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Friday, January 23, 1998 Thursday, Iomega closed at $9 1/32, down $4 5/32. TODAY'S RECAP: The news of the day yesterday was that Iomega reported results that were one cent below expectations of $0.15 per share, but two cents below expectations on a fully diluted basis. After-hours selling of the stock dropped the "value" by over 30% and a great deal of the more-than-400 posts on the board were responses or reports to this effect. A few positive posts were contributed -- on Zip and Jaz presence in schools and movies and buses and Superbowls -- but the earnings report and subsequent conference call (for which no good summary was made last night) drowned out all other topics. 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++ Matt4Vols gives a quick report of IOM at U of Tennessee.
Recap written and posts compiled by TMF Weekly. _______________________________ And now, the Best of the Board...Started 9:01pm ET 1/21/98. 1+++++++++++++++++++++++++++
Subject: IOM @ U. of Tennessee Hey IOM Fools, I thought you guys might be interested to know that here at the U. of Tennessee, we just upgraded all of our computers around campus and they all have internal Zips. In addition, Zip disks are sold at various snack shops around campus, and as best I can tell, they are selling quite well at $15 a pop. Those savvy Iomega marketers put a smile on my face. Go IOM and go VOLS. 2+++++++++++++++++++++++++++
Subject: JAZ ON EVENING NEWS IN SALT LAKE CITY The evening news (6:00 P.M.) had a very nice presentation of how the JAZ drive was used to help produce the Fugitive (movie) and some other movies where lots of action was required. Graphic artists were telling how valuable and how easy it was to use the JAZ to put together sound effects, etc. by using the JAZ drive. Very good advertisement for IOMEGA and JAZ drive. 3+++++++++++++++++++++++++++
Subject: As Usual... Things To Do While Waiting For The Earnings Report >Stop feeding JKIP day-old sushi >Back up Monica Lewinsky phone conversations to Jaz disk >Hold BSutton's head under molten guacamole until he tells us what a gundygut is >Dorsey Levens: 175 yards >Tape tin foil over Zip reflector, then beat the living Play-Dough out of Nomai management >Erase entire collection of 200 videotaped Seinfeld episodes >Hope Elway's legs hold up until the 3rd quarter >Antonio Freeman: 2 TD catches >Support John Paul's demand that Castro stop using SparQ drives >Get bitchin' IOMEGA READY tattoo on left biceps >Call Syquest investor relations, order 5 cases of extra-absorbant 2-ply stock certificates >Reggie White: 8 tackles, 2 sacks >Determine whether David rocker's head is held on with screws or rivets >Ask SoundView what took them so long >Borrow Aruba's RecordIt software to edit voices out of new Spice Girls CD >Rent time machine. Go back to March, 1995. Buy more shares. >Send kind note to Joe Kernan asking him to stop slouching >Favre: Game MVP >Set snooze alarm to prevent nodding off during cargo plane ad >Light candles in family shrine to KE >Slip Len Purkis twenty bucks to goose the numbers >Packers 37, Denver 14 4+++++++++++++++++++++++++++
Subject: On the way to work On the way to work, I saw for the very first time an advertisement by Iomega on a public bus. I don't know how it is in other cities back east but here the advertisement on public buses has become very unique in that the advertisment encompasses the entire bus, the roof, the front, everything. For example, I've seen a bus look just like a coca cola can sideways with the bus red and the coca cola inscribe on each side in white with the two white squigly lines. Looks pretty cool this way of advertising. Definitely eye-catching and in city traffic you definitely admire the creativity. So, anyway, on the way to work, here in San Diego (where the Superbowl is and the population has appeared to double), as I wait for a green light a huge Zip drive flys by! The bus is completely blue with Zip inscribed on the side and the slogan, I believe said "Iomega (or Zip), We're everywhere". First time I have seen it and it looked pretty awesome. Great timing too being in San Diego with their 4 commercials (see the most recent press release) upcoming on Super Bowl Sunday. Here's hoping for a great report and an UP day in the market tomorrow. And more creative advertising on Sunday. Go Greenbay (I think the superbowl theory for those of you in the know (NFC or old AFL teams that win) is a self-fulfilling prophecy - If GB wins market will be up, If Denver surprises, market will be down) so next week will hopefully be an approach to new highs. We also need Saddam to back down and Clinton to keep his pants up (oops, too late for that) and we may have a decent week afterall. BTW, did you know that "stewardesses" is the longest word you can type using only your left-hand? 5+++++++++++++++++++++++++++
Subject: Re: All over the place I believe you're right on the mark! When you analyse this report, it really isn't bad at all. The fact that they sacrificed eps for expansion into more boxes, increase in hiring, increase in R&D etc. and miss the estimate by a penny or two, remaining in a positive cash flow position isn't really bad at all. If they had chosen to limit the above expenses they could have easily blown out eps, but would they be stronger in the future? The aftermarket purge is over reaction and should be an excellent buying opportunity as you suggest. Even the shorts should realize this and take their earnings to invest in this company whose future looks great! 6+++++++++++++++++++++++++++
Subject: Asian Excuse - Bah! The company blames Asia for the shortfall. Sounds good, after all, Asia is having problems, no? Let's see just how bad Asia did: Last Q - 37M This Q - 49M (and an 88% increase for year-over-year) Hmmmmm, that sure doesn't look like the problem to me. Did they really expect another 50M out of Asia, an almost 300% increase Q over Q? Who crunched that number? Let us look elsewhere for the problem. . . Europe in Q3 - 108M Europe in Q4 - 197M (Wow!) Which leaves us with the Americas: Americas in Q3 - 287M Americas in Q4 - 301M That is right, in the Americas, in the all important Q4, sales increased only 14M, a whopping 5%. Folks wonder why it is that Iomega gets no respect on Wall Street. Perhaps the lame excuse of blaming Asia for the problem is one reason. Who communicates with Wall Street? Will they really buy that Asian excuse? Who crunches the numbers? The CFO? If that is the case, it may be high time that Len Purkis packed his bags. Could it come from a higher source, from "the old iomega", from Chairman David Dunn? Wasn't he around in the early 90s when this company had problems? The marketing of the products, to this point, was great. Who has the capability to take us to the next level? Without the continuing problems that come up every quarter? Is this just normal growing pains, or something fundamental with management? If there are problems, I want the straight dope, not a phony excuse. I'll respect, and trust, management a lot more, on all issues. This company has huge potential and I want them to realize it. This shareholder is not a happy camper this evening. 7+++++++++++++++++++++++++++
Subject: Re: Asian Excuse - Bah! Agree totally on the Asian comment, Eric. I was embarassed to hear he used it. As I expected, the tie ratios are going in the opposite direction of the OEM sales. That was expected by all analysts. I'm not a great fan of using retail tie ratios to forecast earnings going forward. Margins were higher than some expected, I gave them credit for 34% this quarter. I also expected that the huge backorder was largely a component of the retail channel duplicating orders to keep their supply up. I expect that the backorders will be adjusted downward next quarter if they can't be offset by new product orders. As for this quarter, the lack of strong retail growth surprised me. Trouble was really in the operations area again. They really fell down on new products, and left another $70 million on the table. Notebook ramp up is going poorly, and the JAZ2 needs work. The numbers are still very strong. Positive cash flow, great margins. Going forward, the notebook Zip is the future glue that will hold this company together. People forget that the margins on the OEM drives are as little as Less Than Zero. With the retail growth falling off, especially in the fourth quarter, the overall earnings growth into 1998 will be much harder to achieve year-over-year. The analysts didn't have their head in tight places when they arrive at growth rates of 25% to 35%. The fact is, that's right about the area they will be. That's not a negative, either. Simply a fact of life as they move further into the OEM camps. They have left the door open again. Let's hope nobody tries to enter at this point. As for the stock price, nobody can complain about PE ratios or hype anymore. _______________________________ End Report. Posts covered through 10:30pm ET 1/22/98. _______________________________
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