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Friday, November 15, 1996 Iomega was down $3/8 Thursday, closing at $23 (-1.60%). TODAY'S RECAP: Again, with no news in the forecast until the storm front moves through with the Comdex trade show on Monday, the climate in The Motley Fool's Iomega Folder remained subdued. Even the usual trash talk that typically dampens the atmosphere has abated. One thread that did generate some interest was a discussion of how Iomega is addressing the data storage needs of the corporate world. Has Iomega completely remade itself into a strictly consumer-driven company? Or is there still a little bit of the old Bernoulli-oriented, buttoned-down mindset still lurking there? That is a matter open to a number of interpretations, and we have collected the best of those for you below. 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++Bigfootmm offers a second opinion on a Portland channel check. And now, the Best of the Board...Started 3 am ET 11/14/96.
1++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: store check Date: 96-11-14 07:46:21 EST From: Bigfootmm
>>>I was in a Computer City in Portland last weekend and asked a salesman how sales were for PC's with internal Zips. He said they carry the one HP and it wasn't too popular because internals defeated the purpose many have for owning a Zip drive (ie. moving from one PC to another). Is this data point meaningful or is most of the world simply looking for a built in medium that can store a heck of a lot more than 1.44 MBytes.
He also noted his surprise that Iomega had not purchased more end caps. They had about 3 to 4 feet of shelf space without any other presence. Does this local manager need a store tour from the Computer City Brass?<<<
This store is a bit confusing. In the Mac section you would have seen over 40 facings of scuzzi Zips (along with three of Syquest products). Also, in front of the store, behind the counter, there you would have seen lots of Iomega disks, including Jaz disks in good supply.
I spoke with a floor person stocking product and he told me that Zips sell very well and that the Syquest products do not. Furthermore, he said that the store was having a difficult time getting disks from Syquest. The disks do sell when they can get them, but he said that once they sell out, "I guarantee you it will be a while before we get any more."
In one section of the store there is an impressive amount of shelf space dedicated to the old EZ product. The one in the funky blue box. Selling for $129, but the boxes look dusty. Next to them are Zips-a-moving.
I might add that Circuit City in Portland offered in its circular last weekend two computers with Zips and one without. The withs were HP and PB, the without was Compac.
Bigfoot 2++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:resistance Date: 96-11-14 08:51:03 EST From: MF DTurkey
<<<If we make some demand that rumors not be posted here will that make them disappear from the rest of the world? Why would we want to be excluded from hearing what the Wall Street pros are hearing?>>>
Bigfootmm:
What if it's a rumor that the Wall Street pro's don't have yet? What if it's a rumor that hasn't become public knowledge? Should this forum be the way rumors become public? How do we determine what's already "out there" and what isn't?
If I posted today that I heard Iomega has a brand new Sproket ready to come out that's going to blow away those old Sprokets from Spacely, how would you know if this is something the Wall Street pro's already know, or if it's something that, until now, the company has managed to keep quiet? And if it's something that hasn't become public, as a stockholder do you want me to post it here so you can read about it, at the cost of blowing the company's suprise?
As Foolish investors, of course we want all the information we can get our hands on. But as stockholders we don't, at the same time, want to help spread rumors the company might not want spread. How do we draw the line?
Dan 3++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Back Cover Dec Comp Shopper Date: 96-11-14 14:01:54 EST From: DaleVelk
The back cover of the December 96 Computer Shopper is an advertisement for a $1997 133 Pentium system complete with internal Zip and monitor by USA Flex. I think the advertisement may bode well for IOM, first it demonstrates that an internal zip can be included in an extremely well equipped system at a very attractive price point (133 Pentium, 16MB, 15" Panasonic Monitor, 2MB video card, 8X CD, 1.7gig HD, 28k modem, wavetable, joystick, speaker, software, etc). Second, the internal ZIP is the white-faced model, which I believe is the IDE version, this would indicate that IOM is now able to supply the IDE's to the lower-tier box makers. Third, I have often found that "newer" peripherals, eg, 3 1/2" IDE Zip Insider, often show up in the advertisements of the smaller vendors 1 or 2 issues ahead of the larger vendors, due to quicker response times. So perhaps we will be hearing more about OEM's next week at Comdex.
DaleVelk@aol.com 4++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Cynicalguy Date: 96-11-14 14:12:36 EST From: EBLUESTONE
CynicalGuy
Thanks for the report on reason(s) for Hills sale of Iomega stock. There is no reason for me to comment any more on this issue (at least not in any direct kind of way).
However, from their announcement of the N-Hand product ,and as a long term share holder, I have these concerns and comments to make:
1. The product sounds great: an affordable way to take digital pictures with a removable storage device that would allow me to put pictures into my computer and then pass them around to my friends and relatives via email and the internet, without having to get the film developed and scanned into the computer. It is something that I couldnt pass up. The discussions on the use of N-hand in GPS applications are also terrific.
2. The problem that I have is my perception that Iomega wants to generate revenue that is easy to pick up. Picking off the low fruit, so to speak. They are more comfortable in the consumer products arena and they have no stomach for the much higher margins in the far more difficult technology and corporate environment.
3. My fear is that there is no one in upper management that really understands the corporate IS environment both from the operational as well as the marketing level. I dont see an Iomega presence in the corporate world. There is no evidence that Iomega management understands the corporate IS environment and, in particular, what they have to do to back up their systems. From a review of Iomega managements past experience, there is no evidence that any of the top management has any first hand understanding of how the corporate world backs up their mainframe computers. There is no evidence as to any first hand information as to how the corporate world backs up their LAN systems. (Please dont talk to me about tape backup. If you do, it will only show you how little you really understand about the corporate world - even if you are employee in a Fortune 500 company and have masters degree in computer science). Price points for the corporate world is completely different from the consumer world. Speed, convenience, and reliability is almost everything. My fear is that Iomega management understand only the consumer world and nothing about the Corporate IS world. (BTW - the old Iomega did understand a segment of that world). But, now we need a more complete understanding of both the consumer and the corporate IS world.
My recommendation to Iomega management is to develop a strategy that does not rely solely on picking up revenue from low fruit. Somewhere along the line, they will have to stop counting their personal wealth (I couldnt resist) and develop the discipline and the hard work that is needed to go after the more difficult and higher margins in the corporate world. The market is out there, but it requires a lot of hard work to get it.
I am long term investor, and I hope my superficial observations about Iomega management is wrong.
FWIW
Mary Cluney 5++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Corporate Markets Date: 96-11-14 15:04:54 EST From: Deanster2U
EBLUESTONE,
I think you have a fundamental misunderstanding of IOM's direction. Before the arrival of Kim Edward's IO was a corporate centered company. The results were very similar to the current situation at Syquest. It has been a decisive management choice that they pursue the consumer market. That decision has turned IO into a billion dollar a year company. With the future development of n-hand it's clear IO plans to remain a consumer oriented company. I don't think you can argue with their success to this point. 6++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Corporate Markets Date: 96-11-14 15:49:29 EST From: EBLUESTONE
Deanster2U,
<<With the future development of n-hand it's clear IO plans to remain a consumer oriented company<<
You could be right , but this seems to be in conflict with KE's stated objectives:
<<The real goal is to make us a leader in rewritable removable storage. We will make the Zip drive the floppy for the multimedia age."<<
If you are going to be the leader in rewritable removable storage market, you can't abandon the corporate market(it would seem).
<<It has been a decisive management choice that they pursue the consumer market. That decision has turned IO into a billion dollar a year company. <<
That is true, but that didn't say anything about abandoning the corporate market.
<< With the future development of n-hand it's clear IO plans to remain a consumer oriented company.<<
You speak with a lot of authority and finality. Are you speaking for the management, or are you humbly expressing your own opinion?
<< I don't think you can argue with their success to this point.<<
We are not discussing there success to this point, although until they finish the job of becoming the de facto leader in the rewritable removable storage market, the final results are not known at this point. We are speculating as to what the future holds. We are speculating as to what their strategy is going forward and what kinds of people they will need to accomplish that.
Regards,
Mary 7++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Corporate market Date: 96-11-14 15:54:24 EST From: JJKozub
EBLUESTONE makes what seems and fair and logical argument that IOM may err by not directing enough attention to the corporate market. It reminds me of similar arguments (well justified with hindsight) made about Apple. He says:
<<3. My fear is that there is no one in upper management that really understands the corporate IS environment both from the operational as well as the marketing level. I dont see an Iomega presence in the corporate world. There is no evidence that Iomega management understands the corporate IS environment and, in particular, what they have to do to back up their systems. From a review of Iomega managements past experience, there is no evidence that any of the top management has any first hand understanding of how the corporate world backs up their mainframe computers. There is no evidence as to any first hand information as to how the corporate world backs up their LAN systems. (Please dont talk to me about tape backup. If you do, it will only show you how little you really understand about the corporate world - even if you are employee in a Fortune 500 company and have masters degree in computer science). Price points for the corporate world is completely different from the consumer world. Speed, convenience, and reliability is almost everything. My fear is that Iomega management understand only the consumer world and nothing about the Corporate IS world. (BTW - the old Iomega did understand a segment of that world). But, now we need a more complete understanding of both the consumer and the corporate IS world.
My recommendation to Iomega management is to develop a strategy that does not rely solely on picking up revenue from low fruit. Somewhere along the line, they will have to stop counting their personal wealth (I couldnt resist) and develop the discipline and the hard work that is needed to go after the more difficult and higher margins in the corporate world. The market is out there, but it requires a lot of hard work to get it. >>
In principle I would find the plausible, but in the absence of evidence I can't buy it. Mark, do you have evidence that sales to firms and corporations are weak, i.e. by virtue of data breaking down retail and commercial markets. I don't know of such data and I don't think that it's available. Corporations buy from wholesale suppliers, not directly from Iomega. You must know something that we don't, however, by expressing such strong feelings. The only argument supporting your allegation is that from your << review of Iomega managements past experience, there is no evidence that any of the top management has any first hand understanding of how the corporate world backs up their mainframe computers>>. You've got to share your knowledge with us since there are other effective ways of backing up mainframes, some of which may be more cost-effective than Iomega's because of large volume and type of back-up storage (i.e. archive). In other words, your << superficial observations about Iomega management>> may be right or, as you say, may be wrong. We don't want IOM to become the AAPL of our eye, do we? 8++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Corporate market Date: 96-11-14 16:28:47 EST From: EBLUESTONE
<<you've got to share your knowledge with us since there are other effective ways of backing up mainframes, some of which may be more cost-effective than Iomega's because of large volume and type of back-up storage (i.e. archive).<<
I should be more careful in how I express myself. I didn't mean to say that Iomega should go after the mainframe backup market. I meant to allude to using that model, where they very quickly backup huge databases, each night, by copying to large scale removable disk drives (and use that model) for the LAN backup process market. I didn't mean to outline a whole marketing strategy for IOM to go into the corporate market place.
<<Mark (you can call me Mary), do you have evidence that sales to firms and corporations are weak, i.e. by virtue of data breaking down retail and commercial markets. I don't know of such data and I don't think that it's available<<
I don't have any tangible evidence either that Iomega is weak in the corporate market. I only surmise that from anecdotal and personal experience.
Mary Cluney 9++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Shorting Date: 96-11-14 16:43:35 EST From: Arentz65
<<From: HartCrane
I agree with Cynical Guy-- I think there's been a new load of shorting since the move to the NYSE and I agree with his previous post about the ignorance of brokers as far as Iomega's technical achievements and technical issues in general. Many still don't understand the product or company and I'm not surprised that the n-hand hasn't made a difference in the stock-- these guys don't understand the possible uses and market.>>
I have to chime in here also.
I have also talked with brokers about iomega. iomega is seen as a company that hypes itself. Which to me, and I'm assuming most long term bulls here, Is of course ludicrous. iomega has NEVER hyped itself. io has always had a tight lipped conservative management. When io announces a product it is normally close to going into beta testing(i.e. up and working).
So how did io get this reputation? Everyone i have talked to gives the same reason. Either this board in particular or 'internet chatter' in general. Somehow the hype that we have seen come out over these internet boards has been transferred to iomega the company. They are seen by many as one and the same. So iomega is a hypster company which will eventually fall.
Human nature is a funny thing. Two totally separate entities are confused with each other. Simply because one talks about the other.
Then business decisions are based on that confusion? That is just plain weird. When you talk to some shorts though, it makes perfect sense to them.
ea 10++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Shorting Date: 96-11-14 17:22:06 EST From: RobertsonG
The street is starting to catch on how companies are now managing the earnings game. Where they beat there stock up on themselves mid-quarter, tipping off a few close friends/analysts so they drop earnings expectations, then come in over the number so as to beat the estimates. This worked wonders last quarter last year, did ok first and second quarter, but by third quarter it became a distinct negative. This is what "hyping" their stock means. IOM could be construed as to bein the camp of the earnings management game, as they would have grossly missed the original earnings estimates made for third quarter and only beat them after they were lowered from low teens to under 9 cents. Remember? Wall St is onto this.
Also, the nHand, vaporware, could be considered hyping.
In many cases IOM doesnt have to hype - they let this board do it for them. And this small group of crazy amateur fools is being very very closed watched and has great suasion. Likely this board is the single most important IR point of reference for IOM. 11++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Corporate market Date: 96-11-15 00:42:05 EST From: EBLUESTONE
From: JJKozub
<<EBLUESTONE. Mary, when you say <<I only surmise that from anecdotal and personal experience>> can you at elaborate on that: i.e., at least one anecdote and a personal experience or two? Did you mean workstations rather than mainframes? Do they use different archival methods and hardware? Is portability important in the corporate world?<<
Okay, Okay, Ill talk. I will name names. Just move that damn spotlight out of my eyes.
I just think that if you are in the Disk Storage business, if you have a high level management position, to be able to provide a vision for your company, you would have to know something about the high end storage systems that support servers across enterprises. These servers may consists of main frames, mid range computers, and open systems. Even though you only compete with Seagate, Quantum, Western Digital, and Syquest for now , you should know something about high-end online rotating magnetic disk devices, including products that utilize fault-tolerant array technology (RAID), and solid-state direct access storage devices (DASD) that are manufactured by IBM, Hitachi Data Systems, Storage Technology, Amdahl Corp, and EMC. These systems now address storage capacities of 20 GB or more. There are databases (Oracle) out there that require TBs of storage. The reason that you have to know about this environment is because not too long ago (maybe 10 years ) this environment was addressing storage capacities, file transfers, and backups in the amounts that you are addressing now.
If you are going to stay in this business, it will not be too long before you have to address these issues yourself. I just dont think that the Tim Hills can really address this end of the business, but I do think there are people at Seagate, Quantum, and WDC that can.
As for anecdotal evidence that Iomega is not a major presence in the corporate world, Im sure you have read posts in these folders that have alluded to this. If not, I know of posts in the Silicon Investor that address this very subject. The following is one example, I have read many others.
<<To: Patrick Keeler (10983 ) From: Ken Pomaranski Nov 5 1996 12:27AM EST Reply #10987 of 11696
TO ALL,
I would like to hear some REAL corporate stories out there, not just lists of possible uses. Who out there sees a large number of ZIPS of JAZ at their place of work. What problems do they solve that can't be solved by other devices? How prevalent are they out there? Home use will slacken, Corporations have the cash!<<<
Okay, can I go now.
Thank you, Mary Cluney 12++++++++++++++++++++++++++++++++++++++++++++++++++++++ Subj: Re:Corporate market Date: 96-11-15 01:17:44 EST From: Gar Shon
I work as a consultant and a Database Administrator (DBA) as well as a designer of large relational database systems. The storage needs for such systems as has been described is as far away from Iomega's market as playing schoolyard basketball is to playing in the NBA. I worked for Fortune 50 companies where spending 200 or 300 hundred thousand for an extra backup and storage repository was a drop in the bucket for our budget. Iomega is not and cannot be all things to all segments of the market. As far as corporate penetration in the last few companies I saw Zips being used to backup information off the network all the time. These are companies such as Westinghouse, Pepsi-Cola, Martin-Marietta. Furthermore the Tech Support groups are enamored with Iomega Zip drives. I also speak to several friends friends on a regular basis who are consultants and each place they see workers backing up their work using Zips. Finally Sam's Club is not selling external Jaz drives for 459.99....lowest I have seen.
End Report. Posts covered through 3 am ET 11/15/96. _______________________________
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