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Wednesday, February 11, 1998 Tuesday, Iomega closed at $9 11/16, down $5/16 (-3.13%). TODAY'S RECAP: As might be expected, the pending class-action lawsuit against Iomega dominated the message board yesterday; posters expressed a range of emotions -- from indignation to anger to confusion and even sympathy. Some posters took issue with the lawsuit directly; others, the law firm. A few posts crept in which weren't lawsuit-related, but they were short and few and far between. 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++ Warren5550 responds on potential consequences of the pending lawsuit
against IOM and its officers.
Recap written and posts compiled by TMF Weekly. _______________________________ And now, the Best of the Board...Started 9:00pm ET 2/9/98. 1+++++++++++++++++++++++++++
Subject: Re: Will KE and Purkis go to jail ?? tomterf5 asks: << If they loose the lawsuit will these two officers go to jail for insider trading? I hear they able liable for treple damages (almost $25M|) plus about 10 years a piece in the slammer. I hope the lawyers from the law suit loose. It would be a real shame for Kim to go to jail over this. >> No, These lawsuits are a non-event. A stock drops and "lawyers" come out of the woodwork to solicit shareholders who might want to get some free "settlement" money - regardless of whether the suit is frivolous or not. It's cheaper to pay these parasites than fight them in court. This is uncommonly common and a drag on the whole investing world, like ambulence-chasers are to insurance premium rates. This same type of suit was filed when SYQT shot from $3 to $18, and then tanked in Hindenberg style back to reality. The result was simply to settle in order to send the parasites on to their next scam. 2+++++++++++++++++++++++++++
Subject: Re: lawsuit RJDIV writes: << Because IOM missed estimates by 1 cent (2 cents diluted) and only grew profits by a diluted 77% year-over-year instead of 100%, there was a over-reaction and a sell-off. Can the company be held responsible for the over-reaction and the sell-off? >> I don't think they can be held responsible for what you describe above. Let me describe a slightly different version of possible events and you determine if the company can be held responsible. Say that during the 4th Qtr. 1997 Iomega and the management team becomes aware of problems in Asia that may materially effect the quarters revenue, profit and ultimately stock price. Should management disclose this to their shareholders? Say that during the period in question certain Insiders sell a portion of their stock. Is there any chance the sell was timed to occur prior to any disclosure of the problem outlined above? If the trade was made with the knowledge of these problems are the insiders in violation of any laws? It is my personal belief that Iomega should release any material information concerning the company as soon as it becomes available. It can be argued that by failing to release materially adverse information in a timely manner that IOM is in effect deceiving its shareholders and the investment community. What if management becomes aware that the delay in releasing new products will impact revenue significantly? Should they release this information? 3+++++++++++++++++++++++++++
Subject: FIDELITY bought 6% of IOM Fidelity now owns 15.8 million shares of IOM filing today this is 6.2% of the total shares 4+++++++++++++++++++++++++++
Subject: Re: lawsuit It can be argued that by failing to release materially adverse information in a timely manner that IOM is in effect deceiving its shareholders and the investment community. We have absolutely no indication that Iomega withheld anything adverse from us or from analysts. Neither do the lowlifes who are fronting this suit. They know nothing. Others on the board (see IBTALKN's note earlier Lawsuit lunacy... ) have pointed out inaccuracies in their own inflammatory press release. This is a clear case of trolling for whatever payoff they can get. It is the equivalent of faking an automobile accident to collect insurance. It is that predatory. (See IdidMrsA's post On Class Actions, Generally for an unimpassioned accounting of suits against companies whose share price falls) In my very humble opinion Iomega has always been forthright about any problems it has. The company addressed the one major clear-cut problem it has had so far -- defective Jaz disks -- promptly and at a cost to the bottom line and has always been as explicit as possible in quarterly reports explaining what went right and wrong. I don't expect them to report every time a supplier runs out of components or ships the company defective parts that force the shutdown of a production line and I don't think they should. That kind of minute micro-accountability doesn't make sense. It's a waste of time. What if they reported every hiccup in production in a press release and scared off shareholders in advance of what would otherwise be good news? Could we for a class to sue Iomega for being too cautious? They are vigorously defending patent rights abroad against piracy of another sort. I think they have been cautious in summing up expectations. I think their overall confidence is well-founded. I think the ad campaign is exactly what the company needs right now to reenergize the growth RATE. Earnings are up spectacularly for the company as a whole. An unbroken line of growth. Just about every speck of evidence available indicates an honest company looking out for its shareholders. Do I think they have been perfect? No. There are no perfect companies. I bought and held Iomega stock (and still hold it) with my eyes wide open, figuring that the company could stumble along the way or have to rethink its mission as events unfolded. That's what happens when you're blazing trails. This suit is contrived; it's cynical, greedy, opportunistic, parasitical garbage. It aims to exploit that conveniently vulnerable area between success and perfection -- and pretends that thin gap equals failure. Ludicrous. If you think Iomega has been disingenuous and want to join the class-action suit, go ahead. But I wonder if we can form a class to sue the law firm that's foisting this garbage on the rest of us, who will end up paying the bills for Iomega's trip to the courts. I am infuriated. 5+++++++++++++++++++++++++++
Subject: ..presentations.. Goldman Sachs presentation is this Friday at 9:10 am in NY. Kim Edwards will do the honors. There will be another presentation at ING Bearings, Arizona, on Feb. 23rd. Len Purkis will be the presenter. 6+++++++++++++++++++++++++++
Subject: Re: 3com Millberg Weiss is the most famous of the "shareholder lawsuits" firms. They are involved in every big one. They tried to get a law passed in California to subordinate the Securities Act of Congress and allow continued fishing expeditions. They lost. They are a very nasty operation that, once in awhile, finds fraud and punishes the defrauders. I saw one of their attorneys at a speech once. He said something like: "If the insiders sell, we've got 'em." So, my guess is that they've got Iomega. To the tune of millions. Which may or may not be covered in part by insurance. It will take time but Iomega will probably settle for some amount eventually. I am not evaluating the fraud aspects here at all. I like Iomega the company in general, although I feel Edwards, Purkis and Co. screwed us badly last quarter by not preannouncing. They should not have sold shares in a quarter where they could be subjected to such scrutiny. These facts may not be appealing, but they are nevertheless the reality of the street. 7+++++++++++++++++++++++++++
Subject: Legal Defense The essence of a claim for securities fraud is that the shareholders were deprived of material information, and suffered a loss as a result. Is that the case here? No. Why? Because the information was available, and in fact, discussed right here in our own humble little corner of cyberspace. One only have been marginally attentive to know that the ship dates for Jaz2 had slipped. Here are three posts from October, from three different public sources, that attest to the continuing delays, and ultimately to the fact that Jaz2 would not contribute to revenue. 10/5/97 Jaz2 expected by 10/20 quoting Cyberian Outpost CYBOUT 10/6/97 Jaz expected by 10/17 quoting MacInsider JAZ2 Date 10/16/97 Jaz2 to ship "this quarter" as per conf call Q3 1997 Earnings & Call Note What is missing then, is only that Jaz1 product would have diminished revenues due to the announcement of Jaz2. Well, even one bumbling Fool was able to reach that conclusion, while the stock was still at $12 bucks a share. Since he (quite predictably) blew his original post, this small small correction followed. Thus, any investor paying attention should have foreseen this problem. How the market reacted is another matter altogether. Does this excuse the company from not warning in advance? No. They should have, especially since it could have been predicted based on available information. But the result (a lawsuit) would no doubt have been the same as the price of the stock would be expected to have reacted in a similar manner. No charge for the defense. Call the next case. _______________________________ End Report. Posts covered through 9:00pm ET 2/10/98. _______________________________
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