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Monday, February 16, 1998 Friday, Iomega closed at $9 1/16, down $1/2 (-5.23%). THIS WEEKEND'S RECAP: A few major news events hit the message board over the past few days. The temporary restraining order Iomega had against Nomai selling XHD disks in the US was lifted. In addition, Iomega announced that it had begun shipping Buz and Jaz2 and also had lowered its Jaz1 price. Posters spent time discussing these issues as well as Iomega's advertising, sales and general reasons for owing the stock. 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++ TMF Keeler responds to the decision against Iomega in its restraining
order against Nomai in the U.S.
Recap written and posts compiled by TMF Weekly. _______________________________ And now, the Best of the Board...Started 9:00pm ET 2/12/98. 1+++++++++++++++++++++++++++
Subject: Re: Court Rules Against Iomega This was pretty much inevitable. The TRO was only based on Nomai's claim of compatibility. Iomega said they weren't and Nomai said they were with certain drives. The decision was delayed for months as new motions and data were filed. I think the whole think was a stalling tactic by Iomega. Nomai has labeled the disks in a way that was ok for the court. Its the exact same decision as in Germany. The big battle is over patents and trademarks. That starts 2/27. I think Iomega might be pleased they stalled this long. Remember, this all started last March. 2+++++++++++++++++++++++++++
Subject: Re: Court Rules Against Iomega << The big battle is over patents and trademarks. That starts 2/27. I think Iomega might be pleased they stalled this long. Remember, this all started last March. >> Maybe so, but this is still a serious bummer for Iomega the stock. I doubt Nomai makes many sales and I have no idea how long the patent stuff will take (Nomai will lose on those, at least in the U.S. and probably over most of Europe). Uncertainty is the stock's enemy, however, and this creates the perception of uncertainty if not the reality. I have to recommend to all but the longest term holders that they reevaluate their holdings in Iomega. I lost my stomach on 16 to 9... I can only imagine someone in at 14-16 going through yet another drop... I am not predicting a drop, just believing one is highly likely for the short term based on this news crossing everyone's Bloomberg screen in the a.m. I believe people like to manipulate the price of Iomega's stock and they will certainly try on this issue. Instinet is not your friend here. 3+++++++++++++++++++++++++++
Subject: Re: Today's Announcements << Excuse my cynicism this morning, but I think there may be more than mere coincidence in the timing of these announcements. A courtroom loss yesterday, positive product PR today... >> Cynicism can be healthy, Ira... but I had the opposite impression of the timing. Since the court ruling appears to have taken Keating by surprise, I don't think this morning's releases had anything to do with it. Note the widespread advertising many of us noticed this whole week... radio, 4-page gatefold spreads in PC Magazine, etc.... and don't forget the big moment for KE at the GS tech conference this morning. I figured Iomega had carefully orchestrated the release of new product shipments, price cuts, advertising blitz.... all to make a solid impression not just in the marketplace, but on Wall St too. Just another opinion :-) 4+++++++++++++++++++++++++++
Subject: Re: ..from emerald call.. << ..I doubt a 'somewhat' compatible disc would even sell, even if allowed to ultimately.. >> Huibs and others.... I've been thinking a lot about this "almost compatible/somewhat compatible/usually compatible" thing with the disks made by the pirate known as Nomai. I could see how some people would not be aware that the pirated Nomai disks would stand a pretty good chance of not working or that they stood a really good chance of not working in their laptop or even that there WAS a compatability issue, but wouldn't these people tend to be the "low tie-rate" Zip users? Wouldn't the heavy (high tie-rate users) disk users tend to be the graphics art people and corporations or businesses who could not afford to risk the loss of important data or damage to their drives? Wouldn't these people be the same ones who would need to be able to count on the fact that they could use their disks in both their desktops and their laptops? Seems to me, based upon what I've seen, that the heaviest users would be the same people who would most likely be most aware that there was a potential for data loss or incompatability and wouldn't risk using the Nomai's...or am I an idiot? I can see the conversations now: Weaselboy: I don't have today's big presentation ready Boss... I'm of the opinion that if Iomega keeps slipping in the "potential for drive-damage" and "laptop incompatability" comments into their press releases, that eventually it will become mainstream and commonly accepted knowledge that the Nomai disks are the black sheep of the removable storage family...kind of like me in my family. 5+++++++++++++++++++++++++++
Subject: Re: Iomega Response #2 << For maximum reliability, use only genuine Zip 100 disks featuring a genuine symbol in your Zip drive. >> $100 Million dollars worth of advertising can include this little addition to the text. Good job Iomega. I'm rejuvinated too. Susan Stillings, Iomega's Director of Investors Relations, told me the other day that there was alot of "noise" out there. Well Bulls, time to do something about it. The Bears have been firmly in control of this stock for way too long. Zips are becoming more popular in business, schools, and anyone that wants to bring data to or from either of those places. They are dominating the market for removable storage. I don't care about the stock price right now. I care about Iomega selling 40 million drives in 1999, on top of an installed base of 30 million drives. There is not any product on the market right now that even stands a chance to come close to these numbers. Any new drive that comes out will have to be so good that it would convince the owners of approximately 18 million drives, or more, to switch (VERY UNLIKELY), but it would also have to be so good that it would get the 18 million + savy computer users that are Zipped to start recommending the new drive. Even more unlikely. Why? Because the Zip's value is enhanced by its' common status. A value that can't be measured by price/performance. Now if I were Michael Dell, I don't think I would be too happy with Sony, seeing how internally they have been replacing Dell PC's with Hewlett Packard. It sure would be a hoot to see Sony miscalculate their power, and end up with PC's that Junkyard can buy for scrap. So Iomega, Dell, time to get together on this. Offer a "FREE" Zip drive standard on any Dell PC purchased between now and April Fool's Day. "Hello, Gateway? Yes, but Dell is offering a FREE Zip drive". "Hello, Compaq? Does yours include a FREE Zip drive?" "Hello, Micron? Yours does?" "Hello Apple? Yours Too?" I just wish that someday I could be a fly on the wall when Sony has to call Iomega, or even better yet, Panasonic, and ask for Zips again. If their PC line survives their miscalculation. BTW, if there are any long time lurkers out there that appreciate the efforts made by many of the bulls to keep you informed, speak up. Make a short post expressing your opinion on Iomega. In the meantime, any Chicago Fools want to keep your eyes open for Nomai disks on sale in a Chicago area store? I'm pretty certain that I could get local, major network, news coverage of that store being picketed by Zip drive owners (volunteers?) protesting that stores support for piracy of intellectual property, and risking the integrity of Zip drives by selling a dangerous product. Do you feel lucky Best Buy? How about you, CompUSA? 6+++++++++++++++++++++++++++
Subject: Bullish Reasons for IOM!!!!!! Fools, consider the following: 1) Nomai was not a surprise to IOM. They knew what was happening a long time ago with these knock-off disks. IOM, like other firms, have spys looking at other companies products to make sure they are not infringing. IOM, I am sure has contingency plans in case they lose these cases. They might change their labeling and warranties to reflect guarantees for IOMEGA authorized disks only. If they can really prove it, they might engage in negative ad campaigns against Nomai saying inferior products. They could do a host of things. 2) The latest round of court rulings are not the rulings that we should be caring about. We should be focused on whether or not permanent injunctions will be granted. Here, the real issue of whether Nomai infringed on IOM will bw decided. Courts are reluctant to maintain preliminary injunctions until a full hearing or trial can be had, so as not to damage either of the parties. Think about it, It would be wrong if the courts stopped Nomai from selling now and the trial did not occur for six months or a year or more. Now, once a trial or full hearing comes, and IOM wins, then IOM will be entitled to damages, monies it can prove that it lost to NOmai as a result of the infringement. Nonetheless, I agree that this does not help us in the short term. 3) I have to wonder whether most distributors would want to associate themseleves with an inferior product that can damge drives and damage their relations with the people they sell too. 4) I would not be surprised if the other IOM licensed disk makers join IOM in fighting Nomai. They have a financial stake as well. 5) I believe that IOM has all of this factored into their long term plan. With R & D spending up, they have more products in the works. Just like Microsoft, their bread and butter comes from Windows, but they have a host of differnt software and products that they get money from. Like IOM is trying, buz, recordit etc. 6) Jokes have been made about possible buyouts of IOM. However, it is very possible. There is consolidation in all the other industries now. Why not storage? With IOM's low debt, and revenue growth, it is a nice candidate for one of the bigger disk drive makers struggling to compete and enhance shareholder value. Their stocks need help too as this board has commented on. 7) With clik, deals with start to come out. Remember, IOM is not known for giving advance notice that they are working on something big. Note, they said in the past, that no OEMs had signed up to do anything with clik, they did not say that OEMs were not working with the product. We have to remember, IOM could be under confidentiality agreements not to divulge any info. so that their competition don't get winf of it. Fools, come on, all the digital cameras, cell phones, PDAs, etc., look alike. What OEM is going to let another OEM differentiate themselves with a special feature. Likw Zip, practically all OEMs signed up because no OEM wanted to be the only one not offering zip at least as an option. I remain bullish with good reasons. 7+++++++++++++++++++++++++++
Subject: Huge IOM ad in Wired Just received the March issue of Wired magazine in the mail. Iomega has a 10 page four color ad. This is not an insert, it starts on page 53 ends on page 64. The entire product line is featured, including clik!. They bought 5% of the magazine. This is some serious ad placement. 8+++++++++++++++++++++++++++
Subject: Nomai Disks and Drive Warranties I have been thinking further about the potential problem of Zip drive damage from Nomai disks and how Iomega can/will deal with it. There are two issues as I see things: (1) Can Iomega differentiate between damage done to Zip drives/disks as a result of the use of Nomai disks, and (2) What should be done about it. (1) It should be very simple to determine if damage is due to Nomai disks. In the past, I have suggested that Iomega request that the user send back both drive and disk as part of any RMA repair, but I now believe that this is not necessary. The damage to Zip drives from Nomai disks has to occur as a result of crashes of the drive heads into the disk media. These crashes must scrape some (albeit, maybe miniscule) of the magnetic coating off of the disk. Iomega uses ATOMM media, a patented magnetic storage composition from Fuji. Nomai uses a functionally similar material from BASF (or its Korean successor). Although functionally similar, there must be some differences in order for the BASF material to avoid infringing on Fuji's ATOMM patents. These differences could be in the magnetically susceptible particles, or in the binders that fix them on the rotating disk substrate. In any event, the chemical differences can be analyzed by appropriate analytical techniques. So Iomega can readily determine if an unauthorized disk was used in a drive. (2) This is a tougher question. It is easy to say that Iomega should take a hard line and void all warranties where unauthorized disks are used, but that could antagonize many innocent victims. On the other hand, the costs for replacing damaged disks/drives due to Nomai induced failure could be staggering. This decision is as much an ethical one as a business one. _______________________________ End Report. Posts covered through 9:00pm ET 2/15/98. _______________________________
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