|
|
|
|
Monday, November 17, 1997 Friday, Iomega closed at $28 11/16, down $5/16 (-1.08%). THIS WEEKEND'S RECAP: Posters continued to murmur about Iomega's new Clik! drive and disk, announced at a press conference on Thursday. Debate over the drive's potential uses, value and limitations occupied much of the board over the weekend, but other subject did manage to peek in at times: the impending 2-for-1 stock split, the laptop Zip, earnings, RecordIt and others. 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++ SGOWLER expresses some reservations regarding Iomega and deadlines
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 11/13/97. 1+++++++++++++++++++++++++++
Subject: Re: I MAY SHUN Jim, You are correct. I was not being fair because I wasn't trying to be. Maybe I should have put a wink after it or something. My intent was to put the "Herb" spin on it. Remember when Herb called for a public announcement by IOM explaining why n.hand was late... maybe this was it :) Maybe my reservations came through what was to have been tongue in cheek. Sort of a subliminal "Paul is Dead" thing. I worry a little about being a bit of the Scholars Parrot so I question what I think I know. (The scholars parrot speaks perfect Greek... but knows none) I confess that I remain quite skeptical of IOM reaching its new launch date for Clik! in light of the delays in Notebook Zips, Buz and n.hand., coupled with the uncertainty involved in fitting the drive to all those products and partners. I bet we are looking at a year delay and I'd be glad to be wrong. The potential remains tremendous and I feel IOM will eventually tap that potential in the style we have become accustomed to. Time to market = big risk and that is what makes a market in the stock. There was a lot of information to digest, and the market was ambivalent today. Tomorrow will show us how the circumspect investors intend to act. Citizen could be an important signee. They reduced the floppy to a 10MM form factor.... maybe we can get some carry over into the 12.7 Zip as a bonus. (Someone did post that Clik! was going to use the same heads as Zip did they not?) Matsutshita can build millions, and Citizen can make 'em smaller. I was impressd by the fact that IOM is well enough thought of to sign letters of intent so soon. In closing, IOM signalled the world that Clik! is IOM's next star in the making... and signalled that it still is a ways off. Someone else has to want into the race...we will see if anyone can compete. (If someone mentions Swan here, I'll die laughing) 2+++++++++++++++++++++++++++
Subject: Stock splits & pyramids What do stock splits have in common with pyramid schemes? They mainly benefit those who got in the earliest and stayed the longest. Let's have a little look at Iomega to see how this works.If one first invested in Iomega in March 1995 with a purchase 2000 shares at $7 per share then the following table shows what might happen if those shares are held for 5 to 6 years: No. of shares Issued shares Date of split Share price at Value held month end 2,000 24,000,000 N/A $7 $14,000 6,000 72,000,000 Jan 96 (3 for 1) $47 $282,000 12,000 144,000,000 May 96 (2 for 1) $44 $484,000 24,000 288,000,000 Dec 97 (2 for 1) $15(?) $360,000 48,000 576,000,000 May 99 (2 for 1) $15(?) $720,000 96,000 1,152,000,000 Dec 00 (2 for 1) $15(?) $1,440,000 The two most important lines in the table are the first line and the last line.From the first line to the second line is the largest percentage increase in value (20 bagger) while from the second last to the last line is the largest dollar increase ($720,000).To get to the last line you have to jump onto the pyramid at the appropriate level with the right amount of cash. Most investors at some point or other jump off the pyramid and try to land on another one at a higher level.Even the Motley Fool portfolio couldn't hang on to all their shares. I guess if there are some investors on this board who got on at level one or level two and sat tight then who can say that they are wrong.If they stay the course then the benefits of compounding may ultimately make them big winners in this pyramid game. 3+++++++++++++++++++++++++++
Subject: Re: More Bill posted last night: << My friend who is a manager at Arthur Andersen told me they just made Jaz the standard for all back-ups. >> And it reminded me that I forgot to mention an interesting factoid that Kim Edwards passed us yesterday... Describing the success of clik!'s predecessors, he stated that Iomega shipped over a million Jaz drives since release, and that more than 5,000 of them were in use at Boeing, where Jaz is a corporate standard. If this is not news to long-timers here, well, uh.... nevermind. 4+++++++++++++++++++++++++++
Subject: More Hitachi and Baseball Rumor has it there are gremlins running around the computers at AOL HQ, and some folks got a blank screen for this post...so I'll try it again.... The Hitachi camera used at the news conference was a prototype, not a production model. No one ever said that this particular one would see store shelves, it was done to show that it can be done. The drive on the Hitachi camera was internal. The drive used to play the pictures back was external, using a docking station attached to a laptop. I would hope to see beta versions of production models at PC Expo in June, 1998. Warren used a baseball analogy here, saying it was early in the season. I think a better way to look at it is to say that we have a promising minor league player. By contrast, Zip was Rookie of the Year in 1995, had a solid sophmore season in 1996, but is still a very long way from the Hall of Fame, though with as good a chance as anyone of making it. 5+++++++++++++++++++++++++++
Subject: Re: Business Week predicts? I agree with Hype that the Josephy prediction is premature. I sure hope he (Josephy) is on target though. I would also point out that he is very well informed about Iomega and IOM. I will give it more credence when he includes it in his projections for growth and revenue included in his recomendations for IOM. (What was his price target?) I do believe IOM is going to do great in 2000 and will probably do better with Clik! I also believe the Josephy statement will bring more focus/interest in IOM. That is well deserved. My excitement about Clik! is as follows. 1. It is a another new catagory of removable storage, Miniature magnetic or something like that. Iomega is light years ahead of the competition again. 2. On the business and financial sides it makes a lot of sense. It is a large peice of intellectual property. We just have to wait to see if the Railroad comes through this unchartered land. 3. Iomega management excells at bringing new storage concepts to market. (I don't think anyone has ever done better). This includes monopolizing the profitable reusable "razor". 4. Iomega management has shown the ability to do 3 (above) successfully from and sales and profitablity point of view for the benifit of the shareholders. (as opposed to traders and nonshareholders) IMO this adds to the upside potential and decreases the downside risk at a rate much faster than I anticipated when I invested. It also creates a huge unplanned upside potential that I can quantitativly follow with time. This increases MY VALUATION of IOM. I feel the market still doesnt value IOM correctly. That is why I bought and still buy IOM. After all, isn't it all about risk and reward. The Josephy statement makes clear one main point. Clik!, if successful, drastically changes all the models that have been used to date to value Iomega. I am glad I own it. The success of Click! (Like the Zip being standard) is speculative now, but the speculation is less than last week. Fact is that Clik! could cost us too. Look at other storage company innovations. This is where management, history and experience bring the real value. 6+++++++++++++++++++++++++++
Subject: Clik! Round-Up Clik! Round-Up: November 14, 1997 The Product Clik! seems to have undergone some changes since we last saw its specs -- under the name "n.hand". The capacity increase, slight change in form factor, as well as ther other "non-visible" changes, like power management, are definately improvements. The addition of an external Clik! seems to speak directly to one of my earlier concerns with n.hand, that Iomega is completely at the mercy of the OEMS. An external model, while clumsy, awkward, and certainly not the long-term solution, does permit Iomega to leverage off at least one of its strengths -- since they won't be leveraging the Zip installed base with a caddy system, a disappointment to me -- its expertise in the retail market. Iomega has serious presence and abilities in the aftermarket and an OEM-only product would not permit them to flex that muscle. An aftermarket clik! does. It harkens back to Zip in this way: there were two ways to approach the issue, OEM and aftermarket. Iomega, mostly because in 1995 it didn't have much of a choice, went with aftermarket. The aftermarket sales proved to be the driver that motivated OEM inclusion. Clik! may repeat that, to a smaller extent. The Numbers While I also question any analyst's ability to peg a number to clik! in the next two years, I applaud the effort. Too many times news from Iomega is called "huge" without anyone actually considering the actual fiscal implications. If it doesn't generate revenue and earnings, short or long-term, then it doesn't matter. In the very end it comes back to discounting the free cash flows back. Period. The "as much as" $1 billion revenue "by 2000" that Cliff Josephy quoted to Business Week is interesting. Let's look at it, given that we have already questioned its accuracy. Analyst estimates call for around $2.4 billion in revenue next year and around $1.25. Keeping top and bottom line growth constant into 1999, then we'd get around $3.1 billion in revenue and $1.70 in EPS. Totals for 1998 and 1999: Revenue: $5.5b EPS: $2.95 These are all pre-clik! of course. Why? Because if these numbers included clik! then all of the revenue and EPS expectations from the product line are already factored in in a large respect. Right? Go with me, for a second. Post clik! with Josephy's "as much as" $1 billion added on top (and an EPS of $0.55 or around 8% net) Revenue: $6.5b EPS: $3.50 So, what does this $1 billion in revenue and approximately $.55 EPS mean to Iomega over the next two years? About an 18% increase in revenue and 19% increase in EPS. We now have a "how much." That's important. The Whining Of course I always find it astounding -- I'm dumb that way -- how many folks claim to be long-term shareholders yet how many posts the past two days were about the stock price, reaching $30, exceeding $30, breaking $30 -- you get the idea. Does the stock price THIS WEEK, THIS MONTH, THIS YEAR need to reflect what WE expect clik! to contribute? Only if we do some serious buying, which, for all the bravado, claims of huge positions, and the like, probably wouldn't move the stock 1/8. Face it, there is signficant risk with clik! going forward. Personally, I think this product, by nature, will be binary in terms of success. There really isn't much middle ground, in my opinion. Either it succeeds and does extremely well (perhaps that $1b in revenue through 1999) or it fails miserably. We can state our opinions on which of those outcomes we believe will occur, but the market doesn't care. Time will show who is correct. The Omission of Analysts Last item. I was told by someone who attended yesterday that financial analysts were specifically NOT invited. While I have no problems with making an event purely a PR type event -- as long as its done well, which could be debated -- I do wonder why Edwards would come to New York and NOT meet with the white shoe firms' analysts. Hopefully he is doing so today. The lack of coverage is quite disturbing. Bottom Line My personal opinion is the clumsy, external, aftermarket unit will help enourmously as Iomega knows retail better than OEM. I also believe this product can't be a mild success, that it is either enourmously successful, very quickly, or it fails, just as quickly. In terms of the upside, the potential EPS increase is quite compelling, around 18% increase over the two year period. I also have little faith in the ship date and don't expect to see a single device for sale, from IOM or others, before Q4 '98, putting most of the gain in the 1999 year. In that respect, I don't expect analysts to change their 1998 numbers due to clik! at all. Without that change in 1998 numbers, I don't expect Wall Street to give Iomega much of a stock boost. After all, if the analysts don't change numbers, then why boost the stock? However, clik! could be a nice, positive figure when 1999 numbers come out. As I said, for all those whining about the stock price -- as if the order of press releases really matters -- patience and free cash flows are the key, not "news." News is only important as it changes the valuation. By how much and when and with what certainty then become the important questions. Could be by as much as $.55 by 2000, with a high risk. I'm willing to wait to find out. 7+++++++++++++++++++++++++++
Subject: GREAT DELL NEWS Great News. New Dell catalog just hit our computer department. The Dimension line has been expanded. Five new models, bringing the total Dim line to 8. Of the 8 models, 5 come with Zip built in,it is an option on the remaining 3. This is great! Dell is probably the leading contract supplier to Gov't and corporate acc'ts. 8+++++++++++++++++++++++++++
Subject: Re: Clik! Round-Up Ben. I agree in principle with your <<However, I still view the two-Clik! drives (OEM and PC drive) as the most elogent and the one most likely to succeed, but, as I said, it does seem binary. Success will beget success (think battery back example) but failure to get consumers at the outset to spend the extra dough could crash the whole thing.>> However, there are three factors to consider: first, as in the case of the light meters installed in cameras in the early 1950's (yes, I'm old enough for that), most hobbyist amateurs and the pro's still used the external meter for accuracy and reliability (ask huibs); as an amateur I remember using my faithful Norwood meter in the Far East during the K. war, despite the fact that my Contax had built-in meter. This requirement persists to this day. I still use an external meter to compensate for the questionable readings of built-in exposure meter. second. is the mobility factor, which enables the operator of a device to use the Clik! on more than one device. This factor, after all, gave Zip broader acceptance in the marketplace than if IOM had relied exclusively on OEM's. IOM thus doesn't become captive of the OEM market (with its vagaries concerned with cost, margins, etc.) but gets the product in the hands of as many consumers as possible as quickly as possible. No need for wiat for an OEM to get its product out (remember how DELL hesitated, Gateway, and the rest). Thirdly, back to the principle underlying Zip's success: it's the disks or blades! Since IOM is more likely to get more drives into consumers' hand quickly if they're external (internals coming out more slowly), disk profits will be rewarding, although IOM may choose to sell the drive at low margins. Indeed your concerns are valid, but I wouldn't lose any sleep over IOM's ability to profit from both experience with the Zip and (I assume) a superior product. 9+++++++++++++++++++++++++++
Subject: Re: Clik! Round-Up <<My understanding, though, is that the external model would essentially remain docked to your desktop pc, while you use your clik-equipped portable device (camera, pda, etc.) in the field.>> Yes, and no. The external clik! drive I handled yesterday in New York did come with a docking station that allowed the device to stand erect on the desktop while port-connected to the computer (and during recharging). It could be easily transferred to a shirt pocket to become a "portable storage appliance". Edwards said outright that other form-factors would appear over time, including aftermarket and OEM clik! drives for use in a PC's internal bays (ala the Zip), or in laptops, and of course clik! drives integrated into a variety of non-PC consumer electronics. He specifically mentioned the external clik! drive form-factor as the one that would hit the market first, and said that it would probably come in both disposable (two "AA" cells) and rechargeable nicad battery formats. I'll go out on a limb here and suggest that during this evangelical phase for the technology, he considers it more important to stress the small, outboard form-factors implied in the little blue clik! shown yesterday. These are the formats that most correspond to digital cameras, PDA's, and Win-CE enabled devices; they also correspond well with consumer audio and gaming equipment. So by proving out power-consumption and durability specs in an aftermarket gadget with Iomega's marketing reputation behind it, this is the form-factor that should quickly inspire OEM applications. But it was by no means the only one. The InFocus LitePro projector used during yesterday's demo had a 5"x 8" x 3" box standing next to it that looked very much like a lab workup rather than a finished product. It contained a clik! drive installed in the fascia, much as it might appear if directly installed in a PC tower bay or other larger format. Unless someone was spoofing us, this thing was operational: Mike McCammon of Iomega took the same disk that had been "exposed" from the Hitachi (or maybe it was the Kodak) digital camera, parked it in the docking station attached to his laptop, printed a consumer-friendly color print using an HP printer, then transferred the disk again from the external clik! to that 5x8 box and projected the image of a bunch of us via the InFocus projector. (I've gotta get me one of those things!) Ben and others are correct that we've got more questions than answers following yesterday's event, but I saw enough to suggest that a rich strategy to lead this marketplace is taking shape. That Iomega has produced a similar coup once before with the Zip drive reduces our risks going forward to, say, about what they were the week HP and IBM announced their first Zip inclusions in 1996. Best of all, though, is our own learning curve experience: I think both Iomegans and streetside analysts will be better equiped to recognize signs of a successful second act now that we've been through Act One. 10++++++++++++++++++++++++++
Subject: Hear Ye, Hear Ye recordIt is now shipping! The iomega link is at: Iomega - Product Guide - RecordIt [http://www.iomega.com/product/prodguide/softguide/index.html] The only source I have found to order the product is at: PC Connection SuperStore Product: RecordIt
[http://www.pcconnection.com/ PC Connection wants the full list price of $39.95. If anyone finds a better price please post it. 11++++++++++++++++++++++++++
Subject: NZR is FREE to us!! Windows Sources has an article about the Norton Zip Rescue. Full article at: Symantec, Iomega, and Micron to Kiss Floppy Disks Goodbye
[http://www.zdnet.com/wsources/ BTW the article showes the logo for the Norton Zip Rescue. Looks good! Form the article: << In a joint agreement, Symantec Corp. and Iomega Corp. will announce today Norton Zip Rescue (NZR). The companies promise the software product, when used in conjunction with any of Iomega's Zip drives, will revive failed Windows 95 systems as long as the hard disk is still functioning. NZR will be bundled with all Zip drives, and existing Zip drive owners will be able to download NZR free from Iomega's Web site. Symantec will also include NZR in Norton Utilities 3.0, and buyers of the well-known utility will receive a discount towards the purchase of a Zip drive. As part of the strategic agreement, buyers of the Zip drive will get an exclusive incentive to upgrade NZR to NU 3.0. When asked if a Windows NT version was on the way, Iomega's Director of Zip Partnerships, George Meyer (meyerg@iomega.com) said, "most definitely, somewhere in the 1998 time frame." >> This is bigger than we have given it credit for. Think about it. Bundled with ALL Zip drives. The ability to "revive" your system for all failures short of smoke being released from your hard drive. This is a must have! Therefore, Zip is a must have. This will strongly accelerate the "desire" level of the Zip drive among the masses. 12++++++++++++++++++++++++++
Subject: 1997 stock returns YTD = year to date return CTD = crash to date return (10/24/97 Friday before mini-crash) PFH = percentage from 52 week high Notice that IOM is the only stock listed that is higher today than it was before the mini-crash. Also IOM is off the least from it's 52 week high. DELL is still king of the hill for YTD returns despite being 24% off its YTD high. The numbers highlighted in bold are the best and worst in each category. 1/3/97 10/24/97 11/14/97 52 wkh YTD CTD PFH DELL 27 15/16 93 15/16 79 2/16 103 14/16 183% -16% 24% CPQ 30 9/16 69 62 9/16 79 9/16 105% -9% 21% AMAT 18 12/16 33 4/16 32 13/16 54 4/16 75% -1% 40% IOM 17 28 8/16 28 11/16 30 2/16 69% 1% 5% MSFT 84 10/16 135 6/16 133 5/16 150 12/16 58% -2% 12% TXN 67 111 14/16 94 8/16 142 8/16 41% -16% 34% INTC 69 3/16 80 78 12/16 102 14% -2% 23% WDC 28 10/16 33 4/16 23 6/16 54 12/16 -18% -30% 57% ASND 59 11/16 33 24 6/16 80 4/16 -59% -26% 70% COMS 75 12/16 45 13/16 30 5/16 81 6/16 -60% -34% 63% 13++++++++++++++++++++++++++
Subject: My brief take on the split... ...is that it makes no sense whatsoever and had a negative effect in a postive couple of weeks. The news releases out of Iomega were awesome: * Zip sales are over 1 million per month right now, 10 million total * the new clik! product has been endorsed by some of the biggest names it needs to succeed * Micron has made the Zip standard on the desktop On the bad side: * CEO and CFO sell shares * stock splits from 29 to 14.5 announced The bad news was bad enough to keep the big buyers away from what sounds like a breathtaking story in the making. Kim and Len may have had their reasons, but it looks bad. The split is mystifying. What could this possibly accomplish except to run the risk that bad news takes the stock to the single digits? Well, there is the increased %age volatility from a lower share price! Whoopee! I am a troubled shareholder who sees, on the one hand, a stock with a ~40 P/E that will end the year with about .90 in earnings. That alone should take it to about 35-36 from here. Given what I believe will be $1.40 or so next year, I think I could see 55-56 by year end 1998. Yet, I have the CEO and CFO selling, the stock splitting, and the price flat as Kansas. I am in for the long haul and have been for nearly three years, but I am confounded and disturbed that good news is not being translated into an orderly upward progression. I am troubled that even with 120,000,000 shares outstanding, someone or some group appears capable of short-circuiting any rally past 30 per share. I am troubled that one day a few months back the stock moved from 14 to 17 for no reason -- a huge increase that appeared to have an options-related profit component. I am troubled that Iomega IR can get no coverage from any more major analysts and that one of this year's pick-ups, Buckingham, appears totally and completely clueless about where next year's earnings will be (or they know something really bad is gonna happen). Do Kim and Len have pessimism on Nomai? Do they believe OEM Zip penetration is not going to increase? Do they know in mid-November that Iomega will miss its Q4 numbers? I'd like to be sure its No, No, No, but I don't know, know, know. All I know is that the stock went nowhere on the kind of news that should've been worth about 5-10% upward movement even if this uncertain environment. Instead, the stock is down a bit from its last run at 30. While I think Tamara is dead wrong about shorting Iomega, there is a case to be made for waiting until 30.25 to buy the stock. I mean, you lose very little upside unless it suddenly pops passed that number to 31-32 -- which seems unlikely. Is desparation over the stock price the reason for the split? If so, it's not going to work because the same people that are working to keep it below 30 (and I believe they are actually out there) are going to work to keep it below 15. And if there is no one out there working to do this, then the overall psychology that says "this is no 30 dollar stock" is going to merely shift to "this is no 15 dollar stock." Troubled but bullish, 14++++++++++++++++++++++++++
Subject: Re: Salt Lake Tribune <<Iomega expects to reach the $5 billion level somewhere in the year 2001, Edwards says. >> If you expand that to around $5.5 billion...that means a triple in four years....or about an 32+% compounded increase....or we'll have to wait four years for this stock to hit $100 on a pre split basis....:) This might mean something closer to 40+% growth in 1998 and 1999 then slowing some in 2000 and 2001....but certainly derserving of a multiple of 30 times next years $1.30-$1.40 EPS....yes I'm an optimist...but I like the sound of KE's internal view of future revenue...Internal revenue projections always (normally) have higher % growth in near term years vs. the farther out you go...because its easier to judge.... Has KE previously commented upon revenue out that far? _______________________________ End Report. Posts covered through 9:00pm ET 11/16/97. _______________________________
WE
DELIVER - Get IOM
In Fooldom Today delivered
|
||||||||||
|
|||||||||||
