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Monday, December 15, 1997 Friday, Iomega closed at $26 7/16, down $9/16 (-2.08%). THIS WEEKEND'S RECAP: Iomega message board posters found numerous subjects to discuss over the weekend, most notably Iomega's competition from the SparQ drive. Other topics up for debate: inclusion of Zips in OEM SKUs, advertising, the impact of lower Apple market share, Fortune magazine coverage, Asian currency and even Iomega's relationship with Dell. 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++ Tjctester shares year-end numbers for IOM, MSFT and INTC.
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 12/11/97. 1+++++++++++++++++++++++++++
Subject: Return for 95, 96, 97? Some year end housekeeping brught to my attention the annual prices of Iomega. Iomega Year.........Start Price........End Price........%Change 95............... 3/4...................8 1/8...............983% 96..............8 1/8.................17 3/8...............113% 97.............17 3/8................ 27 ................. 55% Intel Year.........Start Price........End Price........%Change 95...............16 1/4...................28 3/8...............74% 96..............28 3/8....................65 1/2...............130% 97..............65 1/2.................... 75 ................. 14% Microsoft Year.........Start Price........End Price........%Change 95...............30 3/4.................43 7/8..............43% 96..............43 7/8..................84 1/4..............92% 97..............84 1/4................ 143 1/8..............69% What a pedigree for any so called dog. 97 looks like it will finish between 26 and 35 or between 49% and 101%. 2+++++++++++++++++++++++++++
Subject: Fortune Article Just got latest issue of Fortune; its their annual issue of the Fortune Investor's Guide '98. The article page 257.....by Erick Schoenfeld........What's this guy some kind of a schmuck? Did he get his journalism "degree" from a Cracker Jack box or what? Here is what the second paragraph says VERBATIM: "Edwards certainly has reason to brag. After all, in the past three years Iomega has sold three (thats what he wrote: 3) million Zip drives, turning a device that stores PC data into one of the computing industry's greatest retail successes. The Zip sells for $149 and comes with one 16-square inch disk cartridge that stores 100 megabytes; a six-pack of additional disks costs $90". Folks, it seems to me we have sold nearly 11 to 12 million drives in the last 3 years!!! Please correct me if I am wrong. Author also states that the Zip disk is, and I quote again verbatim a "16-square inch disk cartridge"...........16 square inches, now that gives a whole new meaning to "portability".......I'd like to see the shirt pocket that it fits into. I am sure Fortune and Mr. Schonfeld will be hearing a LOT about these oversights!!?? 3+++++++++++++++++++++++++++
Subject: Apple's Market Share :-( The market share of one of IOM's major OEMs, Apple Computer, continues to dwindle according to IDC. In the U.S. Apple now ranks as No. 8, down from No. 5 last year, with a 4.4 percent market share. Worldwide Apple now ranks as No. 9 with a 3.3 percent share. In the U.S. Apple's shipments dropped from 490,000 computers shipped in the third quarter of 1996 to 365,000 in the third quarter of 1997. Worldwide shipments dropped from 939,000 in the third quarter 1996 to 648,000 during the third quarter 1997. 4+++++++++++++++++++++++++++
Subject: News you won't like... ... and neither do I. I spoke with a Dell product manager today at Internet World. I listened to him tell we about the new laptops they have. These machines have a removable bay for CD, floppy, battery, etc. They don't currently offer Zip laptop drives. Why? Because they don't like the shock performance of the Zip. This guy was hyper about shock performance and said laptop Zip is not yet up to snuff. I'm serious. He continued that they were working with Iomega on the problem and expected to offer laptop Zip in Q1 or Q2. But before then, they'd offer LS-120! Yikes! He likes LS-120 because it holds 20 MB more, it's backward compatible, although it is "half as fast as Zip." He also says they'll offer HiFD, which he really likes for speed, size, and backward compatiblity. He is a techie, and like a lot of techies, he likes specs. It is love of specs that has cost Iomega some in magazine reviews. It is marketing savvy that has brought Iomega dominance. Dell will offer all the drives, but it's unlikely any will be standard on their machines for some time. If anything, they'll more likely include a backward compatible drive in a pricey bundle then Zip is the impression I have. However, I asked him about the value of the 10 million Zips already out there and he said, "you can't argue with that." The conversation clearly showed Dell likes Zip and likes its market presence, but that techies like the "elegance" of backward compatibility, more MBs, etc. This guy loved the HiFD, which doesn't even exist, based on belief it would be fast and backward compatible. He said Dell is working with them on getting a laptop version. I am just reporting some facts and observations. I still believe Iomega is going to have a stellar quarter, with .30 or more in earnings. I also believe the stock trades at 18+, split adjusted, around then. 5+++++++++++++++++++++++++++
Subject: Zip Drive (was Re: IOM is worried.) << The company expects to ship approximately 14,000 SparQ drives of all configurations during the week of Dec. 15, 1997. As previously announced, the company plans to ship approximately 50,000 SparQ drives by the end of current quarter. >> I'm not sure why SyQuest longs feel the need to validate their "investment" here. It is tiresome. Lets get on thing straight, IOM is in another league. Look at the above quote. Even using the most generous of production start times (early November) the stated capacity is a little over 100K drives per quarter. Before I proceed lets remember that SyQuest could ship 50K drives and end up with 12 weeks of inventory in the channel. But lets continue. 100K drives mean what to Iomega? Nothing, in my opinion. Iomega is selling 100K Zip drives every 3 days. More Zip drives were probably sold between 11/1/95 and 12/31/95 than SparQs will the same period this year. It really is that simple. Installed base is the barrier to entry for new competition. IMO, that means any new, real, competition would not just have to sell well; but seriously outsell the Zip drive over a sizable chunk of time. How else can you overcome the Zip drive's installed base? The competitor would have to outsell the Zip and continue to outsell the Zip. Syquest is telling us that they are not even close to accomplishing this. Anyone who can look at a drive on display, or a spec sheet, or read an article and figure out that that product will outsell the Zip drive is either a genius or insane. My guess would be on the latter ;-) Before the Zip drive, removable storage drives were counted in the thousands. The Zip drive is counted in the millions. The only obstacles to the Zip drive being counted in the 10s of millions is component supplies and the inertia of the PC marketplace. Both can be overcome if management can continue to perform as they have since the Zip drive was introduced. The execution of the Zip drive story is all that matters (especially when the stock is at 20X 1998 estimates). All these other concerns are just peripheral (always end on a pun!) ;-) 6+++++++++++++++++++++++++++
Subject: Next week Sadly for the "longs" IOM was the victim of many factors that coincided to drive its stock price down. First, the Barron's article; second, Syquest's release of the Sparq; third Oracle's earnings report; and, fourth, Quantum's and Seagate's ominous predictions. If you break them down, though, you'll find a great deal of irrationality working in the market (which should come as no surprise). As far as the Barron's article is concerned, Sony HiFD isn't even in production yet, nor is its OEM acceptance guranteed, and backwards compatibility with the floppy isn't essential; all these factors were well-known, but that didn't prevent Barron's from stirring up the mud, as usual **. As far as the Sparq is concerned, Syquest's production capacity doesn't allow them to produce enough units to threaten Zip sales at all (and the Jaz drive is developing an OEM presence as evidenced by its recent inclusion as a standard feature on a Micron workstation). Now, Oracle's report was the real kicker. First, it was confirmed from Iomega's recent earnings report that sales grew in Asia despite weaker currencies (please note that Asia's currencies had been declining for quite some time before the market decided to react to it); additionally, Asia represents only 9% of IOM's sales, any decline in which is more than offset by the cheaper labor costs. In fact, Oracle's report cast a dark cloud over all of IBD's good Iomega coverage. Let's face it, Iomega is not Oracle. Database software might be at a saturation point, but the market for removable storage is not. Which brings me to Iomega's unfortunate association via their inclusion in the storage index. People do know that IOM is different than the hard drive makers, but Iomega is guilty by association nonetheless. Bottom-line: Iomega's sell-off was due to panic. Fortunately, this weekend will give the smart money time to look at the facts and see that Iomega is fundamentally very strong. How about technically? Many are depressed that the stock has gone down for many of the recent trading sessions. However, just as stocks do not close higher everyday, stocks do not close lower everyday either. Friday's trading range almost resembled Thursday's and the volume wasn't greater than the 30-day average (as it was in the previous sessions). Has the stock reached an interim bottom? I don't know, but I think the odds favor an increase in stock price over the next two weeks. ** Note that the Barron's article appeared just as Iomega's relative strength line and MACD indicator maxed-out (although Dell's RSI and MACD had been maxed-out for many months during its spectacular rise). Also, Iomega's intraday high of 33.5 last week was hit on very low volume -- which was a pretty good sign an interim top had been reached. 7+++++++++++++++++++++++++++
Subject: IOM Merisel Dec HOT Lists Merisel Dec 1997 Hotlists: VAR Hotlists: HARD DRIVES 1 .Caviar 2000 2GB EIDE * Western Digital Storage * PC 2. Zip Drive 100MB Parallel Port Solution * Iomega * PC 3. CrystalMax 2.1GB EIDE * Maxtor Corporation * PC TAPE DRIVES 1. HP T3000 3GB Travan TR-3 Internal * HP Colorado * PC 2. DITTO 2GB Parallel Port External * Iomega * PC 3. Eagle TR-3 4.4GB Travan Tape * Exabyte * PC MAC Hotlists: ACCESSORIES 1. Zip Disk 100MB * Iomega 2. Universal Macintosh Adapter II/LC/LC II * ViewSonic 3. EtherLink III PCMCIA TP Cable * 3Com 4. Macintosh+/ImageWriter II Cable 6' * Belkin Components 5. Jaz Disk 1GB * Iomega 6. Zip Disk 100MB * Maxell 8+++++++++++++++++++++++++++
Subject: WIN A JAZ DRIVE/IOM Marketing Was surfing the web and by chance came upon a company called Anysoft, noticed that they have a web scavenger hunt in which they are giving away a JAZ drive by IOMEGA, but the best part is you may also win one of my CDs (on Higher Octave Music, this was a surprise to me!). Go IOM check it out, hope you win! www.anysoft.com 9++++++++++++++++++++++++++
Subject: OnLine Shopping The following online shopping sites have IOMega only 1 (First Source) has Syquest.. TigerDirect Computer Discount Warehouse PCMall First Source International MicroWarehouse Surplus Direct 10++++++++++++++++++++++++++
Subject: SparQ vs. Zip The SyQuest rep I spoke to at Comdex, very solidly affirmed that the SparQ was intended to compete in the niche currently dominted by Zip. Think about it this way: Price point: $199. This sub $200 price point is aimed squarely at Zip. Media is cheaper per MB. Speed of SparQ is at worst equal to Zip; and at best way faster. (I'm hedging because there seems to be a bit of disparity between the specs vs. actual performance in the reviews I've read. I think SyQuest prefers to use the EIDE numbers in its promo lit.) SparQ is not intended to cannabilize SyJet sales. Which is why the SparQ won't do SCSI or Mac's (as Huibs so kindly reminded me) If you were to aim the marketing of the SparQ at Jaz.... you hit the SyJet too. (I think they will hurt the Jaz and the SyJet a smidge, but the real power users will still need the performance and reliability of Jaz 1 or 2) SyQuest is trying to walk a tightrope just above Zip and just below SyJet and create its own niche at 1 cheap GB... a niche that encourages people to upgrade from Zip's 100MB's to 1 cheap GB. Read the newsgroups. The prospect of getting 1 cheap GB has driven a lot of the buys. I happen to feel, that at this point in time, 1GB is too large a capacity for the targeted market. 1 (cheap) GB <------ (my new derisive name for the SparQ) has no appeal to me yet. My files aren't large enough. I'd need to mix a bunch of unrelated material onto the disk in order to justify the purchase and it would have an index 1 cheap GB long, on 1 cheap GB of cheapo software. My Zip disks are easier for me to organize and categorize. I can store volumes of small files that are related on a Zip disk; even if they only total out to 30MB's. For example: 1995 Client Contract, Billing and Correspondence (A-E) I can find the disk referenced above in 10 seconds (or less,if I've put it away where it belongs... ummmm thanks Mom) When my stuff appears on my screen, I'm right where I want to be. That makes me happy... when I'm happy I write nice stuff on the board, I'm kind to gin soaked derelicts who hustle me for spare change, barking dogs and screaming children sound like fun instead of noise, my prostate gland shrinks of its own accord, the rest of me seems like I am built of molybdenum... PS: I saw one Imation SuperDrive next to two Zip drives (1) Plus, (1)PP, and I am once again astounded at the size of the freaking box they ship those fat boys in. It is the Baby Huey of disk drives. Shelf space is at a premium (this time of the year in particular) and they've got a package twice as big as the Zip. Maybe they don't like shock and need the extra protection. Anyone know? 11++++++++++++++++++++++++++
Subject: Re: UMAX PC Zip Standard << Sorry Joey but that is incorrect. For further confirmation see the SKU list which was posted on September 30, 1997. >> I stand corrected. I checked not only the aforementioned SKU list, but the Umax literature I have. FWIW, In addition to the 6 Umax PCs that include a Zip, there are also 4 Umax Supermac's (their Macintosh clone) that feature the Zip as standard, for a total of 10 Umax systems that come with Zip. Some Umax news: << TAIPEI (Reuters) - Taiwan's Umax Data Systems said today its sales would rocket at least 50 percent in 1998 from 1997 despite a cloudy outlook for a key product -- ``clones'' of Apple Computer Macintosh computers. Umax, in a statement, said its 1997 sales were on track to hit $15.3 billion and that sales in 1998 would exceed that by 50 percent. >> _______________________________ End Report. Posts covered through 9:00pm ET 12/14/97. _______________________________
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