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Wednesday, March 25, 1998 Tuesday, Iomega closed at $7 3/8, up $1/16 (+0.85%). TODAY'S RECAP: A slow move in Iomega's stock price was mirrored in a slow message board -- some posters obviously spent Monday night watching the Academy Awards (just to make sure that "Titanic" would actually win the Oscar) and didn't get enough sleep, although a few did make the obligatory comparisons of Iomega to the big, unsinkable ship. Those posters who did make it to the post posted on digital camera technology and the role of clik!, on IOM's advertising, Buz and the repurcussions of issuing earnings warnings. 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++ ZilberHere comments on failings in Iomega's advertising campaign.
Recap written and posts compiled by TMF
Weekly. _______________________________ And now, the Best of the Board...Started 9:00pm ET 3/23/98. 1+++++++++++++++++++++++++++
Subject: Why the ads fail As much as Iomega's ad campaign is a necessary (and costly) evil to build brand recognition, the spots that I've seen completely fail to establish a credible reason why the average consumer needs Zip. The ads' major premise is fundmentally flawed because, as fixed disks continue to increase in capacity and diminish in cost per megabyte, there really is no defensible reason for anyone to be using Zip disks for routine file archiving. Certainly, I've found that my primary 5GB Western Digital hard disk is a perfectly satisfactory place for me to store pretty nearly ALL of my stuff. I wouldn't think of routinely farming anything out to ZIP storage for the same reason I never kept my files on standard floppies, either: I want my "stuff" at my fingertips at all times, and I don't want to have to play disk jockey at all if I can possibly avoid it. What IS a credible reason to buy a Zip drive? - Quick and dirty backup for critical data, for just-completed large files (and large quantities of related files) which represent a such a large investment in work and effort that it would be painfully -- or prohibitively -- expensive to re-create them. - Quick and easy file transfer for (typically) large graphics and multimedia files, for remote off-site presentations and service bureau submissions. - Quick and convenient file transfers between home and office, with utter disregard for file sizes. - Desperation storage, for that moment when your hard disk is unexpectedly filled to capacity. I can't think of any other reasons -- but these are darn good reasons which will be as valid in five years as they are today. Iomega's ads miss the point by failing to make these practical Zip applications apparent to the uninitiated. On the other hand, the good news for Iomega is that, as long as Zip represents the most sensible solution to these practical applications, the product cannot be written off as a fad. It will continue to sell itself as a niche product, in spite of the ads. It is too well-entrenched to be supplanted by any johnny-come-lately competitor. It will not be overtaken by something which is merely just as good -- nor even by something which is a little cheaper or slightly better in some respect. The way these development cycles usually run, Zip will probably have a good five years before it will start to be superceded by something several orders of magnitude better, whatever that may be. Indeed, Zip may very well never penetrate more than 12% or 15% of the entire installed base of personal computers -- but as long as the market keeps growing, its 12-15% market share will grow in tandem. Whether IOM is ever again perceived as good investment, however, depends on whether they can reduce their operating costs, sell both the drives and the media at continually-diminishing retail prices, and still make cartloads of money on them. And to that, I have no inside track. 2+++++++++++++++++++++++++++
Subject: Re: The End of the Ag << In the meantime, you can buy a Sony Mavica which takes pictures directly onto a 3.5" floppy diskette. >> 40 mb is better than 1.44 mb - and affordable. I think the fact that Sony choose to make cameras with 3.5" drives is fantastic news for IOM's Clik!. It validates the need for more storage/offload potential for digital images and acts as a natural step up from the has-been (3.5) to the will-be (Clik!). Honestly, when I saw the Sony ads with the old 3.5" disk, I was grinning ear to ear. If a 1.44 mb diskette can be useful (Sony thinks it can), a 40 mb will be even more so. How many high resolution color images can you store on a 3.5"? Darn few. As for IOM being "damaged goods", the slump is industry wide - Would you call all computer related stocks "damaged goods"?. When the tide changes, it will change for IOM as well. As for sacking KE, do you really think the lawsuits are anything more than whimpering short-term traders who didn't consider that tech-stocks are inherently risky - being coddled by parasite-"law"-firms who routinely file suit to get the inevitable "settlement"? Did KE say "IOM's stock can't go down, It's going to go up, buy it, I guarantee it". No. 3+++++++++++++++++++++++++++
Subject: Magid's Buz review This review appeared in the Los Angeles Times yesterday. I take it as both fair and favorable to Buz overall. http://www.larrysworld.com/articles/video.htm 4+++++++++++++++++++++++++++
Subject: Re: ..??.. Huibs questions the meaning of life with: ..correct me if I'm wrong.. ..but didn't these folks just warn??.. << QNTM - QUANTUM CORP
Exchange: NASDAQ Quantum Squeezed By Inventory Glut [http://www.techweb.com/investor/story/INV19980323S0009] From the article: << Quantum issued a fourth quarter profit warning Monday, and said revenue would be about 20 percent lower compared to a year ago because of an inventory glut of hard drives. Quantum [QNTM] said it would break even or post a slight profit for the fourth quarter. Wall Street was expecting earnings of 26 cents a share. Quantum cited excess inventory and aggressive pricing for its financial difficulties. The Milpitas, Calif.-based company is the latest in a long line of hard drive companies that are taking a hit. Iomega warned just last week that its first quarter earnings would fall short of Wall Street estimates. >> Revenue is projected to be down 20% year-to-year and the stock goes up? Notice that they had to mention iomega in the story also....hmmmm..... _______________________________
End Report. Posts covered through 9:30pm ET 3/24/98.
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