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Wednesday, December 10, 1997 Tuesday, Iomega closed at $29, $1 1/16 (-3.53%). TODAY'S RECAP: Another down day for Iomega's stock was accompanied by fairly light debate on the message board; while some posters discussed Iomega patents and the impact on the Nomai Zip disk lawsuit, others spent time on the overall status of Iomega (the company and stock) as well as the potential for 12 million Zips sold. 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++ LB1951 quotes a recent IBD article on Iomega which mentions 12 million
Zips.
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 12/8/97. 1+++++++++++++++++++++++++++
Subject: Re: Investors Business Daily From the IBD article.......... ''Clik takes us out of the PC market, which broadens our technology base,'' said Iomega's CFO, Leonard Purkis. The company's removable hard drives and disks, Zip and Jaz, have solved many data storage problems for PC users. Its installed base includes 12 million Zip- and 1 million Jaz-drive users. Products are sold to consumers in stores and to computer makers. Notice it says 12 million Zips I don't know where they got that. LarryB. 2+++++++++++++++++++++++++++
Subject: Re: Counting Stars by Candlelight Good digging Clay. Clay posted: << Check out claim 12 from patent 5,638,228 and recall that this patent was filed Feb 14, 1995. 5638228.tif Page 10 "...a textured lens for said, detector, said textured lens discriminating against light reflected from other than a retroreflector material by distorting light reflected from other than a retroreflective material..." >> Moving back 2 pages in the patent, in the section titled "Description of the Preferred Embodiment", we find the following which explains the patent claim Clay cited: "Features may be added to the lens prism which help frustrate the use of other types of reflective materials and also the use of a lens in conjunction with other reflective materials. For example, surface roughness or waviness of the top of the lens prism which has a spatial frequency of less than the pitch of the retroreflective elements (0.006") will be corrected by optically using the retroreflective cartridge marker. This will frustrate the use of both ordinary mirrors and reflectors used in conjunction with lenses. Just putting an angular surface on the front face of the prism lens will frustrate the use of polished mirrors if the angle is made large enough. The corrective polished mirror that would be required is of such a large tilt angle that it would be difficult, if not impossible, to locate on a cartridge. If a mirror is oriented just right, some light will get back to the receiver, but this amount decreases in an exponential manner as the mirror is moved away from the source. This is not the case with the retroreflective material. The decrease with distance is linear with a very gradual slope." In the middle of the next column: "Hence, the differences in the return of light from the two retroreflective materials, Reflexite and a molded acrylic tag, are basically in the diameter of the returned spot of illumination. With the Reflexite, the retroreflected spot is about 12 mils. in diameter and requires the "Lens prism" to redirect light to the detector for sensing. It should also be noted that by getting rid of the "lens prism" some of the modes of discriminating against other types of light directing tags has been reduced." So....(my hypotheses follow)... leave out the prism in early production - save money. Lure competition. "Put back" prism, eliminate competition. 3+++++++++++++++++++++++++++
Subject: Optical Baffle (Previously: Counting Stars by Candlelight) << The beauty of the retroreflector is that it will return the light such that the detected power is basically the same as it would have been if the "light baffle" had not been used. According to the retroreflector patent (IraS1 can you link us to the patent?) NO OTHER reflector can achieve this. This is the basis of the entire retroreflector design. >> I agree with this statement completely. The "light baffle" used as a distorting element can be something as cheap as a (purposely) badly molded piece of transparent plastic. This would have the effect of completely distorting the returned light of any type of reflector other than a true retro-reflector. This embodiment makes use of a very special property of retro-reflectors that no other reflecting surface can copy...its abilty to act as a phase-conjugate mirror. The phase-conjugate reflector sends light back exactly along the incident path and removes the distortion from any intervening baffle or obstruction no matter how complex (random). The obstructing baffle draws on but one very powerful property of retro-reflectors, but there are many properties that Iomega should be able to make use of that cannot be duplicated by other reflecting surfaces such as a concave mirror. For example, another property that we may have already seen exploited would be the independence of geometry of the reflector - E/D pair (for distance and angle). In the external Zip drive, this distance is stated in the patent as 13mm, but obviously this cannot be the case in a 12.7mm laptop drive. Therefore a concave mirror, which can only be constructed to find a single "fixed" solution, will not work for all possible geometries that would be necessary for the various types of Zip drive. How many disk rejections will consumers tolerate before they decide that purchasing a knock-off disk is not worth the gamble due to the failure rate? Even if the knock-off worked in your own Zip drive, it may not be accepted in all the drives that you might use that disk in (your laptop Zip drive, your other Zip drive at work, your friend's Zip drive). As discussed in a previous post, the rejection rate does not need to be 100%, but only an amount necessary to cause consumer distrust. Most importantly, this active defense is largely independent of the courts, foreign and domestic. 4+++++++++++++++++++++++++++
Subject: Re: LS-120 still alive? Here is my take on IOM's recent price action. First keep in mind IOM has had a nice run and stocks that have gone up significantly will fall more precipitously in the face of uncertainty or any perception of changing fundamentals. I believe that the Nomai issue is affecting the stock. It just hasn't gone away and certainly if they succeed in being able to sell their disks, this must be viewed as a negative. The second factor is the additional competition Iomega is facing. Now we all laugh at Syquest and its stock dilution, and its difficuly financial situation, but the fact is that the SyJet has received more positive press and apparent sales, than the previous failed products, such as the EZ135, and the EZFlyer. While I believe the SparQ is really going to hurt SyJet sales, there seems to be no question that it is selling well. My local CompUSA sold thirty units in about 4 days. I went back yesterday and specifically asked about returns. FWIW, the sales person said he had not had a return yet. The SparQ poses a problem for both the Jaz and the ZipPlus. I believe the ZipPlus was a mistake. Iomega had worked very hard to reduce the price of the Zip and clearly price points were an important part of the Iomega strategy. In the face of 1gig for $199 it is hard to see the value of the ZipPlus for most consumers. My channel checks seem to back up the fact that the ZipPlus is not moving exceptionally well. I am hoping that Iomega was expecting to have to lower the price of both the Jaz and the ZipPlus, but at this point price cuts would likely be perceived as forced by competition and not necessarily part of the immediate IOM strategy. There also are implications for Jaz 2 pricing. I suspect Jaz sales are slowing and ZipPlus is probably not a homerun either. I am a little less sure about the increasing competition of the LS120. Without a doubt, I have seen more LS120 purchases at CompUSA recently, than ever before. Mostly the one with the $49 price after rebate. Again, we can't have it both ways. If price was as opposed to top performance was a factor in favoring the Zip, it cannot be ignored when hurting Iomega. We cannot dismiss any competition with slower performance if the price is right. I have no doubts that the product shortages helped Iomega competition. Part of the reason that there are so many Iomega skeptics is that it is in a business that requires incredible execution and acumen. Any stumble can be disastorous. When the product was not in the store, this provided an opportunity for competition. While this competition was mostly at the retail level, again we can't have it both ways. The Iomega strategy was to enthuse the consumer and have the OEM's and corporations follow. The need to commit to the OEM's at the expense of the retail market was not a positive and perhaps we are seeing some effect of this. Where are the Laptops? It is now apparent that Laptop revenue will not be significant for this quarter. I know all too well that stock price action cannot be fully explained by some fundamental observations. After all the stock was languishing in the teens with good news happening all the time. I do believe however, that Iomega is at another of those crossroads. I look forward to a resolution of the Nomai situation, an aggresive response to the SparQ, significant shipment of Laptop Zips, and the real birth of Clik. Until then, it has been a good year for Iomega, I am going to take some of my gains and buy a couple of Zips for my kids school district, be more generous to all my favorite charities and enjoy the holidays. All with a close eye on what is happening with Roy Utah's superstar company. _______________________________ End Report. Posts covered through 9:00pm ET 12/9/97. _______________________________
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