|
|
|
|
Friday, January 16, 1998 Thursday, Iomega closed at $12 1/8, down $3/8 (-3.00%). TODAY'S RECAP: For some reason, the Iomega message board has been hoarding posts -- today, it shared them (some dating back from Sunday), so don't be surprised to see an eclectic assortment in today's report. Topics that did get discussed (or rehashed) include Nintendo and Iomega, expenses, estimates, competition, installed base and the laptop Zip. One of the more interesting posts has to be the one from ~TomFargo~ on his Zip-only computer. A look into the future? 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++ Janovsky1 wonders if IOM should get into the gaming disk market.
Recap written and posts compiled by TMF Weekly. _______________________________ And now, the Best of the Board...Started 9:01pm ET 1/14/98. 1+++++++++++++++++++++++++++
Subject: Re: Nintendo Zip? << The second link which addresses 64DD specs clearly (to me) is not describing the Zip either. Physical size, data capacity, and access times aren't remotely in the Zip ballpark. Worse, there's a picture of the drive and its cartridge--neither one looks like Zip. >> By looking at the specs and picture it was obvious that it wasn't the typical Zip disk that I use every day (first of all, mine aren't a full centimeter thick). The reason I posted is that the writer did call it a Zip, so I thought this could be an info leak about a new Iomega product, somewhat similar to a Zip. If IOM is not interested in making cartridges for game systems, maybe they should be. A few of my friends have N64s or PlayStations, and pay $20 or $30 for only a few megabytes, if memory serves. I'm not sure exactly what type of memory this is (not flash) but I'll check it out and report back. It may be a situation a la clik!, where IOM introduces a cheaper removable option. I'm sure it has already been considered by IOM management, but perhaps they have not been able to provide a suitable product until now or were simply concentrating on more lucrative markets like Zip and clik!. 2+++++++++++++++++++++++++++
Subject: Re: Accrued Expenses Earlier, MBAspeak gave a good rundown of the side effects of cash balances and their effects both pro and con on a company's EPS, as well as how a company may be able to tweek their numbers. I would like to look into the non-cash effects of accrued expenses and how a company such as IOM can manage earnings up and down through the management of accrued expenses. Accrued expenses are made of up of estimates by management of future expenses that are associated with present day revenues. The principle of accounting is based on "matching" revenues with expenses. Revenues in the current period may result in expenses in some future period, therefore, a company must reserve or accrue for expenses in the current period that will not be paid until a future period. An example of this is warranty expense. A sale can be made in the 4th qtr., but the warranty repair of that sale may not take place until some future qtr covered under the warranty period. The "matching" principle requires that you recognize the estimated expense for that repair in the period of sale, rather that the period of repair. Accrued expenses are determined by management, along with guidance from the outside auditors. But again, management is the responsible party. Management can probably increase or decrease accrued expenses and reserves roughly a nickle in EPS + or - (in IOM's situation) in the reporting period. What are some of the accounts that can be "managed"? Cash Discount, Advertising, Warranty Expense, Price Protection, Co-op Advertising, Bad Debt Reserve, Inventory Reserve for Shrinkage/Revaluation, etc. All of the above are non-cash accruals. In other words, IOM is not spending the money now to increase the reserves. A balance sheet account is effected (Accrued Expense for example) and a Profit/Loss account is effected (Bad Debt Expense). Only the Profit/Loss account affects EPS (earnings per share). The balance sheet does not effect EPS. Again, notice that this is a non-cash entry. These accounts can be adjusted up and down based on management's opinion of what is reasonable. The auditors will judge if management's position is within established parameters. The auditors can and do make suggestions as to management's assertions. Since, IOM has a history of being conservative, the auditors will probably concentrate on excessive accrued expenses, rather than under accrued balances. But, they will be diligent on all accounts. My gut feeling is that IOM will "manage" EPS to within 1 to 2 cents above the consensus estimates by the analysts who follow IOM. The only way that IOM will stray from this number (again, in my opinion), is if they are unable (on the upside) to increase their reserves and accurals to increase their expenses to arrive at their "target" EPS number. On the down side, IOM and many companies, build in enough reserves from prior periods to enable them to decrease their reserves or expenses (still keeping within generally accepted accounting principles) to enable them to again, hit their "target" EPS number. This saving away expenses for the future, has saved many a company from taking a hard hit in stock price when a mediocre quarter rolls around. 3+++++++++++++++++++++++++++
Subject: IOM is your best short play? Get Real << "RE: STATE YOUR CASE IF YOU DARE. My case it that IOM will report 4th quarters earnings of .175 or better for 4th quarter." Quite simply, my case is it doesn't matter whether you're right or wrong about 4th quarter earnings. My case is that this is the first stage of a bear market, and the day is over when stocks rocket to the moon on a penny or two increase in earnings. My case is that P/E multiples will decline. IOM will have to double earnings just to stand still. >> Your logic is plausible until you get to the point where you choose IOM as your short play for an imminent bull market. You can't think of any other company that is more susceptible to a bear market and will give you a greater potential return? Why choose a company that has met its quarter estimates over the last year or so? If I believed a Bear market was on the horizon (which I don't - I see 0-10%) I would be looking at such other highly PEd stocks that may not meet its estimates due to currency, exposure to Asia, etc. What about AOL with a PE on trailing 12 months in excess of 100? If IOM is your best short play with the number of high fliers out there (even after being beaten down), then good luck. See ya, wouldn't wanta be ya. If you'd like I could probably come up with over 25 other stocks that I'd almost guarantee would produce a better return (as a short play) in a bear market. Your logic fails when you say it doesn't matter what you report because it does. Would you want to short a company that missed its earnings or met them? You can not point to any report in the last 6 10-Qs that would suggest a flat sales, earnings, or EPS growth for IOM. Only non-earnings stories (lawsuits, delays) have hurt this stock over the short-term. However, there are a myriad of other companies that are entering a slow-growth period and may have a difficult time meeting their estimates this year (Nike?). Are you saying IOM is a better short play than AMD?, c'mon! They haven't turned a profit in ages; there is no more story left. They got their pop out of K6 last year and now they have to gain acceptance of K7 but will lose money in the process. They are still expected to make $1.58 in 1998, (wrong guess again analysts). Sorry I am meandering but so many other potential short plays come to mind just writing this posts. I bet if every person on this board posted their favority short play it would provide you a better return than what you will get with IOM. I think I even speak for bears on this board that if you did research on a short play and you determined the best play was IOM you should PRESS ON (now if you shorted at 16.75 that's a different story but now?) I'll give you credit for having thick skin, the pro-Iomegans here can get pretty territorial to contrarian thinking; yet, you have pressed on and for that I applaud you for sticking to your position (however expensive it turns out for you). Still can't believe IOM is your best short play. If it is not, then you are spending far too much time on this board and should be on the board of your favorite short play. All of your posts indicate this is your focus stock; let us all know if this is your strongest short play (for your credibility I hope not). 4+++++++++++++++++++++++++++
Subject: Bootable Zip This message is being written and posted on a computer that has only 1 drive, a (non-atapi) IDE Zip. The computer is booting, running Windows 95, AOL 3.0 for Win95 and Internet Explorer 3.02 all from a single Zip disk. The Windows 95 operating system is the original OEM version that uses less than 50meg of disk space. The OS and all of the software needed to login to this board and post this message were in my pocket a few minutes ago. The hard drive, 3 1/2 inch floppy and CD-ROM have been removed and are all sitting on the desk. The drivers for all of the hardware in this computer are installed on the Zip Disk, the screen looks exactly the same as booting from the hard drive. The Zip is now the C: drive. The original IDE Zip is not supposed to be bootable, but it is! The next time my hard drive dies I will still be able to connect to the net, email and do business online while the dead/new drives are in transit. The last time my hard drive died it took more than a half day to install all of my "stuff" on the new drive. Making the IDE Zip the bootable C: drive should work great for a network PC, boot Win95 from the Zip and run all storage hog applications over the network. Will NT workstation fit on a Zip disk? Sunday evening I first posted about booting from an IDE ZIP(non-atapi). It was discovered by accident while testing a dead hard drive. Since then I have tested many variations and know how it happens....but I still don't why it happens. Here is a link to that post: Bootable Zip by accident? I can now give an exact sequence of events that will make it happen. Would someone with an IDE Zip please try this on another computer? Clay Hagen: Last spring you took your IDE Zip apart to read the chip numbers. That Zip is about the same vintage as this one, and should boot if the bios is the same or reacts in the same way. This experiment is much easier than taking a ZIP apart. CayugaDan: Since you build computers it would be very easy to try this on the workbench and see if it works on your computers. It would also be interesting to hear what the ATAPI ZIP does under the same circumstances. There are many other knowledgeable members of this board that could sure check this out. If you think this can't work, you are probably technically skilled enough to try. To spare this board all of the technical details please email me and I will send a detailed list of how to make it boot. The big question is, how many bios versions will boot a non-atapi Zip. 5+++++++++++++++++++++++++++
Subject: Ingram Hot Lists Ingram's best sellers list for Sept 28 to Oct 26 just released. Mass Storage 1- Zip 100 Parallel port 100 mb 2- Zip ATAPI 100 mb int 3- Zip 100 SCSI ext 4- Jaz 1gb 3.5 ext 5- 2gb eide lp Western Digital Accessories 1- Zip pc 100 mb The ATAPI version is number 2. This is the low production cost drive. Surprised to see it there, looks like a lot of smaller box makers jumping on the wagon. These are only available to the resellers and OEM's in a 5pk box. This is the first time that I've seen the Zip disk leading the accessories category. Iomega has the first four of five spots in the mass storage category. For those that don't know Ingram is the largest supplier of computer products in the world accounting for about 12% of IOM's sales. They are also the largest supplier of Compaq goods 6+++++++++++++++++++++++++++
Subject: Re: Pre-Earnings Estimates Fun << 4th quarter Revenues $ 725(MIL) - 4th quarter Earnings 46.4 (MIL) = .0175 (ESP). Basis- Strong 4th quarter sales- Clearing up of 3rd quarter backlog- Expenses normal with IOM probably pushing some 4th quarter earnings into 98 for continue clik introduction & marketing. Zip 98 sales to remain strong. >> There is no healthier discussion than trying to figure out what the company could report. People who think that somehow someone will use any such banter against the stock does not understand how the market and stock appreciation work. I think $725 is way too high. Filling the backlog will boost this quarter, as will seasonality. However, not that much. The backlog was $380 MM or so right? But Iomega usually has a $100-$150 MM backlog of orders at quarter's end. So, the fillable backlog is more like $250 MM; some of which is for Jaz 2 which did not ship. Some is also probably for OEM laptop Zip drives which might have shipped but Iomega won't count until they sell through. You could add that to the 3Q97 results and say...look $630 MM. However, that probably is not the best way to go about this stuff. It really does depend on the mix of OEM and retail Zip sales. Earnings will depend on the amount of disks sold. I assume you meant $0.175 for earnings. If Iomega did do $725 MM I would look for something closer to $0.22; or $0.07 above Street estimates. Probably goes to show that $725 is too high. 7+++++++++++++++++++++++++++
Subject: Re: I don't get it << Well, there are PLENTY of SyJet's at the Fry's down the street so I personally don't see the distribution problem. >> Wrong. Fry's is SyQuest's biggest reseller nationally. Yes, I'm serious, even though they have buy a dozen stores or so. Fry's takes product directly from SyQuest. << As for "installed base" you seem to be forgetting that this doesn't really matter to the individual user. >> Wrong. It matters hugely. This is the "compatibility effect" and it explains why Jaz continues to outsell SyJet and why HiFD and LS-120 are both way, way behind in the super-floppy race. Compatibility is critical, the only reason we even here a word about the LS-120. Unfortunately, the 120MB disks are useless, except in a single-user world. The SparQ and SyJet are both facing a Jaz base of 1.25 million drives or so. SyQuest wishes it could make that effect go away; it can't. That's why the overpriced, in my opinion, Jaz2, will outsell the SyJet in 1998. The overpriced, in my opinion, Jaz1, will outsell the SparQ. The increasingly reasonably priced Zip will outsell the Jaz1, Jaz2, SyJet, SparQ, LS-120, HiFD, CD-R, CD-RW, MO and Shark combined. If Zip sells "only" 12 million this year (I expect perhaps 15-18 million, including licensee sales), it would outsell the combined group listed directly above by around 6 or 8 to 1. It's possible that 18 million Zips would outsell the combined group by 10:1. That, my friends, is the compatibility effect. Not to mention the incredibly superior distribution of Zip, available in probably every single computer store of any size in the country, countless office supply outfits (including all the giants), and most warehouse clubs. Yowza! 8+++++++++++++++++++++++++++
Subject: Laptop Zip Compatibility! My cries have been answered! (at least by CNF). Here are links to the CNF Web site and to a LIST OF NOTEBOOKS THEIR ZIPS DRIVE CAN WORK IN! That's great news to me! To CNF: Congrats on making this info easy to find at your website, too! CNF Laptop Zip Compatibility Chart http://www.cnfinc.com/compatib.htm 9+++++++++++++++++++++++++++
Subject: Re: WHAT'S IOM WORTH WHEN EARNINGS GO UP 100% Ok I'll try to respond to your plea. Qestion 1. Are you thinking in terms of short term price - like the day after earnings announcement? If you are you are doomed to disappointment. The day to day price fluctuations are based on whim and whimsy. They bear no relation to the hard facts you researched. IOM got to 27.5 on a fraction of today's earnings. We even had a Fool analysis which justified the price. On that kind of reasoning you can justify 35 or 40 on January 23, Question 2. Are you thinking long term as a proper Fool should do? If you are you can expect the random walk down Wall Street to lead to a proper evaluation based on trailing earnings. I don't think the street will evaluate IOM based on projected forward earnings as long as columnists continue to highlight every conceivable competetive product that appears on the distant horizon. Your best estimate of future pricing may be arrived at by taking your projection of thenext quarters earnings and calculating a price based on the corrected trailing earnings figure and the PE then in vogue. Question 3. Do you think that IOM can field a new blockbuster product that will become profitable before the sales growth of Zip and Jaz is attenuated by competition or changing technology? If you do then you have a quantum jump in earnings not a projected new growth rate. This would trigger another speculative binge in the stock. This is the situation which occurred when Zip vaulted IOM to a new level of sales and profit . I would say that you have to take the numbers you have gathered so painfully and project three price based on my scenarios. This will give you a band width within which IOM should trade. Of course, you can always go for a worst case situation in which sales stagnate and IOM stays flat. I wouldn't post that here if you value your computer - the flames will destroy it. _______________________________ End Report. Posts covered through 10:00pm ET 1/15/98. _______________________________
WE
DELIVER - Get IOM
In Fooldom Today delivered
|
||||||||||
|
|||||||||||
