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Monday, February 02, 1998 Friday, Iomega closed at $9 1/16, up $3/8 (+4.32%). THIS WEEKEND'S RECAP: Over the weekend, Iomega message board posters discussed an enormous number of subjects: Radio Shack, advertising and Dell computers, Herb Greenberg, 4Q earnings, the conference call, the SparQ drive, Clik!, analysts, Jaz1 and 2, Nomai and even publishing service bureaus. No doubt some pent-up anxiety after the below-expectation earnings report contributed to the number and variety of subjects covered. 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++ NSACORAF on the sale of Compaq computers by Radio Shack.
Recap written and posts compiled by TMF Weekly. _______________________________ And now, the Best of the Board...Started 9:00pm ET 1/29/98. 1+++++++++++++++++++++++++++
Subject: Re: Radio Shack & Compaq << Compaq was won exclusive right to sell in Radio Shack nationwide. Out goes IBM. Maybe we'll start to see Iomega now in those sores? I'm thinking Compaq more IOM-friendly. Any thoughts out there? >> Compaq is Compaq friendly,IMO. It started with just one SKU about 9 months or a year ago as I recall. Just recently they see that Micron, Dell, Packard Bell, Nec are using the Zips more extensively. They hopped on the band wagon. When they start also with their commercial computers the 3000, 4000, etc., IOM sales will go up substantially in my opinion. I think it not a matter of if, but when? Remember my post in mid-december or so about the two Home Business December Catalogs and the one Commercial catalog. The more outlets selling our products the better it is for tie ratios and sales of disks. 2+++++++++++++++++++++++++++
Subject: Top Direct PCs The February issue of PC Computing Magazine has a section that rates the top Direct PCs (mail order) of 300Mhz PII. Among the listing is a columns named "pros" and "cons" where just a couple of key things are mentioned on each PC. The top 3 PCs ALL have the Zip mentioned in the "pros" column. The 4th PC doesn't have a Zip mentioned in the "pros" column, but, in the "cons" column of that 4th PC the only words there were "how about a Zip drive?" LOL!! Check it out. 3+++++++++++++++++++++++++++
Subject: Re: JAZ & Syquest << The introduction of JAZ2 would give Iomega a legitimate cover for dropping JAZ1's price. This particular battle is not about speed, it's about removeable storage price at ANY performance level for an increasing number of PC users. >> Good point. The pricing of the Sparq -- assuming SyQuest can legitimately sustain it -- for someone looking for a secondary sort of adequate backup storage drive and not that interested in speed or specs would be compelling for anyone deciding between it and a Jaz. Hell, if it turns out to be reliable enough it would make ME think twice, although I know where I'd end up out of sheer self-interest. But with even a $150 gap instead of the present maw I'd lean toward the better machine even if I didn't need all that it offers right then. Lowering the Jaz price and cutting its margins might hurt the bottom line for the time being but could pay off nicely in the longer run with a secure market share. Iomega needs Jaz to be the inevitable next step up as file sizes get bigger. Jaz is one of the disturbing gaps in the company's performance right now. They have to attack it aggressively and put a plug in the marketing machinery for Jaz2, Buz, clik! or anything else until they're sure they've got it absolutely straight. And just for the hell of it since it's never discussed here: what do you think about spinning off Ditto altogether and concentrating on disks? Sell the Ditto unit to HP, get a bundle for the patents and put it into the disk drives. I get the feeling Zip, Jaz and the rest of the removable will eventually render tape backup a redundancy of a redundancy anyway. 4+++++++++++++++++++++++++++
Subject: Insider holdings Vickers Top Ten Direct Insider Holders for IOMEGA CORP Filer's Name Shares Held Market Value Held IDANTA PARTNERS LTD. 11,979,356 312,960,676 RADMAN, ANTON J. 648,535 16,942,977 EDWARDS, KIM B. 496,695 12,976,157 THOMPSON, JOHN G. 397,840 10,393,570 DUNN, DAVID J.(FAM TR) 83,987 2,194,160 BRISCOE, EDWARD D. 54,000 1,410,750 NOLAN, JOHN E. 50,000 1,306,250 STACIOKAS, LEON J. 39,174 1,023,421 CRAIG, ANTHONY L. 33,750 881,719 PURKIS, LEONARD C. 19,500 509,438 This report is presplit. If KE now has roughly 1mm shares after the 2-1 split, he took a $4mm+ paper hit himself after the dismal conference call, and saw his IOM holdings fall from $13mm to about $9mm in value overnight. Ouch. Still, if you compare KE's personal stake in IOM for example to Compaq's CEO Eckhard Pfeiffer, who ONLY has 50k shares of CPQ valued @ $3.7mm, at least KE has his eggs in the right basket, FWIW. Bottom line, as goes IOM so goes KE, for better or for lately ;-). 5+++++++++++++++++++++++++++
Subject: Re: DOUBLE STANDARD << If we disregarded analysts' estimates (they're wrong 60% of the time), at what price should IOM be trading at? >> But you can't disregard analyst's estimates. That's simply the way the financial world works, like it or not. In order for Iomega to reward it's shareholders it has to do more than become a big time player in the computer industry. Churning out millions of Zips and getting into boxes simply isn't enough. They also have to become big time players in the financial world. Which means more than growing revenues and profits. They have to know how to play the game and satisfy the traditional Wall Street establishment. And that requires a whole different set of skills. A set of skills that, unfortunately, Iomega's current management has not yet shown they possess. From the blunders of this past quarterly report to the questionable last split to the failed secondary offering to their overall lack of guidance and disclosure, Iomega management hasn't shown they're up to the task of being big time players on Wall Street. In my opinion this is the greatest danger to an investment in Iomega, not SyQuest or Sony or the LS-Super.a drive. As Ben has quoted over and over, the only one who can kill Barnes is Barnes. Iomega's greatest enemy at the moment is not the competition and it's not any conspiracy in the financial press. It's themselves. 6+++++++++++++++++++++++++++
Subject: ..Zip/Sparq.. ..ok.. ..several folks have asked the rhetorical question, "why buy a 100MB device, when I can buy a 1GB device".. ..let me try to answer that, using my own experiences.. ..firstly, in my experience, I use Zip discs to store individual "jobs", or "projects".. ..that is, I've got one Zip disc that has "upgrades" of applications that I've downloaded from the internet, printer drivers, battery updaters, virus code updaters, that sort of thing.. ..I've got a disc for e-mail.. ..I've got a disc for my 3 year old.. ..I got discs for several Operating Systems for my macs..(macs can boot Zips easily).. ..I have a rotatating stack of 5 Zip discs that contain the back-up of files for my business..(~65MB)...I use five, and bring one in each week, so I always have current, as well as progressively older back-ups..(I also have a disc that I do a daily back-up on).. ..I do many photo projects on Zips, and often have 2-3 discs out at service bureaus at one time.. ..I have a designer who works with me, and she uses Zips to move jobs back and forth to the studio with ease.. ..I also have many disc that are just filled with photos and other 'sorted' stuff..:).. ..my point??.. ..the Zip is the PERFECT size for managing my files..(I also have a jaz, but use it quite differently).. ..the Sparq would suit NONE of my needs..each disc is TOO big for anything but a back-up role, and if it's back-up you want, buy a tape drive, they're MUCH cheaper to operate.. ..I would need to buy 6 Sparq carts just to manage my back-ups, and each cart would have only ~65MB's on it..???.. ..no service bureaus have, or will likely EVER have sparq drives.. ..and on and on.. ..look, my point is, this issue isn't just about SIZE.. ..it's about a multiple of other reasons, the vast majority of which point in favor of the Zip.. ..oh, did I mention that you'd better not DROP a sparq cart??..I've tossed Zip discs 45 feet without a problem.. ..you have kids??.. ..LOL.. 7+++++++++++++++++++++++++++
Subject: Re: Nomai << Anybody hear any news about the lawsuits with Nomai lately? I thought there was supposed to be a hearing in California on Jan. 23, maybe I missed it with all the worthless posts here >> This post is "as far as I know." ;-) The Nomai vs. Iomega case in California was suppose to have been tried today. However, the trial was postponed until Feb. 27th. The Temporary Restraining Order (TRO) is still in place. Interestingly enough, the TRO has nothing to do with Iomega's patents. The only issue involved is the Nomai disk's (XHD) compatibility with non-notebook Zip drives and the claims on the packaging. What has been happening is that Nomai will keep coming to the court and saying they changed something and can we sell disks now? Iomega has been saying: we need to test the new disks. I might be reading too much into the postponement, but the fact the court delayed the trial probably means they thought Iomega's latest data showing Zip head damage from XHD disks was worth delaying the trial to follow up on. Eventually I would suspect the TRO will be lifted. Nomai will come up with some wording, even if it's "disk may damage Zip drives" and get it lifted. This all seems like just the first line of defense. I would think that when this is finally lifted Iomega could make other models incompatible or sue on other grounds (like patent infringement). 8+++++++++++++++++++++++++++
Subject: Re: ..Zip/Sparq.. I seldom post, but with Huibs' "real life" example, I couldn't resist. I am a classical concert pianist by trade. I had a CD released nine months ago that has done exceptionally well (by classical standards--which translated into normal-people's speak means not TOO pitiful) and necessitated a new promotional flyer featuring reviews of same. This means photo scans, scans of the CD cover, pre-press scans, hard-copy previews, etc. My graphic artist had purchased an EZ Flyer because some review told her it offered the best speed/price ratio. Unfortunately, the reviewer forgot to inform her that only ONE pre-press bureau in the ENTIRELY of Manhattan has an EZ Flyer. And it's location was inconvenient. Needless to say, she is replacing her EZ Flyer with a Zip, which EVERY bureau in Manhattan has in abundance. 9+++++++++++++++++++++++++++
Subject: Re: Jerr & Greenberg on IOM. << Did anyone read the article in the Greenberg column in the SF Chronicle? It touched on the issue on whether the computers that are selling today have enough storage for the ave to above ave user and whether there will be a big demand for the zip in the near future. >> Storage and filing are very different matters. I have boxes that hold old archived files, while I have current file folders that hold individual files for current use. In the same light, I have a large hard drive that holds my current programs and data files, while I backup my system to tape in the event of a crash, and archive individual files or programs such as TurboTax to disk. Many PC owners that have not followed proper backup or archival methods have felt the pain when their system crashes, rendering their massive storage devices useless and inaccessible. Where will Herb be then? He does a disservice to his readers by letting his bias against the company blur his vision when writing about the needs of the product. I sense that he does not particularly care. While I realize that Herb and others remain steadfastly oblivious to proper PC storage matters in the wake of a persistent campaign against one individual company, the facts remain the same. While it is nice to have discussions that pertain to the future utility of a product, it would be much nicer if there was in fact a conversation going on. Herb Greenberg was also the rocket scientist that predicted Iomega's downfall in each of the past two years, or is it three? I do not have any axe to grind, and would be delighted to bring all issues to the table and return the discussion to at least a slightly more intelligent level. It is a pity that such anamosity can exist in the world of investing. Yet, I feel that not one of the posts in recent days has had anything to do with investing at all. 10++++++++++++++++++++++++++
Subject: Conf Call Transcript Paul, Here is the link to the Conf. Call Transcript. It is not finished. It only has through the first question. Iomega Fourth Quarter 1997 Conference Call Tr... [http://www.wwol.com/%7Emcoley/Iomega-4Q-1997-CC.html] 11++++++++++++++++++++++++++
Subject: Clik! pictures Very cool site. Looks like someone scanned a couple of promotional spec sheets for Clik! http://www.juip.com/pics/clik1.jpg http://www.juip.com/pics/clik2.jpg 12++++++++++++++++++++++++++
Subject: Re: 1999 could see 44 million Zip drives ClayHagan wrote: << The 1997 capital expenditures expanded the Zip drive capacity from 8 million/year to 20 million/year. The above statement says that 1998 capital expenditure COULD be double that of 1997. This implies that the Zip drive capacity could swell to 44 million/year by 1999. The math is that the 1997 expenditures increased the drive capacity by 12 million/year. If 1998 is double the 1997 then another 24 million could be added to the current capacity of 20 million/year. >> I doubt the relationship between capital expenditures and production capcity is linear. Either way, I believe Purkis was talking about the capacity rise from 14 million (6 months ago?) to 20 million now. If they doubled that, and the relationship was linear, would be more like 32 million Zip drives. 13++++++++++++++++++++++++++
Subject: Dell co-op on Condor ad? I just saw the Condor Zip-Inside add. I only caught the very end but I did see a new twist. Along the bottom of the screen was: "Available in Dell Computers" The telephone number for Dell was listed below that. 14++++++++++++++++++++++++++
Subject: Re: 1999 could see 44 million Zip drives Patrick wrote: << I doubt the relationship between capital expenditures and production capcity is linear. Either way, I believe Purkis was talking about the capacity rise from 14 million (6 months ago?) to 20 million now. If they doubled that, and the relationship was linear, would be more like 32 million Zip drives. >> While I also doubt the relationship is linear, I would venture to bet that the relationship is better than one-to-one when adding capacity. The expansion of capacity from 14 million to 20 million occurred in the 4th quarter. It was during the 3rd quarter CC that iomega announced the 14 million/year capacity. Now I will speak directly to what Len said: << [Len said]...."Our capital expenditures in fourth quarter 97 totaled $34 million, bringing total year capital expenditures to $89 million. We entered 1998 with capacity for about 20 million Zip drives and about 3 million Jaz drives, and our 1998 capital expenditures could be double that of 1997, depending on the speed of growth in 1998." >> So there are several ways to do the math. The first method is to take the full 1997 number of $89 million and relate it to the growth of capacity from 8 million to 20 million. This model is flawed because we know that the capacity for Jaz was also increased significantly during 1997. However, using this conservative model, one notes that iomega grew capacity by 12 million with the 1997 capital expenditures. If 1998 has double the capital expenditures then we could expect a growth of 24 million. Thus, this is now I arrived at the acity of 44 million going into 1999. A more aggressive model would be to assume that the $34 million spend in 4th quarter increased the capacity by 6 million. Len stated that the total for 1998 could be $178 million (double the $89 million in 1997). Running the math for this model would result in an increase in capacity of 31 million drives per year. Thus, iomega could begin 1999 with a capacity in excess of 50 million drives per year. 15++++++++++++++++++++++++++
Subject: Re: The bullet is loaded!!!! Clay enthusiastically posted; <<I am pumped!!! The only thing holding back the $99 price is KE's analysis of market demand. The bullet is loaded!!!!>> Clay thanks for the flood of great posts. Kind of feels like a shower following a week of camping out. If I may be so bold, let me try and tie a few of your different comments and posts together regarding the above. IOM was figuring they would be at $99 for the "Zip Classic" by now, but demand has been high enough as it relates to current capacity, so why should they? Delay the price drop and reap the extra profits. Wait, let's take it one step further, they already have enough cash so lets take the extra profits and fund a huge ad campaign aimed at: 1) Get all the buyers you can at the current price before you reduce prices, then get the rest 2) Increase disk sales to OEM users, who don't know why they need a bunch of disks yet 3) Line up the enemy for the kill, so when you fire your bullet it does maximum damage This is great. I am pumped too (I doubled my IOM holdings Monday after the CC). _______________________________ End Report. Posts covered through 9:00pm ET 2/1/98. _______________________________
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