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Friday, March 27, 1998 Thursday, Iomega closed at $6 7/8, down $1/8 (-1.79%). TODAY'S RECAP: The big news of Wednesday -- resignation of the CEO and President of Iomega -- continued to be the big news yesterday, at least on the Iomega message board. Posters kept contributing thoughts, ideas, frustrations and more as the stock price remained steady, but low. As you'll see from the posts below, many investors or interested parties are using this recent event as a call for change in many of the company's policies and procedures. It will be interesting to see how this all works out over the coming months/years. 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.
1++ MarkRogo pushes the notion of "think big, be big."
Recap written and posts compiled by TMF
Weekly. _______________________________ And now, the Best of the Board...Started 9:00pm ET 3/25/98. 1+++++++++++++++++++++++++++
Subject: Re: 3b-10b << I remember when Creative Sound Blaster, Hayes, the list goes on used that bigger is better philosophy. I agree, the OEM market must be captured. The tie ratios stink, and they won't get much better. Volume will appear to make up for this, but not long term. Iomega's "risky" ad strategy wasn't any riskier than attemting to flood the PC world with cheap drives. >> Hayes had no proprietary lock and Creative lost its lock. Tie ratios are irrelevant. Disk sales are what is relevent. Eventually, if Zip replaces floppy, tie ratios take care of themselves. << Although IO appears to have the "standard" better than most, they are on shaky ground at best. The company needs to contniue to fight the battle on both fronts, retail as well as OEM. Retail got them to the dance with margins, OEM's will hopefully contniue the spread. So, Mark, I generally agree with your OEM argument on volume as it relates to the age old problem of becoming the standard device. But the company doesn't have the capital to make that dream a reality right now. Perhaps the licensee crowd is finally ready to step up to the plate in volume? That would take the lower margin production pressure off of Iomega right now. >> Licensees apparently are waiting for Iomega to need them. Iomega has to force the issue by selling a lot more drives. They need much more OEM presence. Nothing can be done at retail to pull the Zip up fast enough. Nothing. At $99, sales will increase, but will not soar on wings of eagles. OEM is the future, retail is important -- but not the future. << I see the OEM market becoming a little less enthusiastic right now towards the Zip. The drives need to be in all machines, not just certain higher-end models. To conquer that market with volume, Iomega will have to become primarily a disk maker, not a drive maker. Otherwise, the company begins a risky 12-18 month venture to live off of slim drive margins and their disk revenues. >> I don't care who makes the drives. If NEC and MCI can sell them at a profit at a lower price than Iomega, bless them. It's time to tell the PC industry: We can make -- together -- the 60 million drives you need to replace the floppy. Stop jerking around with the useless, overpriced LS-120 and stop waiting for Sony. We can do it. << They need to achieve about 20 - 40 million drives per annum just to be in the ballpark of those goals. During that time, the tie ratios will not grow at a phenomenal rate. I suspect lower disk prices will ensue, lowering margins yet again. This all assumes no real great contribution from Clik or other products. >> Clik schmick. It's the Zips. Period. At 50 million OEM drives, Iomega making 35 million of them, you are looking at over $1 billion in Zip drive sales. You are looking at installed base of probably 75-100 million drives by then. Nearly everyone will have them. They will buy some disks. Probably 250 million a year at about $5 apiece to Iomega. We are only scratching the surface. Fast forward to 100million drives a year, an installed base of 250 million, 750 million disks sold per year at $4 apiece to Iomega. Now the Zip business is $4 billion... Think small, be small. Think big, be big. << I believe that the ad campaign might very well be viewed as a good try that could be shut down at any moment. The next step I think the Board will make cannot be shut off easily. It's a make or break it scenario. Just bouncing thoughts here, feedback appreciated. >> Go for the friggin' ring. It's a $7 stock, going nowhere but down these days. Go for the ring. Raise the money needed. Cut the prices. Get the licensees ready. Kill SyQuest for cryin' out loud (all those who think SyQuest doesn't matter, read the other 10,000 reviews of their products over the past 2 years that don't call the stuff crap and don't remind people of SyQuest's financial troubles). Win nowbefore Sony ships. Before LS-120 gains even a toehold. This is not a 6-year race like Dvorak says. Think 1-2 years. Think 6-12 months. Think big, be big. We are replacing the floppy drive. You will need a Zip drive in your next PC. You need to backup your critical data. You need a way of taking your files home from the office (without having a beastly laptop you don't really need). You need a way to archive those digital photos / MP3's / whatever that the 2.1GB drive on your $800 PC doesn't have room for. Get a friggin' Zip or you're gonna be Zipped out of luck. Hammer home the point. Think big, be big 2+++++++++++++++++++++++++++
Subject: Clik! Bundle Deal Close? Tucked away in an article from Computer Retail Week Interactive about KE's resignation is the following tidbit: << Although no digital-camera maker has decided to use clik! as its storage system, Iomega is close to signing a deal to bundle the retail kit with a mainstream digital camera, Kelly [vice president and general manager of Iomega's mobile storage division] said. >> 3+++++++++++++++++++++++++++
Subject: Improved Wall Street Relations << Now back to the firing of KE. What do we have to look forward to? Everything. Coverage for one. Any new CEO will have to have a better dialogue with the street. >> Don't count on it. David Dunn, chairman of the board, is still around. Look at history. Iomega went silent after the first shareholder lawsuit back in the days of Gabe Fusco (late 80s). Dunn is still gun shy, and is dictating the tone of the relationships. Without the removal of Dunn, the only change will be voice of the messenger. Next in line, any guesses on CFO Purkis's resignation date. I hold him responsible for not watching the income and spending levels and trends close enough to spot trouble before it blew up into a loss. He needed to go before Kim. Another problem within the company is Marketing. Kim was the marketing genius driving the company. He will not be easily replaced. Second in marketing command, Tim Hill, left last year. They have not found an effective replacement. I think they can only go down hill from here. How soon will the new guy start the RIF (reduction in force) process? Insiders say the growth in the past year has been nothing short of amazing. The recuiting group has become a core competency of the organization. Is the new guy an axe man or a wimp? The axe is needed to bring the organization back into fighting form. _______________________________
End Report. Posts covered through 9:00pm ET 3/26/98.
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