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Monday, April 13, 1998 Thursday, Iomega closed at $6 9/16, down $1/16 (-0.94%). THIS HOLIDAY WEEKEND'S RECAP: While many message board posters took the holiday weeekend off from AOL, a few did take some time to share thoughts, concerns and comments on various topics: Iomega advertising, SyQuest, Creative Labs, Business Week, earnings, pricing of Zip drive and more. 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++ NSACORAF describes recent Iomega ads
Recap written and posts compiled by TMF
Weekly. _______________________________ And now, the Best of the Board...Started 9:00pm ET 4/8/98. 1+++++++++++++++++++++++++++
Subject: Ads Here are some of the latest ads I have seen: Dell Business Catalog April 1998 "Custom Built For Business, Order customized business solutions from Dell" Cover shows photo of Dimensions XPS with Zip installed. P.4 shows Dimensions XPS with Zip installed. P.5 describes TWO Dimensions XPS with Zip installed. (STANDARD) P.5 Iomega Zip Built description at bottom of page. Add $99 for third computer depicted. 3 pak cart. Add $39. P.9 Iomega Zip Int. with 2 carts. Add $99. P.11 Portable Computer - Iomega Zip Ext. Add $149. P.13 Iomega Zip Ext. Add $149. P.15 Portable Computer - Iomega Zip Ext. Add $149. P.20 Zip drive on 4 of 6 models. P.21 Zip drive on 2 of 3 models. Back cover shows photo of Dimensions XPS with Zip installed. CompUSA Direct Business Catalog Vol. B8.10 April 1998 Inside back cover: Jaz 2 ext. $549.95 P.68 page Jaz 2 ext. $599.95; Zip Plus $199.95; Zip parallel & Atapi $129.95 each.; REMANUFACTURED Zip $99.95 while they last. Ditto Max 7GB $199.95; Dito Max Pro 10GB $299.95. P.68 page Sparq $199.95, 3 pk.1GB carts $99.95; Syjet 1.5GB $299.95. P.72 10 pk. Zip carts $129.95; Imation diskettes 3 pk. $49.95 but not SYQT carts advertised on the catalog except as above. Reseller News full page ad: Middle age guy balding sitting, smiling and counting money. "Installing a Zip Built-In ™ Drive Is as easy as putting money in your wallet." Small inset left lower corner showing ATAPI drive suspended in air ready to go into open slot on the computer. "The Capacity To Do More"™ MAIN Body of Ad: {Zip Built-In logo) "If you've got room in your wallet, we've got a way to fill it: by installing a Zip ™ drive, the new standard in high-capacity removeable storage. It's a simple way to add value and make your customers happy. A pro like you can install and ATPI Zip drive in minutes. And with millions of Zip drives already out there, it's an easy sell too. Check our Web site to find out more. Then perform the easiest installation of all --- putting money in your wallet. www.iomegaeasy.com/zip or 1-800-Iomega-2" (in small type below) "D&H 800-340-1001 Gates Arrow 800-456-8000 Merisel 800-MERISEL Synnex 800-756-9888 Tech Data 800-237-8931 In small type: "use only genuine Zip disks featuring this symbol (Zip 100)" the number being vertical. "Because it's your stuff "Tm [Iomega logo] 2+++++++++++++++++++++++++++
Subject: NYT and Syquest Syquest has the back page of the new "Circuits" section for SparQ, something they have had consistantly over the last 4-6 weeks since the section was created. (Iomega has a full page on the inside pitching Zip disks). They compare SparQ to both Zip+ and to Jaz, taking both to task on price, and claiming a faster drive than Zip+ (giving Zip+ 29ms seek time and SparQ 12ms seek time). Frankly, the fact that Syquest is still afloat amazes me. I thought they would be pushing up dasies a year ago. While they may not be able to finance huge volume production, anyone who thinks that Iomega isn't losing at least a few sales to them is deluding themselves. They may not get the lion's share, but they will get some. And everyone they get is one less for Iomega. Hard to believe they are still alive and kicking, but they are. . . 3+++++++++++++++++++++++++++
Subject: Re: CREAF model Pat- I think you can expand your analysis of Creative Labs to most of the PC hardware industry. How can Dell and Compaq make any money? Constant price cuts force a competitive environment that brings margins down to very low levels. Brand name really is all. Distribution helps, but isnt' really necessary. Some of the sucessful PC manufacturers have grown on the basis of mail order sales only. And as we learned early on, its a cyclic business. Demand will rise and fall. But I see an overall growth in demand over the next 5 years as the floppy becomes increasing outmoded. But you have to look at what builds a valuable brand name- responsiveness to customer needs. If the Business Week article is an accurate view from the inside of Iomega, Kim Edwards did an incredible job of focusing the technology driven engineers of Iomega on creating products with huge hidden demand. His "Give the consumer what they want at a price they want to pay" was a revolutionary marketing strategy in a world of bigger/faster at set price points. Where Edwards failed was in growing operations as the market he created grew. The product introduction delays, parts shortages, customer support problems, failure to meet OEM quality requirements are less obvious customer support issues. But they have hurt the Iomega brand name. At this point I'd like to see Iomega re-emerge as a more mature company. Operationally oriented management, transform the brand name into one that is respected more. Transform the stock as well into one institutions are more comfortable with. 4+++++++++++++++++++++++++++
Subject: Re: Business Week Bombshell some quick thoughts about the B/W article: 1) the lead -- suggesting that the ``click of death'' is worse than Edwards allowed, is never justified. It's just a lazy hook into the troubles of the company. 2) no attribution for 300,000 Sparq figure. attribution isn't necessary for every fact in every story, but in this story for this fact it's essential. 3) purports that the LS-120 is real competition. Nothing we have seen so from Imation suggests that the SuperDisk has provided real competition. Old news repackaged to fit the theme of the article. Likewise no fresh reporting on the Sony drive. 4) More than 12 million Zip drives sold. I've lost track myself of all the Zip figures, but isn't that an acient number? 5) Suggestion --unsubstantiated-- that computer makers are experiencing returns because of faulty Zip drives. A loose quote from Bakar accompanies it. Never heard this one. Has anyone else? Would hope that Bakar addresses this ``issue'' in the conference call to whomever is taking questions this time around. 6) remainder of article, the backroom decisions and infighting, Edwards' fall, is better than the rest of the piece. the reporter is surer of himself in the boardroom than with the technology. 7) for all its faults, it's not at all slanted and is worth reading. 5+++++++++++++++++++++++++++
Subject: Re: Whisper number Hyperchaz writes: << I hope to hell this 3-cent loss hasn't become the general guess. It's at the optimistic end of Iomega's announced $10-25 million shortfall, but missing it by a couple of cents invites another swift blow to the groin. I understand some analysts' figures, though mostly bleak, are skewed by one wildly positive number goobering up the consensus. >> My personal feeling is that it really won't matter that much what eps is as long as it does not fall below their preannounced figures. I think anyone invested at this point should have at least a rough idea of what eps should be this quarter and the next few to justify the current share price. Without this knowledge you are only hoping for stock appreciation. IOM is not a big Blue Chip Stock that you can blindly throw money at and expect to receive a decent return on your money. IOM is a Very High Risk stock and for most should only be a small portion of their overall portfolio. I hope everyone here realizes that even at its current low price of 6-1/2 ish IOM can still drop. I personally believe that short term stock price will greatly depend upon comments made concerning demand for Zip drives and Disks. A new CEO, CFO or whatever personell changes may exert a temporary upward movement in the stock price but will be short lived. Earnings and the possibility of earnings will be the ultimate driving force behind IOM's appreciation. Of course the revenues go hand in hand with earnings. Without substantial revenues IOM will never have any decent EPS numbers. For those who may not know, it is possible to take a defensive stance going into earnings. You can buy puts or sell short agains the box. There are many ways to protect ones investment against any further decline. I personally don't see much upside at this point. 6+++++++++++++++++++++++++++
Subject: Re: ZipPlus vs. Classic AubreyPup wisely stated: << One has to search to find the Zip Classic and its lower price. Zip Plus was displayed with its price PROMINENTLY in publications... and that price did not measure up favorably in the price/meg comaparisons with competitors. The Zip Plus should have been advertised but not as Iomega's primary Zip product, but rather a sub niche of the Zip Classic ..... Zip Plus should have been aimed at those few who wanted to pay more for more features... instead the marketing gave the ENTIRE Zip line a "more expensive than competitor" perception to the average consumer. >> Well said. Nothing wrong with the ZipPlus. The ZipPlus price, however, probably could come down to $179 for the time being. May help to sell more ZipPlus units. The increase in ZipPlus unit sales would probably more than offset the $20 (or $10 to $15 to Iomega) less profit per ZipPlus and end up with increased total revenue and profit. Such would be the case if lowering the price by 10% (from $199 to $179) would increase unit sales by more than 11.2%. There could be an optimal price to maximize the revenue and profit for a product at a certain time and it may change as situation developes. Must monitor closely. I realize that the optimal price may not always be the lower price. If you go below a certain price point, you may get no more positve returns. I should also mention there is this most important collateral benefit of increased Zip Drive sales : increased Zip disk sales. One needs to worry as customers in search of more features may move up from the Zip Classic drive to the ZipPlus drive and when considering the price of $199, may end up choosing a competitor's product and there goes the Zip disk sales with it. Yes, in retail store publications, external Zip Classic should be prominently displayed with a price of $129 (at least some stores are selling at this price) for the time being. ZipPlus should be in a small corner with the $179 price. But, can Iomega really "control" those retail stores as to what to put down on the stores' own ads? If the retail stores are not too bright in their owm marketing (they probably wouldn't care as much if Iomega's products would sell or not), can Iomega step in to help (Iomega has not been doing much at retail stores -- one of my big complaints -- except those INEFFECTIVE and miserably designed Iomega end caps)? Yes, I think so. Iomega could help by providing the artworks for the ads (e.g. ... with classic Zips in the center and ZipPlus at a corner ... if that is what we wish for the time being) and may also make recommendations to the store managements. I am sure at a time in the past, perhaps only a few months ago at ZipPlus' introduction, ZipPlus was a very hot item and you wanted to prominently tell customers that you had them at $199 and you were not charging a premium. That shouldn't apply anymore. I suppose that may show us how slow or inaccurate those computer generated sales numbers and reports may be. The retail stores and Iomega top managements may also be reacting or acting too slowly. The feed backs and actions may not be there or fast enough. (And when they finally react, they may overreact too.) 7+++++++++++++++++++++++++++
Subject: Zip Quality problems at Apple I have not posted on this board in a very long time because of the garbage level here. I came across something recently though that i thought needed to be shared. I have a friend that until recently was working at Apple. While there he asked around the hardware division about Zip and how the zip inclusion was going for Apple. What he heard back was very disturbing. It seems Apple has been getting a large number of calls from customers with bad zip drives. The problems do not seem to be a constant problem with quality but rather a consitent problem with batches of zip drives. I am not talking about a huge percentage of bad drives. It is under 5%, but there have been enough problems that the possiblility of dropping the zip has been discussed. Neither Apple, nor any other OEM, will include a device that results in an inordinate number of Customer complaints, let alone returns. The Profit margins in the business are simply too thin to allow it. If quality Is a problem then IOM has to fix the problems and quickly. If IOM loses or has lost OEM customers due to quality problems then it will be very difficult and time consuming to get them back. For a long time now i have wondered why the rate of inclusion was not going up. The price of the OEM Zip has come way down. Low enough that we should be seeing greater inclusion. The problems with quality that keep appearing could explain the lack of OEM inclusion growth and why it seems that OEM's have pulled back from Including the Zip. It may be that as Iomega grew they out grew their quality control systems. I sold all my remaining shares in IOM after the last CC. But still follow the company as it may be a buy when the dust settles. 8+++++++++++++++++++++++++++
Subject: Dell Catalog Back in the summer of 95 when I was shopping around for a computer I was looking at Dell, Compaq and Gateway. I purchased a Presario. Anyway I still receive a catalog form Dell every now and then. I just received one this past week. I usually put them in the recyle bin but decided to see how many Zips were included in Dell computers. - it's the April issue. On page 8 are seven different models. The internal Zip is standard on two of them and optional on all the rest. On page 11 is an add for the Zip - the internal model with 2 cartridges for $99. A 3-pak of 100mb cartridges add $39. There are 6 notebooks listed on page 14 - 15 with none showing a Zip. On the next page they do show an external Zip for $149. I would liked to have seen them standard on more models, but on the other hand I can't complain too much. After all, there were none of Iomega's competitors models listed at all. They do have other products in the catalog besides the Dell computers and Iomega Zips, such as Altec Lansing sound speakers, Microsoft software and Joystick, HP printers and a scanner. _______________________________
End Report. Posts covered through 9:00pm ET 4/12/98
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