spot is impressive enough but when combined with the "Zip Rescue" news is even more meaningful to the big picture of zip as the floppy for the multi-media age. All the pieces are in place, cheap ATAPI (EIDE/IDE) zip drives, BIOS (Basic Input/Output System) support from the 3 big BIOS makers allowing the zip to be the "A" drive and production capacity from Iomega with licensee drives from MCI/NEC scheduled in the coming months. A zip "Built-in" or zip "Inside" (not sure which theme they're using) coming this week rounds out the picture and will sure help consumers understand the trend many of us here see as inevitable. Norton creating a zip based recovery system is even more important, while the Norton Windows 95 repair utilities are designed to work best by booting from the new "A" drive zips it should also work fine on all the existing zips out there. If you find yourself needing the Norton repair but currently are using a PP or Insider zip you would need to boot from a floppy, run the Iomega Guest utility and then easily access the zip drive and use the Norton Zip Rescue disk to commence the repair of your hard drive. One nice thing about the Norton news is the fact that it is impossible to do this any other way. The Norton CD includes all the tools (programs) but because each system is different (different video cards, sound cards, and drivers etc...) each user will need to create a Zip Rescue disk which among other things makes copies of all your drivers and system files and other such individualized information that's needed and stores them on a separate Rescue disk, also needed on that recovery disk is the programs and diagnostic tools that scan your corrupted system to identify what's wrong and programs that can attempt to fix those things, either by replacing the missing/damaged device drivers, registry files or assorted windows program files from the safe copies previously stored on the rescue disk, or maybe fixing a damaged portion of the hard disks surface or damaged directory entries. There are an awful lot of things that can go wrong and usually when something does go wrong it takes out other things with it or as a user futz's around trying to figure out why things aren't working right they create additional problems themselves. Having the ability to run the gamut of it's capabilities from one disk without requiring a lot of user interaction (disk swapping etc... ) will mean a better chance of a complete recovery of a crashed system. A recovery disk that hopes to actually be capable of repairing such damage to a system needs an arsenal of tools at it's disposal as well as copies of all of the system specific files and drivers. There is no way that this could fit on a floppy (or 3 or 6), I haven't seen the newest Norton Utilities but I remember prior versions well enough to say that having a system specific all in one Rescue disk will dramatically improve the odds of successfully repairing a damaged system. A set of tools like this, configured and tested isn't thrown together quickly, my guess is that Norton has been developing this concept/product for some time now. The release of this product at all says lot for the usefulness and capability of the zip as more then just a floppy replacement. If this isn't the "Big Announcement" Either Micron or Norton, well..... WOW. There are hundreds of possibilities for zip based solutions, this Norton Rescue Zip is just the first. I really believe that Intuit will release individual self contained applications (Quicken and Turbo Tax are great candidates) on a zip disk, If they included a run-time version of windows and were bootable that would be even better. Anyway, Now that the zip is in the "A" slot, bootable and standard, Iomega has crested the hill and soon will be picking up speed on it's way to being the biggest magnetic media company in the known universe. Probable even bigger then the Borg consortium. Note: any reference to Star Trek Aliens is really a reference to Star Trek Aliens and not a reference to the competition, even though such a reference may be valid. 8+++++++++++++++++++++++++++
Subject: Re: Fujitsu wants your Zip Drive! << SAN JOSE, Calif.--(BUSINESS WIRE)--Nov. 10, 1997--Fujitsu Computer Products of America today announced a special promotion that will pay Iomega Zip drive users $150 to trade in their Zip drive when they purchase a higher capacity DynaMO(R) 640 magneto-optical drive. >> Does anyone recall a turn-in promo that was successful? Didn't Syquest do something similar with (against?) Iomega last year? I remember Wingz (sp?) offering a generous amount to trade in Excel about 8 or 10 years ago. I believe they may have finally bellied up and flamed out earlier this year. I just can't think of a similar program that was successful. Seems like it would be less likely to succeed against a market leader such as Iomega. 9+++++++++++++++++++++++++++
Subject: My breath... ... was taken away by the Micron announcement. I would like to have seen more talk about laptops, but I am nevertheless stunned. This is powerful stuff from Iomega and does indeed suggest that manufacturing costs for the ATAPI Zip are below the $50 level (at worst, they are selling these drives at breakeven gross margins in my opinion). Wow! If it were Dell, with the Dimension line, the stock would be worthy of a leap to $40 in a heartbeat, but Micron is not chopped liver my friends. And where Micron has gone, others have followed before. I eagerly await the big announcement (not the BIG ANNOUNCEMENT, which I suspect we'll here about soon)... * 10 million Zips have been sold -- we should here it this week * OEMs are leaping all over the Zip Built-In campaign, increasingly offering the drive as standard * 4th quarter profits are up 50% over 3rd quarter profits, an astounding record for The New Iomega * Kim Edwards is spending his newly acquired $10 million on t-shirts for all the contributors to this board :-) _______________________________ End Report. Posts covered through 9:00pm ET 11/10/97. _______________________________
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