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Thursday, April 23, 1998 Wednesday, Iomega closed at $8 13/16, up $3/8 (+4.44%) TODAY'S RECAP: Iomega's stock price continues to move up, and the number (and quality) of posts on the board moves in direct ratio. Issues of the Zip as a standard, OEM inclusion, PBS sponsorship, and short interest kept some posters busy, but others devoted substantial time to describing the Iomega Annual Meeting from earlier this week -- see posts from NSACORAF and BuriedLie. 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++ HryThdBst talks about becoming a standard and getting into OEM boxes
Recap written and posts compiled by TMF
Weekly. _______________________________ And now, the Best of the Board...Started 9:00pm ET 4/21/98. 1+++++++++++++++++++++++++++
Subject: Re: OEM % of BUSINESS Increasing << Stocks and sales do not always increase quarter to quarter, nor do stocks always go up. Iomega is facing increased competition, how they handle the increased competition is almost as important as winning or losing the game. >> Forget about present competition, they barely exist. Win the standard battle at all costs, as fast as possible. This game is simple. Get zip in the OEM boxes, big time, in the next few years or sales and stock price will stagnate. Where is the growth going to come from if zip doesn't start to emerge as the obvious floppy replacement? Without increasing OEM inclusion Iomega will be hard pressed to sell 15 million drives per year for the next 2-3 years. Zip starts making some serious inroads to floppy replacement or growth is at a stand-still. The longer the door is left open the more I worry about Zips success. Bigger- faster- cheaper is always right around the corner, it's the way of technology. Iomega doesn't have a monopoly on innovative engineers. 93million computers this year? That's monsterous potential. Zip may be in what, 4-6mm of those, pitifull. I'm not trying to be overly negative, just objective. I've held this stock long since 4/95 because of some basic beliefs:
1. The 3.5" will become obsolete. It's that simple for me. But the longer I wait the less sure of #4 I become. Ultimately the consumer will decide when and what drive. 2+++++++++++++++++++++++++++
Subject: Re: PC Unit Shipments << Thanks, Dave McCoy, but the whole essence of this debate is that your simple conclusion may be just plain wrong. It is not clear that Zip is gaining acceptance at all. It may be slipping, flat or gaining slightly. But certainly it isn't gaining much. The fact that the stores in Silicon Valley typically carry 0 or 1 Zipped machines only is not bullish >> Mark, This depends on several things that you believe are true that I would argue with. First, time frame. If I look at a magazine like Computer Shopper from 1 year ago, I guarantee you that you will find a much bigger presence of OEM inclusion in today's issue vs. 1 year ago. You are arguing about a small slice in time, and may as a result, miss the bigger picture. Zip is definitely more included today than 1 year ago...1 year ago it was more included than the year before...etc. Second, adverse market conditions unrelated to Zip. No one will argue that the sub-1000 pc has changed the mechanics of the PC market. Suddenly any add on device that costs money may be deleted from the initial SKU. In this environment, the fact that any OEM would include a Zip standard would tell you something about the value of the Zip. These guys (OEM's) aren't stupid. They are trying to balance what the customer wants with what thecustomer will pay for. I suggest that you look at the latest data in reverse. If the market for any add-on device is sluggish right now, but Zip penetration rates were flat or slightly up (even with the need to lower prices to bare bones levels), THEN Zip demand is actually gaining ground at a more rapid rate than the raw data would suggest. Another example related to this would be a money manager that has managed a 15% compounded return in thetecnology sector when the rest of the tech market dropped by 50%. He planned a 35% return but I'm sure his investors would be happy that their money grew at all. Unfortunately for the many who watch the debate, including the participants, the over-scrutization of the short term data tends to lead to some conclusions that are in some cases wrong and also based on hindsight. I think it is great to discuss an issue, get out the facts, and form some conclusions. However, I think you and many others on this board are fooling yourself when you think you have the answers and can accurately predict the future. Ihave come to trust that you are honest and mean well, and I also think you mean what you say. My argument with you on this and several other issues is just perspective. I know that only the very well plugged in people can have any idea where the next turn takes us. As a result, the only real way to play this stock is with the long term perspective in mind. My opinion is you lose sight of that from time to time in your analysis. 3+++++++++++++++++++++++++++
Subject: Annual Meeting News Part 1 Iomega Product Room: As usual, the IOM product room (sales room) was manned by young, friendly, energetic, and knowledgeable employees. You could buy various products at a discount because you were a shareholder at the meeting. I only asked about the Buz which was on sale for $179. The Clik! OEM version is the size of a flash card in width, height, length and thickness, and it was very neat. It will be a very big winner IMO. The stand alone Clik! as shown as FallComdex was also displayed and operational. No plans for ZIp reading Clik! It is much better! They are in the process of developing a frame the fits inside a Desktop PC which will hold the Clik! OEM version very nicely. Just another small bay in the computer. It will take Clik! disks. Techie stated that it is almost done and it will go into PCs, laptops, PDAs, Digital cameras, etc.Zip Plus, JAz 1 & 2, Ditto Max and Buz were all hooked up to various computers in the Product Roomwith techies explaining their operation and answering any questions quickly and very adequately. Registration: One would sign the registry, they checked their master roster of shareholders and gave you a felt Iomega cloth stick-on emblem to gain entrance into the meeting hall. You did not exchange your proxies for a ballot as prior years. The registration was handeled differently this year. nyone having proxies coul vote them in the meeting room when the elections and proposals came out. Meeting: A large banquet hotel room with tables and seating for about 500 persons. My guess only about 300 or less were in attendance. Worse attendance in past 3 years. Large banners or large blow up photos conatined in the Annual Report for 1997. Not as impressive as last year, IMO. In the past they would have 4 to 6 standing microphones for Q&A by the shareholders. This time they had total control with two guys who had portable wireless phones that they would bring to whomever the Chairman recognized. No class action attorneys were in attendance or asked any questions to my knowledge. Chairman Dunn: He opened the meeting by thanking KE for all of the extraordinary work he had done to bring IOM to a $1.7 billion corporation. (KE was not in attendance). Dunthen stated that he was "truly enthusiastic about the future of IOM." He also stated: "God sent us Jim (Sierk) last fall." He praised him and wished he would stay on as CEO. Sierk's wife is against Sierk taking a permanent job, She is finishing her studies to become a Chaplian. (No furtherdetails known.) Dunn, Sierk and Director John Myers are working together to secure a new CEO for IOM. Dunn told me that KE is helping Sierk in various ways in a very cooperative manner. I'm not sure if he is also suggesting traits or people as his successor. Meeting Continued: The proposals were presented and two individuals orally objected to The Director Options proposal stating "They should buy the stock themsleves just like all of the rest of the shareholders." The proposal passed. Afterwards I moved to adopt Proposal 2 the adoption of Employee's stock purchase program. This was passed as well the nominees were all elected, and all stated proposals passed. Dunn presented awrads to retiringt Kucha who started with thecompany way back, and an award for Director Wilhelm who was retiring also after 4 years as a Director. Dunn then stated: "Over 17 million IOM products have been shipped all over the world. (He did not delineate which products were involved.) He then introduce Jim Sierk. {Continued tomorrow) Sorry gang I am whipped from all of the travel and am hitting the sack. Tomorrow morning: Jim Sierk,Ted Briscoe, Ted Forsyth, Jim Kelly, Video, Scott Flaig, Jim Sierk again, Buz, and the like, and Dunn admits a mistake! 4+++++++++++++++++++++++++++
Subject: Re: Annual Meeting NewsByte Just a few comments about the meeting. I found James Sierk to be a very calming influence for a nervous shareholder. No hype, just quiet confidence. He would be a very good CEO but unfortunately his wife does not want him to do this full time. Talking with him afterwards, he is very down to earth and approachable. He seems very customer focused. He mentioned that he likes to listen in on the help line often to get a feel for what kinds of problems customers are calling in about and to see how customer service is responding to customers. He said he has been impressed with the support people because often they will apologize to the customer saying, "I'm sorry you're having this problem, let's see if we can fix it for you." First question was regarding why the stock split. I was glad to see David Dunn admit that he was responsible and that it was a mistake. He said he never intended to have a stock price in single digits. At the time they were deciding to split the stock, there were no indications that they were about to have problems with operations. There was a comment posed by one shareholder regarding insider selling and how this has affected shareholders. Dunn emphasized that people should not read anything in to buying or selling of shares. Dunn admitted though, that he has never sold a single share of his personal shares. Glad to hear that they have 900 prototype clik! drives ready to go with a good percentage of them already in OEM hands. Surprisingly, it was an upbeat meeting and I came away more confident in James Sierk and his management team. They even gave everyone tee shirts. Best button - I've got yada, yada, yada. 5+++++++++++++++++++++++++++
Subject: News Item: Iomega PBS Group New Sponsor PBS' national sales force booked some new sponsorhsips during its third quarter which ended 3/31/98: Sponsor companies: << ...Third-quarter national sponsors include Fannie Mae (the Federal National Mortgage Corp.), Iomega, Kellogg Co., the Mobil Foundation, Sprint and Thompson-Minwax Co.... >> Seems to be in good company there. The new sponsorships totalled $6.25 million. Wonder what Iomega's share was. Some of the programs: << ... The sponsorships will support programs such as ``Africans in America,'' ``Nova,'' ``Rolling Stones: Bridges to Babylon 1998,'' ``Showdown in Berlin,'' ``Teletubbies'' and ``This Old House.'' ... >> Some of the stations: << ... The PBS sales group was formed by four of public television's leading program producers - KCET Los Angeles, WETA Washington, WGBH Boston and WNET New York ... >> 6+++++++++++++++++++++++++++
Subject: Re: Short Interest Up 37% << Company 04/21/98 03/19/98 % Chg Avg Dly Volume IOMEGA 20,382,053 14,851,538 37.2 4,898,250 >> There has been no better predictor of the short term performance of IOM than short interest. Short interest peaked in March 1996, August 1996, and April 1997. IOM's greatest uptrends began April 1996, September 1996, and May 1997. Short interest was at its lowest in Jan. 98 and June 96. IOM's greatest drops occured in Jan. 98 and June 96. I don't have concrete figures because I don't pay that much attention to short interest (or should I say didn't). If someone has some time to kill and the data maybe they would try and confirm my recollection. 20 MM (4 days) shares is not a lot for IOM...but another monthly gain in short interest like last month and things might get interesting. Who knows how many calls were shorted and puts bought too. The shorts are always late. David Rocker was on the conference call (and sounded baffled). Afaik, he has been short since the Summer of 1995. This stock has had two huge plummets and he's still on the wrong side of a 5-bagger. Maybe he's covered or hedged...I don't care. All I know is everytime the guy has been on TV since 1995 he's said he was short IOM (or said IOM was overvalued). 7+++++++++++++++++++++++++++
Subject: ANNUAL MEETING - PART 2 OF 3 PARTS Meeting Continued: I made the motion to adopt Proposal 2 the Employee Stock purchase program. All Proposals were adopted and all nominees were elected. President Jim Sierk: He had a very good speaking voice with a pleasant manner. He conducted a short slide show concerning IOM's products and short history. This was substantially different in style and content to KE's MTV hip type of presentation of the last two years, but it was adequate although not as exciting and inspiring. He stated: "Truly a company that listens." "Clik! will be available in a few months." Since 1994 Iom's compound growth rate is 200%! "MCI and Citizens will be producing Clik!s" "We expect to have SG&A 15% - 20%, R&D 3% - 5%, GM 24% - 32%" "We endeavor to return to profitability by end of the year." "We also will return to Cash Flow Positive by the end of the year." "...rapidily approaching 14 Million Zip drives." Reached 1.5 Million Jaz in February 1998. (no specific date). "We are integrating the marketing group, engineering, designs, product mgt and CUSTOMERS!" "We presently have a global infrastructure, e.g. Penang on line now 18 months, making Zip,Jaz,Ditto & Zip disks. Plenty of room to accomodate Clik!" "EAI (?) is a Phillipine contract partner making Zip drives." "70% of U.S. customers are located within a 500 mile radius of our Greensboro,NC Distribution Center." "We are lucky to get Scott Flaig from Dell, Jim Taylor from Gateway who is an expert in sales + marketing, and Dave Henry for worldwide marketing..." "I AM VERY CONFIDENT OF THIS TEAM!" I talked to him after the meeting and found him to be a very personable individual, quite calm, quiet type of confidence and remember Chairman's Dunn's remark "God sent us Jim sierk last fall!" That is quite an endorsement. Buried Lie was also with me when I was talking to him. I echo most of his remarks contained in his post. Some occurred after I went to talk to other officers or Division Heads. Ed Briscoe , President of Personal Storage Division (primarily the Zip drives) Excellent speaker, very very confident, made great impression ( reminds me of KE in many respects but much more personable) about age 30. He said: "Over 13 million Zip drives shipped." "Tens of millions of disks." (My impression 20 Mil +, maybe 30 million.) "According to ...(?) the market for all types of storage drives is 140 million drives from 1998 - 2001. Zip and Jaz will be part of this!..." "...Goal: Customer driven solution development... We have in place the marketing and price points!" "We are going BEYOND the PC. The paradigm is RECORD/PLAYBACK not just storage." "...convergence of varied products: Audio, video, VCR, camcorders, graphics, VOICE-E-MAIL, WebTV, PDA, color scanners, color printers, digital cameras..." "Media becomes central to the solution." ( I just saw on CNBC a Xerox commercial "Digital or paper no difference." which is apropo to what Briscoe said above re convergence of digital and other technologies!). "The AutoDetect technology contained in the Zip Plus, that is the ability to connect to SCSI or parallel ports, will be marketed also to other vendors as well. It also adds to customer value because the drive is easier to install, more flexible and portable and faster..." "Zip solutions will be less than $100 by end of year." "Recently began shipping our notebook Zip." "Universal recording media - Digital recording of converging different types of media..." When asked about whether the Zip parallel & SCSI drives would be phased out for the Zip Plus, he indicated that that are considering same but it only will be done at the right time. He had a very positive and confident manner and approach. I was very impressed by him. This is the end of Part 2. Part 3 will follow in a few hours re: Ted Forsyth,Jim Kelly, Scott Flaig, Jim Sierk, & Q&A., and Fools at Annual Meeting. _______________________________
End Report. Posts covered through 9:00pm ET 4/22/98
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