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Friday, December 12, 1997 Thursday, Iomega closed at $27, down $1 (-3.57%). TODAY'S RECAP: A range of issues circulated among Iomega message board posters, intermingled with posts predicting the stock's imminent doom and it's imminent rapid rise. Most posters, however, focused on topics such as advertised Iomega products, the LS-120, Asian markets and currencies, and comparing Iomega to hard drive manufacturers (and why that shouldn't be done). 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++ Ken2Marcus comments on the potential of Iomega's earnings and currency
devaluation.
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 9:01pm ET 12/9/97. And now, the Best of the Board...Started 9:01pm ET 12/10/97. 1+++++++++++++++++++++++++++
Subject: Devaluation Bonanza << I think there is a IOM earnings shortfall on it's way. Why?? Asia is 8% of sales >> If Asia sales drop 25%, that would be a 2% drop in sales for Iomega. The very large savings that Iomega is experiencing because of the currency devaluations in the countries that it manufactures drives, will overwhelm a small drop in sales. If Iomega was still making most drives in Roy, I would be worried. As it is, I am very happy that the currency in those drive producing countries like Malaysia has been devalued. Currency devaluation, plus the Dale Velk discovered tax effect, plus strong demand in Q4, 14 million zip capacity, no longer component shortages, and a huge backlog starting off Q4 all point to a very nice earnings report. I've lived in countries that have had devaluations. Makes it very cheap to buy stuff there; Iomega "buys" production in Malaysia. They are now buying it cheap. I can't understand the market, why waste my time. But I can understand Iomega, and I do. Not worried. 2+++++++++++++++++++++++++++
Subject: SuperDisk Road Show Seems that the Imation folks are "on the road" doing LS-120/SD/SuperDisk demos at various corporations. This is a *must read* from a Fool on our website who witnessed such a demo at his company yesterday. It's a very long post, so I'm only pasting a small piece of it, but the whole thing is quite entertaining and I recommend a quick visit to 'da web to read it all. Address at bottom. << Ah, now the demo. He went into Win95 and showed us how easy it was to drag his 5,222KB PowerPoint presentation to D: (SD). We timed this and it took 2min 45sec. Just for kicks, I have a 486/66DX 16mg RAM running Win95 with a PP Zip. I pulled a file from our server, over the network, that was 6,250 or so KB to my PP Zip. 2min 07sec. 20% LARGER file on a SLOWER machine over a ETWORK and STILL kicked StuperDisk hiney! During his file copy, the drive made this consistently loud, annoying noise. I asked if this was normal; he said it was. The noise was the laser-servo techno-babble blah blah. And I want this slow, noisy piece of crap in my home and office. Right. Okay, now he will show us how fast and easy it is to pull the PowerPoint presentation off the SD for an actual presentation he has. He double clicks the PPT from D: and we wait. And wait. And wait. After a few minutes, my technician indicates that his system is frozen. CTRL-ALT-DELETE to shut everything down one at a time. After this and rebooting, he tries again. Several minutes go by, then BSOD!!! (Blue Screen of Death). Tried once more. Same thing. I gotta have this drive!!! Oh, yeah!!! Oh, for the coup de grace. My technician asks for a spec sheet. The very last line on the last page, all by itself says "Do not format HD or DD diskettes in this drive" Another nail in the coffin for backward compatibility. By the way, why is this guy going through all this trouble. In fact, Imation reps are traveling around to large companies to demo these drives in a grass-roots effort to publicize their product. >> ...continued at www.fool.com
Subject:
LS-120 demo 3+++++++++++++++++++++++++++
Subject: History Well, history repeated itself once again. Cabot issues a buy recommendation. Stock proceeds to lose 20%. Cabot's stop losses are triggered, he sells. Hopefully, like the past, IOM(G) will continue its uptrend soon as Cabot (and his flock) sell. Another historical note... When IOM(G) last hit $33 in June of 1996, the actual forward PE was 63.5. When IOM was at $33 a few days ago its forward PE was 27 on the average analyst estimate. At the current ~$26.5 price, IOM has an estimated forward PE of 21.7. 4+++++++++++++++++++++++++++
Subject: Understanding Drive P/Es We know IOM is quite different from the other hard drive makers, but let's look at and compare P/Es anyway. From current S&P Comstock Quote (AOL Quote), trailing 12 month Actual earnings: SEG $1.16; WDC $3.17; IOM $0.73 From 12/8/97 First Call reports, Estimated '98 earnings: SEG $0.47; WDC $0.27; IOM $1.22 So, accordingly, we have the following situation: Trailing P/E Forward P/E ('98) SEG @ $20 17.2 42.6 WDC @ $16 5.1 59.3 IOM @ $27 37 22.1 We are at the end of '97 going into '98. Actually, SEG and WDC are already into their Fiscal year '98. For those who complain about IOM having a higher TRAILING P/E, do you say that because you look at WDC's extremely low trailing P/E of about 5 and think WDC is a better valued stock among drive makers without looking at WDC's forward P/E of 59? JUST looking at the trailing P/E and value a stock may be akin to someone who is driving a car and wants to know where s/he is going by ONLY looking into the Rear View mirror. Please don't try to do that or recommend others to do that. I can't emphasize this enough. Iomega is very different from other hard drive makers: briefly, Iomega products are proprietary and enjoy legal monopoly with good margin on their DISKS while they are selling like hot popular consumer goods. Removable media also give rise to the compatibility issue which works towards Iomega's advantage because of Zip drive's current installed base of close to over 11 million units absolutely dominating the field. On the other hand, regular hard drives are more like commodity merchandize that may be subjected to price pressure once in awhile. In addition, looking at the above table, we see that IOM has the lowest '98 P/E among the three. Not to mention that IOM also has a current annual EPS growth rate exceeding 80% and may be able to maintain the growth rate of 35 to 40% in the future. Other hard drive makers are currently suffering negative growth. Yet, and I am repeating, IOM has a modest '98 P/E of only 22, way lower than the other two (the other two hard drive makers' '98 P/Es being 43 and 59). Just a lay person's humble opinions. As "usaul", I may be wrong. 5+++++++++++++++++++++++++++
Subject: Re: Circuit City flyer This weeks flyer (inside the USA Today) Iomega products are very prominent inside. With the new "zip built-in" computers included with the logo;
Sony PCV-220 The 15th page (out of 16) is totally dedicated to IOM products
Zip Plus and the back page has a nice Zip ad next to the Sony & Compac BTW - no Imation, Syquest, or other competitors mentioned _______________________________ End Report. Posts covered through 9:00pm ET 12/11/97. _______________________________
WE
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