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Tuesday, December 23, 1997 Monday, Iomega closed at $24 5/8, down $13/16 (-3.19%). TODAY'S RECAP: On the day of Iomega's 2-for-1 split, the stock dropped nearly a point. Message board posters commented on a series of issues which may or may not have played a role in the recent up-and-down stock movement: Zip disk reflectors and Nomai's knock-off disk, advertising (and SyQuest), institutional ownership and production space for Ditto and clik! In honor of the split, Enjoy! 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++ AuntArctic continues the discussion on Iomega's reflector on the Zip
disk
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 12/21/97. 1+++++++++++++++++++++++++++
Subject: Re: Retroreflector Patent JIMMUNROE: << The important thing, where we agree, is there are simple things that Iomega can do to make the Nomai disks useless. >> Jim, I am in total agreement with that statement. I was thinking earlier today that our seeming disagreement over the RR patent may have sprung from some basic differences in perspective. The interpretation of the retroreflector patent as "weak" against a spherical mirror solution could be made if you thought of the Zip drive as a static invention... whereas my immediate interpretation was always to think of it as a dynamic defense. As you say above, once Iomega begins to employ changes things become very bleak for any attempt to clone a disk without using a retroreflector, and to me that was the key. I always looked on this as an active defense, constantly changing yet keeping compatibility with the installed base of disks. Once you accept that the Zip drive and the E/D are not static solutions but can be moved and changed in position over a large area within the drive, then the real strength of the patent is obvious. Also, the use of interfering baffles is another method of active defense that Iomega may be deploying. The retroreflector has the ability to remove distortion from any intervening baffle no matter how complex and random due to its ability to send light back exactly along the incident beam, and allow the light ray to re-trace the exact path it took on the outward path to the retroreflector. By passing back through the obstructing baffle along the exact same path on the return leg.... only in reverse... the retroreflector causes any distortion to be perfectly ironed out when the light returns to the source. No other reflector.... except the phase-conjugate mirror, of course... has this property. As I mentioned, the Jearl Walker article cited in the patent demonstrates the power of this retracement by passing a beam of light through a "baffle" made of a beaker of boiling water! The light strikes the retroreflector and returns through the "baffle" (the beaker of boiling water) and re-traces the exact path in reverse and reappears at the source with all distortions introduced by the boiling water removed. That demonstrates how powerful the retroreflector is at recovering the undistorted beam after passing through any transparent and random obstruction... and there are very few obstructions as random as a beaker of boiling water. As I mentioned, this is essentially the same method used in high-power military lasers to remove distortions introduced as the laser beam is passed through an amplifier to increase its energy.... but only with a phase-conjugate mirror acting as the reflector. The best aspect of this dynamic defense of Iomega's is that it largely independent of the findings of the courts both in the U.S. and abroad. The consumer will soon discover that the Nomai disk does not work in many Zip drives, ruining its reputation and making the consumer distrustful of its reliability. I am still considering your idea to use of polarizing filters as another defensive measure against the Nomai disk, and it still seems very promising. 2+++++++++++++++++++++++++++
Subject: Re: Retroreflector Patent Duuwhee: << A quick question. How come my ZIP drive still read a disk even after I scotchtaped over the retroreflector? >> I would imagine that in the initial stages production of the Zip drive, Iomega went with the simplest and least discriminating form of the retroreflector and detector. Now that another company is attempting to clone the disks, Iomega is beginning to draw on some of the properties it can use to distinguish between simple reflectors and true retroreflectors. It has been stated in the Nomai press release that Iomega is using a baffle in some drives, and this is an expression of an active defense against a cloned-disk. It makes use of the retroreflectors ability to remove distortions from a light beam passing through a baffle. Other changes were inevitable, such as the forced change in the geometry of the laptop drive. Iomega found it necessary to change the geometry of the E/D pair due to the required decrease in the height of the drive. Either way, Iomega is shipping about a million drives per month, and can rapidly seed the population of Zip drives with enough new discriminating E/D placements and baffles as to very quickly erode consumer confidence in any unauthorized disk. Even if the disk worked in your personal drive, it may not work in your friend's Zip drive, or your drive at work, or your laptop drive. Or your investment of disks might not be able to follow you to your new computer with an internal Zip drive. This would destroy faith in the pirate disk instantly, especially as most consumers would be wary of the disk to begin with. 3+++++++++++++++++++++++++++
Subject: Re: Syquest ad Sunday << I find it fascinating that they appear to be spending more than Iomega in print advertising in this area but do not have the product available. Can they hope that interested customers will delay their purchase and wait for the Syquest product? That seems like an expensive gamble and certainly won't work with the impulse buyer. >> Well said, Paul. Advertising creates demand that insists on being fulfilled. And you can double that impulse at holiday time. Customers who are brought into a store by advertising will leave with *something* if the product advertised isn't available. Hopefully, that something will be an Iomega product. One is tempted to say "thanks, Syquest", for supplementing Iomega's advertising :) 4+++++++++++++++++++++++++++
Subject: Rancho Bernardo Ditto/Clik! facility ....I drove by the Rancho Bernardo facility that produces the Ditto ....interesting location....nice area just outside San Diego....on a street named Ave. of Sciences....seems to be a local high tech area....other companies on the street were names I didn't recognize.....only two names that I did recognize were TRW(avionics div, ) and Abbott. On another street are techs like Hewlitt Packard and Sony(I'm told that.....I didn't drive that street). ....the Ditto building appeared to be quite small. Didn't the Clik! presentations at Comdex say that a second building was being built?....or that expansion was taking place?....I forget, but there isn't any room to expand at the Ditto building. I did notice, however, sitting beside the building are two construction trailers. So, maybe the managers and new office personnel are operating out of the trailers. Or maybe those are there for construction/expansion of a new facility for Clik!.....but, then again, Clik! is so small that maybe it can be manufactured in a closet....lol....honestly, though, I'd like to see a larger facility. 5+++++++++++++++++++++++++++
Subject: Re: Retroreflector Patent << An aside concerning clik!. Could the RR tecnology and hardware fit within the specs of the little clik! drive and disk? Might this be why Iomega has announced an intention to license the clik! disks? >> When Iomega designed the Zip they had a new, unproven and unpatented product. Now they have a proven product, patent protection and (I would guess) expectations of a hugh market for Clik. They could now have the retroreflector, emitter and detector adapted or designed to their specific needs. The RR could well be viable for Clik but there are other considerations like power consumption, size and weight which are outside my knowledge. 6+++++++++++++++++++++++++++
Subject: Re: IOM down on split day Iomega splits today, after the close. Nomai products are for sale in Northern California. They are removable 750MB cartridge-based disk drives, not Zip clone disks. These products are already orphaned by Nomai, like the SyQuest EZFlyer 230. Nice to be so customer-friendly. 50,000 Sparq's followed by the following quarterly production numbers doesn't mean much to Zip (Q1 75,000 / Q2 125,000 / Q3 200,000 / Q4 300,000) at all, but it would be bad for Jaz. I do believe that Iomega is asleep at the switch on Jaz. Last year, the company could've killed off SyQuest -- forever -- with a Jaz price cut. It would've hurt a bit in the short run, but would've worked. I don't think Iomega believed SyQuest could possibly raise hundreds of million of dollars floating its worthless stock as currency, but SyQuest did just that. With the money, SyQuest kept SyJet afloat as a bigger, cheaper (per MB) Jaz competitor and launched SparQ, which has positive gross margins (I'll show you why I believe this later). Jaz is faster than SparQ, slower than SyJet, more expensive than either. The disk cost/MB is outrageous for Jaz and not much better for Jaz2. But at least Jaz2 is outrageously priced (the cost should be essentially the same as Jaz1 (same a small premium for the more complex heads and the included disk). I think none of the this matters for Zip, the No. 1 driver of Iomega's revenue and profits, but Jaz matters today and in the future -- at least somewhat. I'd love to hear how Iomega plans to blow SyQuest out of the water -- again -- with it's much deeper pockets, it's much savvier marketing, and, for good measure, it's much better products. I'm waiting. 7+++++++++++++++++++++++++++
Subject: Institutional Ownership I just reviewed Bloombergs list of institutuional ownership. It is over 36 million shares. WOW. I try to stay up on the filings but I guess I let it slip by. These are the result of filings 9/97. The growth rate on the institiutions stepping in must be fantastic. I believe we have almost doubled in the past 6 months. 8+++++++++++++++++++++++++++
Subject: Re: Rancho Bernardo Ditto/Clik! facility <<.the Ditto building appeared to be quite small. Didn't the Clik! presentations at Comdex say that a second building was being built?....or that expansion was taking place? >> As some of you may recall I reported on Comdex that the Ditto and Clik! divisions were going to be more or less combined and that they were seeking expansion by about 5 times it's local space. They were considering leasing additional space and posssibly constructing some additional space. In any event, in about several weeks they may have their facilty or facilities in operation. I will report back here at that time with an update. _______________________________ End Report. Posts covered through 9:00pm ET 12/22/97 _______________________________
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