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Tuesday, July 15, 1997 Monday, Iomega closed at $21 3/4, up $1 1/8 (+5.45%). TODAY'S RECAP: It would not be hard to guess that Iomega will be making its 2Q earnings annoucement this week, as posters in the IOM board focused much of their energy on looking at potential sales, product development and more. Most posts dealt in some form or another with earnings, but a few posters commented on other Iomega news, too. The LS-120 drive made some small appearance on the board as did a few news releases/announcements from Iomega and a few regarding Iomega products. We even have one report from a college orientation program and the presence of Iomega on campus! 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++ TMF Keeler comments on why some analysts don't follow Iomega.
Recap written by TMF Weekly; posts
compiled by TMF Weekly. As always, the following posts represent the thoughts of our contributors, not those of The Motley Fool. And now, the Best of the Board...Started 8:31pm ET 7/13/97.
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Subj: Re: whispers NSACORAF (who owes me a drink now) writes: << What are the reasons Smith Barney and others are not covering IOM? Other than wanting to have an IOM secondary offering before they cover it, what else? Please state what are those reasons. >> It is probably the same reasons so few mutual funds are long the stock. Mutual funds do their own analysis and very few have bought IOM. As to what these reasons could be, pick any or all of the following: 1. Stock is based on internet chatter 2. Can't tell if the stock is going to go up and stay there 3. Most analysts I talk to think they will miss estimates 4. Too much competition coming 5. Who needs a Zip drive? My opinion is that its #1 and #2. How many full service brokers received phone calls in the Fall of 1995 from clients asking if they should buy IOMG at $7? How many told those clients to ignore it, buy something else, or maybe even short it. That it was just an internet chat stock. How can you then turn around 300% later and start coverage with a buy? I also think analysts like to see the stock rise when they put out a buy. Its embarassing to have your buy on CNBC then have the stock plummet. Bad for business too. IOM has a beta near 3. Too volatile to predict. Further, earnings are coming out and many think they will miss. I expect Iomega will change its Jaz reporting strategy someday. I doubt that new coverage will follow any time soon after that. In the meantime, if Iomega does not change its policy on forward looking statements and commenting on published estimates (which is the only thing they do different from US Robotics) and they pick up a first tier analyst, I will pretty much win this argument ;-) I will also win if Iomega changes their policy and still doesn't pick up a 1st tier analyst! The only way the "disclosure cabal" ;-) can prove their point is if Iomega doesn't change their policy and never gets new top tier coverage. By the time we realize that, no one will care ;-) LOL Patrick Keeler 2+++++++++++++++++++++++++++
Subj: More good press My local Sunday newspaper contains a monthly magazine supplement called "Connect Time". This is a national publication published by Universal Press Syndicate. It contains various articles about computers and the internet. In an article called "Crash insurance: Backups save files", the article lists two possible backup products by name. The Ditto tape drive and the Zip. Glowing recommendations are given for both products. I assume this same publication will be in many other Sunday newspapers around the country. More free advertising for Iomega products. The article sure gives the impression that Iomega products rule the backup world. 3+++++++++++++++++++++++++++
Subj: New CPQ at Circuit City Forgot the exact model # but saw a brand new CPQ system on display( upfront and proud ) at a Circuit City in Monterey Bay,CA yesterday. What I do remember is that it had a 266mmx chip and they had a VCR hooked up to it. The picture and sound was very impressive. Other features I noticed were some great sounding JBL speakers and oh yeah an Internal Zip Drive. The system sold for 2,699 and right next to it was a CPQ system with an internal zip on sale for 1,699, I suppose they were trying to clear the deck for the new and improved system. Once again like so many on this board have already found first hand I asked the salesperson how the CPQ systems with the zip drives were selling and got the same answer. " Best selling machine in the store ". For what it's worth! 4+++++++++++++++++++++++++++
Subj: n.hand Spec's from Iomega Web Site Iomega has a new page that has detailed specifications for the n.hand drive. The link is: Iomega -- n-hand tech specs Or: http://www.iomega.com/product/n-hand/tech.html The nominal size of the drive is 3" X 2" X .4" The cart is nominally 2" square The average transfer speed is 760K per second The drive weighs less than 2 ounces The carts weigh around 1/3 of an ounce There is also a picture of the n.hand cart on the page Based on the specs it appears that they can cram all of the electronics into a space roughly 1" X2" X .4". or a volume of .8 square inches. I would think that there really shouldn't be much difference in the electronics between the n.hand and the Zip drive (the function set should be close to identical) so this raises the possibility that IOM has achieved a more integrated/higher density solution to the electronics component of the drive. It will be interesting to see if there is any discussion of this in the forthcoming conference call. Also HMT is scheduled to report on Tuesday the 15th according to SI so perhaps there will be some information forthcoming about Jaz carts on that date. 5+++++++++++++++++++++++++++
Subj: Whisper = symantics Whisper number is another name for the streets perception of what a stock should do in reaction to earnings at a certain value. In retrospect, after earnings, it is a description of what happened to a stock price in relation to earnings and consensus estimates. Look at CPQ. After earnings but before open the WSJ reported that a trader said that CPQ did not make the whisper number and would go down. The price rose then fell then ended up going up. If the momentum players all decided to jump after earnings, their whisper number might rule. If more value players jump on after earnings exceeding the momentum players, their whisper number might rule. In the end it is what willing buyers and sellers price the stock after hearing what the earnings are. One could conclude that the whisper number is higher than consensus if the stock price is rising into earnings. If it falls on reporting, It rose too high for the reported earnings. Lets face it, the "whisper number" has nothing to do with earnings. It is about short term stock price and the reaction to earnings. And that my friends is unpredictable IMHO (and little reason for discussion here unless you are a trader). If you are a trader I hope that IOM makes your whisper number. If you are a long term investor, I hope the earnings meets your long term growth objectives. 6+++++++++++++++++++++++++++
Subj: Thoughts on Competition Much has been made of the LS-120 no longer be offered as standard in certain Compaq Deskpro computers. But what does this really mean for iomega as far as numbers are concerned? While it is true that the sale of every LS-120 means one less Zip sale (and for Shark and any other competing drive), and one would therefore expect the opposite to be true, the more fundamental question lurks out there: Just how many people really feel the need to buy a super-floppy with their new computer? If the answer is "Almost everyone will", then we should be seeing a flood of new SKUs with Zip as standard, in excess of what Bill Polk has been keeping tabs on. Are computer buyers really going to feel they need that drive? Competition takes many forms, and people should never forget that part of that competition includes the many upgrades, bells and whistles that come with buying a new computer. For that same extra 100 bucks, you can get all manner of stuff...including more RAM, bigger/better monitors, different printers, scanning gizmos, software packages, etc. This is very real competition for the consumer dollar at the time the computer is sold. So one thing I am looking/hoping for in the coming conference call, above all else...is increased (dramatically) OEM SKU penetration. Without that, the LS-120 being left out of standard configurations is of very little importance. The vastly more important subject is consumer acceptance of the need for a super-floppy of some kind. Eric Turkewitz 7+++++++++++++++++++++++++++
Subj: File Transfer Test Results The August issue of PC Computing magazine includes reviews on hard drives and removables. Zip is the winner in the "Top File-transfer Device" category (5 star rating - Excellent). Next is the Nomai 540 and EZ 230 with 4 stars - Good. 'Wiping up the rear, is the Shark 250, the Olympus SYS.230 and the OR Technology a:drive all with 3 stars - Acceptable. In the performance test of transferring files, the a:drive is the baseline. The results indicate that the Nomai is 947% faster than the a:drive; the EZ 230 is 584% faster than the a: drive; the Olympus SYS.230 is 514% faster than the a:drive; the Zip is 457% faster than the a:drive and the Shark 250 is 385% faster than the a:drive. 8+++++++++++++++++++++++++++
Subj: IOM at JMU, the Shark, and the laptop Zip Thought I'd get this in before earnings come out and it gets lost in the shuffle... As an IOM shareholder, I was pleased by the amount of Iomega products on campus when I recently attended Freshman Orientation at James Madison University (Harrisonburg, VA). The first encounter was when they were taking my picture for my photo ID. They were using a digital camera and guess where all the digital pictures for the 3-4,000 incoming freshman were going? That's right, a Jaz drive. Later I was browsing around the bookstore and came upon the computer section. Iomega products basically have an entire cabinet about 4' wide by 8' high to itself for Zip, Jaz and Ditto drives, as well as Zip Zoom, etc. There could have been maybe 30 PP Zips, 15 SCSI's, and 10 Jaz drives. There was also a big display with a lot of disks for $14.95 each. I found this interesting because usually the least expensive that I see them anywhere else is $17. Does anyone have any input on whether that is an unusually low price? Anyway, the attendant saw me browsing and came over to ask if she could help. I said I was just looking and as she was about to leave she grabbed a Zip disk and said "Get Zip. They're awesome." When I asked her what she meant, she said that a Zip drive was one of the most important things you could buy. Especially essential for keeping space on your hard drive. She saw it as a remedy against computer crashes. Said her dad's computer crashed because it's too full and he needs a Zip but hers NEVER crashes because she has one. She and her boyfriend share one and she made it very clear that if they split up, SHE GETS THE ZIP! Uses for it include backup, storing data, "and even running applications!" I asked her about a laptop Zip, and she said you just connect it to your laptop and it works great. She knew NOTHING about any competitors. She said there are none right now, and there is supposed to be one by the end of the year but they have not yet made it to market. My last question was whether I, as an incoming freshman ISAT (Integrated Science and Technology) major, should be getting one of these for my first semester. Her response- "You need one." This wasn't exaggeration- she showed me a list of minimum system requirements for ISAT majors if they have a computer and there it was, "Zip or Jaz removable disk drive". This strikes me as something completely new as both a student and a shareholder. I hadn't heard of any colleges REQUIRING the purchase of a Zip before then. The rest of the list wasn't exactly top of the line anyway, so it was even more interesting that they regard Zip as a higher priority than a better processor or bigger hard drive. Anyway, those were my Iomega impressions at James Madison Orientation. On a seperate note, I saw an ad for the Avatar Shark the other day in a catalog. It is incredibly thin. My question- how can Avatar have a drive with 2.5x the capacity and still be so much smaller than Zip, and why can't IOM get Zip that small? Finally, my proposal for the "extra feature" on the laptop Zip. Since they keep talking about how they have a 200mb Zip working, and space is at premium for laptop users, why not make a 200mb laptop Zip? I don't think this would fragment the market too much because laptop and desktop are already two seperate markets. This would also give them the capacity advantage over most everybody, as well as save space by using less disks. So there are my thoughts. I would appreciate any comments, positive or negative. ps- looks like I'm getting a zip for this fall. pps- Tiger Direct is selling IDE insider Zips for $119. Is this new? 9+++++++++++++++++++++++++++
Subj: Re: Re:Competion, what competion? << A bigger worry should be a antitrust suit than competion at this point. >> Why should this be a concern? Iomega has patented various components of the Zip drive. A patent is a legal monopoly. That means that they're allowed to be the only one who sells it. Furthermore, there are all kinds of other removable drives out there. Consumers have plenty of choices if they don't want to go with an Iomega product. It's not Iomega's fault that none of the others are the "emerging standard." And if there's a way to legally build a zip-compatible disk that does not violate any of Iomega's patents, any engineering team out there is welcome to build it. I doubt it's possible, though. I are no lawyer, but I've seen the antitrust word mentioned on this board a couple of times, and it makes no sense to me. ___________________________ End Report. Posts covered through 9:30pm ET 7/14/97. _______________________________
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