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Wednesday, March 18, 1998 Tuesday, Iomega closed at $7 3/8, up $1/4 (+3.51%). TODAY'S RECAP: Iomega message board posters continued to lick their wounds today following yesterday's earnings shortfall warning (and subsequent 17% drop in stock price). Many felt the need to express their general feelings about Iomega, its products and management, and what some consider a contributing factor to the problem: the $100 million advertising campaign begun with the Superbowl ads. 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++ Its Kevin shares his perspective about Iomega products and
management.
Recap written and posts compiled by TMF
Weekly. _______________________________ And now, the Best of the Board...Started 9:00pm ET 3/16/98. 1+++++++++++++++++++++++++++
Subject: sober What can I say? I'm bummed. January's disappointment was worse, unexpected as it was, but today felt like a little more air let out of the balloon. In tonight Fool Port recap, David Gardner said something to the effect that your losers start to take up less of you portfolio as they decline -- which is good. I found that out today. The last decline had a significant effect on my account. Today's was still noteworthy, but not huge. It's strange -- I become less sensitive to the decline in this one stock the more it falls. Ironic, huh? I hope this point isn't illustrated for me again and again over the next year. I miss the rush that the stock used to give me, or the hope of near-term gains. Maybe that was part of my problem. I'm still going to hold the stock and the company for the indefinite future. I believe in its products, the technology, the brand. I work for a college admissions office, and we started using zips, primarily for backup, about a year ago. That was a big indicator for me that something was going on. We don't usually adopt new technology until it's a proven success. I liked the look and feel of zip immediately. It was somehow sexy. I have to admit that's a strange word to use to describe removable storage, but that's what I felt. It was cool, hip, powerful. (A nod to Iomega marketing and design.) It's also comforting to know that clik! is on the horizon -- a much-anticipated new technology, one that Bill Gates saw fit to include in his very selective highlights of Comdex -- and that Iomega can leverage the name it has built up for itself to sell clik! and future, as-yet-unknown (to us) technologies. I wish I could say that I also believe in management. I did believe in them. Through last year, I liked what I heard KE say again and again in subsequent conference calls -- that the company was building a solid corporate foundation. That they were foregoing "flash" for substance. I thought this was going a long way to mitigating the negative feelings that had been swirling around the stock and company since the great ascent and decline in '96. And then last quarter -- hype, hype, and more hype (I know we're all sensitive to that word around here, but it's appropriate in this instance, I believe) about the coming of clik! and the stock split, etc., all within a short period. Every announcement was followed quickly by another, a breathless series of apparently good news out of Roy. I could kick myself now, because I had just opened a Roth IRA in January and I thought, hey, KE has so much faith in this company right now, I might as well invest more $$$. It wasn't much money in the grand scheme of things, and I do accept full responsibility for my own investing decisions, but it still gets me. Anyway, I'm rambling. The long and short of it, no pun intended, is that I will hold. But I will not add. And I will cast a skeptic eye toward managament from this point forth -- not disbelieving or hostile (or litigious), but questioning. 2+++++++++++++++++++++++++++
Subject: I needed a breather I guess I can't take the heat, because I got out of the kitchen today. I wasn't on margin, I could afford to stick it out, but today it hit me that I needed a break. Sold all my IOM at $7. I have dropped a chunk of change on IOM and my portfolio dropped another 3.4% today. Not that anyone will care, but as a long time lurker and occasional contributor here, I felt some kind of obligation to say something. I am not down on IOM, but already I feel that some of the emotional ties I had un-Foolishy developed (ties that had resisted my thoughts of selling), and I took it as a sign to step back and take an objective look. Now that I am out, I find that the blinders came off easily, and things are already clearer than through my blurry vision this morning. My decision was reinforced when I called my broker for the sell and he suggested that maybe I should hang in there because IOM was now a better takeover candidate. IBM he said. Well, that unsound investment strategy confirmed that I needed to take another look. Not selling is somewhat the same as buying. For what it's worth, here's the vision that has come to me since I became IOM-less. 1) Competition? What competition. Iomega is the undisputed leader. Trouble is, it's a new game and nobody knows how long it's good for. I still think the Zip will eventually replace the floppy. 2) Management? They need to quickly iron out a few wrinkles and find some overdue maturity and "street smarts", which I think they are learning now (they will soon be graduates of the "School of Hard Knocks'). 3) Shorts? It appears that the short posts and the factless insults are every bit as disgusting and worthless as ever. "I told you sooooo.." makes me want to kick somebody (my emotions hanging on). Litryham, who had more class than most of them, lost some of that with his own version of an "I told you so" post. 4) Head in sand longs? Not for the most part, but those that do have their head in the sand are particularly obvious today ("Maybe this is a set up for a short squeeze"? come on, take a reality pill!) Most of the longs posting today seemed to have their head on straight though. 5) IOM sales? I was infavor of advertising, but I didn't realize that the "awareness" campaign would coincide with sales growth leveling off. Those are longer term issues, and they will not look like big bumps in the road once they are a ways back in the rear-view mirror. 6) clik? who knows, (I didn't really care), not the driving issue right now. Lots of blue sky there. 7) Nomai? non-issue except for perception (which drives stock prices) and legal expenses. Gotta fight 'em though, even if their sales never will amount to more than a pimple on the ass of a princess, you gotta get rid of it. 8) Class actions? As Steve Martin used to say... "I blame only myself". People who sue because of what someone else "led them to believe" deserve to lose money, and so do their lawyers. The single issue that bothered me was the apparent slowing of revenue growth. I posted only a few weeks ago about KE saving the price cut bullet for later. But conversely, I think this pause gave me the confidence to step out of the hot kitchen for some fresh air. I am not so worried about "missing something" now, because I think I will have time to keep an eye things and jump back in when dinner is almost ready. As Arnold says, "I'll be back" Leave room at the table will ya? 3+++++++++++++++++++++++++++
Subject: Right product/price/time Iomega has said many times that price was a key driving factor in selling their products. Why, then, do I see a lot more ads for ZipPlus at $199 than for a $99 or $129 Zip? Sure makes Zip drives look awful expensive to the casual observer. The guy who doesn't know the difference probably has it in his head that Iomega Zips cost $199. Jaz & Jaz + cartridges look really expensive. Granted, Jaz/Jaz2 have SCSI capability and are aimed at the high-end user. I figure the marketing folks at IOM have studied this and priced it at what the market would bear. Maybe they were wrong. On a final note, the ads sure don't seem to be inducing buying. How about an ad that shows a typical family. Dad's hard drive is full because the kids have been downloading stuff. So he gets a Zip and it solves their problem. SHOW people how it would help them! Or, how about a funny ad spoofing on a guy that keeps backing up and backing up and backing up all his programs: Win95, Office etc. Then show how he could be just backing up his files, not his whole program. SHOW people how this can simplify their lives. Oh, and, yeah, use the stuff word...but make sure people know what that is. Or how about linking these type ads with a Dell TV ad - then TELL them they can ask for it for only $100 more. TELL them! I was in my car during rush hour this AM. As I listened to rthe radio, I thought, "You know, an Iomega ad explaing how a Zip drive would be useful to me would probably get my attention and interest right now. Where else am I gonna go." Of course, the marketing geniuses are in Roy. Maybe I'm just a kook on the internet. 4+++++++++++++++++++++++++++
Subject: Re: Right product/price/time from BurtskyH: << On a final note, the ads sure don't seem to be inducing buying. >> Though it is too early to tell how effective the ads will be, I do agree with you in the sense that the ads (that I have seen) are not targeting the right groups of people. The way I see it, there are 2 segments critical segments to target: teens and professionals. Why target teens? Iomega ads should target teens for the same reason that house cleaning products target women; they are "opinion leaders" and make the purchasing decisions. Teens "get into" computer stuff . Either directly or indirectly, they detemine the computer's configuration: 3-D video card, sound card, memory, etc. Remember, technology is still new to many adults. Ads for teens need an MTV flavor to them. Use techno music and a bunch of 2 second clips. Just show the product being used. Btw, if you are unfamiliar with "techno" as a music style, think of the BMW ad with the rockin' beat to it... makes you want to drive. Why target professionals? Let me define this segment a little further. I am not talking about professional artists. I am talking about the 30+ year old kids that have some cash. Doctors, Lawyers, and anyone that has a "delayed childhood." (it is often said that the reason doctors have so many gadgets is because they don't have time to play until they are done with all their training.) This is the segment that is always tweaking this or thatcomponent, whether it be stereo or computer equipment. This is the segment that sells their regular Palm Pilot so they can get the Palm Pilot Pro. This is the segment that friends and neighbors turn to for advice. The "professional" ads have a politcal component too (let's not forget that a big chunk of wallstreet is in this segment.) A while back I asked for one ad a week in the Wall Street Journal... I got a lot more than that! What I have seen in the WSJ, I like. TV ads that target this segement should not be corny... the current ads are. They need to be hip and sexy too. Off the top of my head... maybe an ad with 2 guys racing to store some stuff for work... they both have a woman waiting for them... maybe the same woman... of course, guy with the Zip is done first and gets the girl. This supports the Zip instead of a laptop concept. There are other segments to target as well, but I think these 2 should be (or should have been) the initial targets. The family style ads don't get my attention. One segment, the "Gen-Xers" (hello :-) would be served by a combination of ads from the other 2 segments. (For example, that BMW ad I referred to covers both segments, imo.) << Of course, the marketing geniuses are in Roy. Maybe I'm just a kook on the internet. >> I hear you... _______________________________
End Report. Posts covered through 9:00pm ET 3/17/98.
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