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Friday, April 17, 1998 Wednesday, Iomega closed at $7 3/8, up $1/4 (+3.51%) TODAY'S RECAP: Well, the big (and long-expected) earnings announcement came out yesterday after the market close and, as the company pre-warned, there was a loss of $.07 per share for the first quarter. I've provided the full earnings report below, and some posters provided their thoughts and comments. Iomega, true to form, made another major announcement earlier in the day -- the appointment of Jim A. Taylor as executive vice president, global sales and marketing. Mr. Taylor comes to Iomega from Gateway 2000 (NYSE: GTW), so some posters were quite happy to see someone fill this position who appears to be strong in the marketing area. 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++ Poulon35 reports sighting IOM advertising on a NY subway car
Recap written and posts compiled by TMF
Weekly. _______________________________ And now, the Best of the Board...Started 9:00pm ET 4/15/98. 1+++++++++++++++++++++++++++
Subject: Iomega advertising FWIW, I just saw that an entire subway car in the shuttle between Time Square and Grand Central in NYC (i.e. one of the most traveled subway cars by white-collar, PC using employees in New York) was taken over with Iomega advertising. It featured Zip and Jaz, and clearly explained their uses and applications, in snippets like: - Store your files if you use a laptop - You need it if you use graphics and sound files - You need it if you use the Web and want to save what you download or create - It's vast and it's fast (Jaz) Seemed a pretty effective choice of ad placement and a pretty clear message. 2+++++++++++++++++++++++++++
Subject: Comp USA Totowa NJ This is a brand new CompUSA in the Wayne section of NJ. Let me start by saying I have never seen a prompotion of products such as this since the initial distribution of Windows 95. They had One entire wall of Zip, Ditto, & Jaz stacked all the way to the ceilling. I went over to look at the Compaq line of computers, but first had to walk by an entire skid of Zip Plus Drives to get to see any computer at all. This was sitting right in the middle of the isle. I decided to look at software and had to walkthrough an isle that was almost one side dedicated to carrying cases for Zip drives & disks. At the end of that isle there was a display from Memorex, the entire end of the isle, stacked with storage cases and soft boxes to hold zip disks. I decided to go look at lap-tops to see what was up and found CNF Zip drives for every laptop brand except Compaq. I really became interested in this, since I also have a Compaq laptop, and asked the salesmanfrom business solutions about getting a zip for my laptop. He said the Compaq zip for laptop is due in any day and that they are going to keep at least 12 of each brand of laptop that CNF makes in stock. I also casually asked him how zip was doing and he told me that is probably the best selling product in the store since they opened two-three weeks ago. About a week ago, I was helping a friend buy a new computer and was disapointed not to findvery few computers with zip installed, but with what I saw last night I can easily say IOM is winning when it come to actual sales of removable media. There is no way so many companies would put so much into a product if it was not a winning product. As far a ths Sony drive, I really feel it is too late to replace the zip. There is so many zips out there already and more each each day. I look at the current price of the stock and can't help butto think this is the buying opportunity of a lifetime so I have doubled my position by buying @7. These are shares that are not on margin and can sit in my account for ever. 3+++++++++++++++++++++++++++
Subject: Re: Jim Taylor / Cow (KE) / McDonald's << ... He (Jim Taylor) thinks that throwing money at advertising is not the way to do it. .... >> Thank God for that ! I hate seeing any mangagement teams throwing money at problems thinking that doing so alone can solve problems immmediately. They don't know that they have to put efforts into it too ! A few days ago, I was at McDonald's. I saw that they have some kind of "Monopoly" Game/Promotion with prizes. They have the prize pictures hanging all over the places. I wonder if this is a nation-wide program, or a world-wide program? How many McDonald's do we have in this country or in the world? One of the prizes is a Gateway system. I thought to myself, why couldn't Iomega do something like that? Give 10 Zips and 5 Jazs away to McDonald's for prizes (as a sponsor) and have the Zip and Jaz pictures hanging all over the places? If that is not enough, give 20 or 30 or more Zips .... How much could that cost? Why didn't Iomega do something like that? Iomega didn't think it was a good idea? Not expensive enough? Not throwing away enough money? Or the old Iomega marketing team just didn't have the idea or the connection to do good things like that in marketing? The McDonald's Gateway promotion may be one of the "small" things that could be credited to Jim Taylor. Maybe I can expect lots of good and effective things coming to Iomega marketing really SOON. I am excited.... Shouldn't I? Just a lay person's humble opinions and questions. As "usaul", I may be wrong. 4+++++++++++++++++++++++++++ Iomega Corp. Announces First Quarter Results Within Pre-Announced Range Zip(R) Drive Units Shipped Up 61% and Total Revenue Up 13% Over First Quarter 1997 ROY, Utah--April 16, 1998-- Iomega Corp. (NYSE:IOM - news) Thursday reported first quarter revenue of $408 million, an increase of 13 percent over first quarter 1997 revenue of $361 million. The net loss for the first quarter, which was in line with the range of the company's pre-announcement on March 16, 1998 was $18.6 million or $(0.07) per share compared to earnings of $23 million, or $0.08 per fully diluted share in the first quarter of 1997. ``Weak international aftermarket sales, combined with approximately $20 million in incremental marketing expenses, were the major contributors to our loss in the first quarter of 1998,'' said James E. Sierk, president and chief executive officer, Iomega Corp. ``We are pleased, however, to report that Zip drive units shipped increased 61 percent over the first quarter of last year and that over 50 percent of Zip drives shipped in the first quarter went into the OEM channel. This underscores our impressive progress in becoming the standard in the high capacity removable storage market segment. In fact, by early March, Zip drives shipped surpassed 13 million units, and Jaz drives shipped surpassed 1.5 million units.'' By product category, Iomega's Zip product sales were $266 million in the first quarter, an increase of 24% over first quarter 1997. Jaz(R) product related revenue of $110 million was approximately level with first quarter 1997 on Jaz drive unit growth of 21%. The company's Jaz 2GB product became commercially available in mid-February. Iomega's Ditto(TM) tape product revenue decreased 14 percent to $31 million from first quarter 1997. Geographically, Iomega's Americas business remained strong, with sales growing 32 percent in the first quarter of 1998 to $299 million from $227 million in the first quarter of 1997. Iomega's European sales declined in the first quarter of 1998 by 17 percent year-over-year to $89 million. Iomega's Asia/Pacific sales were $20 million in the first quarter of 1998, down 26 percent from the year earlier period. Gross margin decreased to $102 million, or 25 percent of sales for the first quarter of 1998, from $107 million, or 30 percent of sales for the first quarter of 1997. The decline in gross margin as a percent of sales in the first quarter of 1998 is primarily related to a higher percentage of Zip drives shipped to the OEM channel where prices and margins are lower than the aftermarket. Zip drive OEM unit volume increased four times over the first quarter of 1997, while Zip drive aftermarket units were relatively flat. International aftermarket unit volume was down, while aftermarket unit volume in the Americas was up compared to the first quarter of 1997. Selling, general & administrative (``SG&A'') expenses increased to $108 million, or 27 percent of sales, for the first quarter of 1998, as compared to $54.4 million, or 15 percent of sales, in the first quarter 1997. The year-over-year increase in SG&A expense is primarily the result of a substantial increase in marketing and sales expenditures, increased spending on customer satisfaction and international expansion. The company is focused on bringing SG&A expense back in line with the 15 to 20 percent range of sales in its corporate operating model. Research and development expenses were $23.1 million or 5.7 percent of sales compared with $14.7 million or 4.1 percent in the same quarter of 1997. Cash and temporary investments as of March 29, 1998 were $80.5 million, which compares to $196 million as of Dec. 31, 1997. Cash flow was negative, as was anticipated by the company in its March 16, 1998 pre-announcement. Net cash outflow of $145 million is primarily attributed to a net increase of approximately $70 million in inventory combined with a decrease of approximately $40 million in accounts payable during the quarter. The company expects to generate positive cash flow over the next three quarters in aggregate, but anticipates being cash flow negative for the year. ``We remain committed to realizing Iomega's tremendous market opportunity,'' continued Sierk. ``As we reassess our plans for 1998, however, we expect results in the range of a small loss to breakeven for the next two quarters before returning to profitability in the fourth quarter of 1998. ``Of course, our ability to do so will depend upon successful execution of our 1998 plan and upon the effects of several factors, noted in our most recent SEC filings, that could cause materially different results.'' Historically, Iomega has refrained from providing guidance as to expected future revenue and earnings. However, in light of first quarter results, the company made an exception to this practice due to the importance of informing the market of management's current thinking as to when the company anticipates a return to profitability. Iomega Corp. manufactures personal read/write storage solutions that help people manage their stuff -- anywhere. Iomega's products provide consumers with what they want, when they want it, at a reasonable price. The company's industry storage solutions, designed for all types of computer users, include Zip drives and genuine Zip 100 disks; Jaz one- and two-gigabyte drives and disks; and Ditto tape backup drives and tape cartridges. Whether used in homes, business, government or education, or by creative professionals, all Iomega storage solutions ensure high levels of quality and reliability when using authorized Iomega media products. Iomega products are available through computer retail stores, resellers, major distributors and OEMs. The company can be reached at 800/MY-STUFF (800/697-8833), or on the web at http://www.iomega.com. Additional Iomega press releases can be accessed through the toll-free fax-back line: (888/88-IOMEGA). Special Note: The statements in this release related to the Zip drive becoming the new standard in the high capacity removable storage market segment, anticipated second and third quarter results, future cash flow, and the expected return to profitability in the fourth quarter of 1998 are forward-looking statements. There are a number of important factors that could cause actual results to differ materially from those suggested or indicated by such forward-looking statements. These include, among others, market acceptance of and demand for the company's storage solutions, the impact of competition from other suppliers of data storage products, the effect of the company's expanded advertising and other marketing programs, the ability of the company to maintain stringent quality assurance standards and enhanced customer services, the timely introduction and marketing of its new products, manufacturing and inventory issues, production costs, intellectual property rights, general economic conditions and the other factors described in the company's Annual Report to Stockholders for 1997, Annual Report on Form 10-K, filed March 31, 1998 and recent quarterly reports filed with the SEC. Note to Editors: Iomega, Zip, Jaz, and the stylized ``i'' logo are registered trademarks of, and Clik!, Ditto, Zip Built-In and Buz are trademarks of, Iomega Corp. All other products and brand names are the property of their respective owners. For maximum reliability, use only genuine Zip 100 disks featuring the genuine Zip 100 symbol in your Zip drive. IOMEGA CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) For the Three Months Ended (Unaudited) March 29, March 30, 1998 1997 SALES $407,500 $361,344 COST OF SALES 305,364 254,065 Gross margin 102,136 107,279 OPERATING EXPENSES: Selling, general and administrative 107,942 54,360 Research and development 23,133 14,717 Total operating expenses 131,075 69,077 OPERATING INCOME (LOSS) (28,939) 38,202 Interest and other income and expense, net 437 (2,872) INCOME (LOSS) BEFORE INCOME TAXES (28,502) 35,330 BENEFIT (PROVISION) FOR INCOME TAXES 9,926 (12,316) NET INCOME (LOSS) ($18,576) $23,014 BASIC EARNINGS (LOSS) PER SHARE ($0.07) $0.09(a) DILUTED EARNINGS (LOSS) PER SHARE ($0.07) $0.08(a) COMMON SHARES OUTSTANDING 262,238 257,286(a) COMMON SHARES ASSUMING DILUTION 262,238 280,668(a)
(a)The shares and EPS have been restated for the December 1997 2 for 1 stock split and FASB 128 "Earnings Per Share."
IOMEGA CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) March 29, Dec. 31, 1998 1997 (Unaudited) ASSETS: Cash and temporary investments $80,491 $196,241 Trade receivables (net) 249,270 280,182 Inventories 313,632 246,383 Other current assets 70,731 59,978 Total current assets 714,124 782,784 Fixed assets (net) 187,418 175,669 Other assets 3,176 3,186 TOTAL ASSETS $904,718 $961,639 LIABILITIES AND STOCKHOLDERS' EQUITY: Notes payable $0 $0 Current lease obligations 5,259 5,505 Accounts payable 219,650 257,281 Other current liabilities 157,889 181,832 Total current liabilities 382,798 444,618 Long-term liabilities 34,586 13,273 Convertible notes 45,683 45,683 Stockholders' equity 441,651 458,065 Total Liabilities and Stockholders' Equity $904,718 $961,639 5+++++++++++++++++++++++++++
Subject: Re: Full earnings report A few quick reactions to the press release: Is it just me, or did they break out revenue for Zip, Jaz, and Ditto? Previously, it's been Zip/Jaz, and Ditto. This is a good sign of trying to establish relations with Wall St- breaking out more numbers. Also, they gave guidance for future quarters- another good sign. OEM penetration over 50% is terrible for profits, but excellent for the long term goal of replacing the floppy. Jaz unit growth of 21% looks nice. Zip units up 61% on $ growth of 24%. OEM units 4x 1Q last year. Aftermarket flat (ho hum) OTOH, HUGE negative cashflow combined with a rather large inventory buildup are not such great signs. Foreign sales terrible. SGA 27% (we knew that would be high, but WOW!), hoping to cut to 15-20% in future Q's. All in all, a mix of good and bad short term, with a somewhat positive longterm outlook. The possibility of replacing the floppy is most definitely still there, it will all depend on how management executes. _______________________________
End Report. Posts covered through 9:00pm ET 4/16/98
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