Iomega Hires Prez
...and insider buying in IOMville
by Jeff Fischer (TMFJeff@aol.com)
ALEXANDRIA, VA (Oct. 22, 1998) -- Iomega began the search for a new CEO in March, and today the company announced that it found its replacement. Mr. Jodie Glore will take over as the new President and CEO of Iomega (NYSE: IOM), replacing Mr. Kim Edwards. (I can't help but notice one similarity between the two names. Perhaps that bodes well for the company.)
Kim Edwards stepped to the plate nearly four years ago and knocked the cover off the ball for Iomega, making millions for himself before going freelance again. A month after leaving the company in March, he sold $6 million worth of Iomega stock, a fraction of his total winnings. Interestingly, there hasn't been any insider selling at Iomega since then. In fact, the opposite is true. As this list shows, insiders have been buying Iomega on the open market since April at prices ranging from $9 to $3.56.
As the saying goes, insiders sell stock for many reasons, many of which reflect little on the business; but they buy stock on the open market for only one reason: they feel the company is underpriced. Of course, even insiders aren't always right, but they have a better sense than most people of what's happening at the firm. Iomega recently restated that it should be profitable in the fourth quarter, and cost-cutting has been even more successful than hoped for.
Returning to Jodie Glore. The new CEO hails from Rockwell Automation, where he served as president, chief operating officer, and as a corporate senior vice president for parent company Rockwell International (NYSE: ROK). Glore replaces acting president and CEO James Sierk, who will remain on the board of directors. Sierk competently led the company over the past six months in cost-cutting and in implementing a new Virtual Enterprise Model for the business, a la Dell Computer and Cisco Systems. The Motley Fool interviewed Mr. Sierk on Tuesday, asking him many of the questions that you posted on the Iomega message board. The interview is available here.
Iomega is expected earn $0.07 per share next quarter and $0.31 per share in 1999, putting the stock at 13 times the 1999 earnings guess. Presumably, Iomega will have net income from Zip, Jaz, other standby products, and finally the new Clik! product next year, too.
Next in the news, Lucent Technologies (NYSE: LU) announced earnings that topped estimates by a few copper pieces. Excluding charges, the company earned $0.41 per share against an estimate of $0.39. Net income totaled $388 million on a 16% gain in revenue to $8.03 billion. (Revenue rose 23% on continuing operations.) Lucent had a strong quarter in all product lines, and experienced a surprising 41% increase in sales outside the U.S. as it gained market share.
The stock is still recovering from its recent whiplash. In the heat of summer, on July 22, Lucent rose to $105 per share. On August 30, it traded at $70. On October 8, it hit $53 -- nearly a 50% decline from its recent price. During this volatility (amazing for a $100 billion company), the stock has traded hundreds of millions of dollars worth of volume daily. Who is behind the giant trades? Certainly not individual Fools.
Now at $78, Lucent is priced at 46 times 1998 and 38 times 1999 earning estimates, with expected growth of 22% annually.
America Online (NYSE: AOL) and AT&T (NYSE: T) both rose on word that the companies are separately in talks with Time Warner (NYSE: TWX) in hopes to tap into its cable customers. AT&T could use the high-speed lines to access local-calling telephone markets, and AOL would like to provide the cable subscribers with, well... AOL and the Internet. AOL held its annual conference yesterday and discussed its potential to provide one service (it's current online service) over several platforms, including cable. AOL is reportedly in talks with all broadband high-speed access providers in the country.
The company also shared that it crossed the one million member mark in Europe profitably (it took 8 million members in the U.S. to become profitable), and that it expects Europe subscriber growth to exceed that of U.S. growth over the next five years -- which isn't surprising. The company has over 15 million members including CompuServe subscribers. The projected share price for AOL's stock in 1999 is $150. That's based on estimated growth rates of its various revenue streams, details of which have been frequently outlined in this column. AOL will announce earnings during the final week of October, and $0.23 per share is expected.
Exxon (NYSE: XON) is falling as oil prices strike a twelve-year low. The company was able to report giant cash flow and earnings yesterday anyway, though results pale when compared to last year due to the external pricing factors. This Foolish Four giant is widely one of the most respected companies in the U.S.
What will Amazon.com (Nasdaq: AMZN) do next? One conversation on our Amazon message board has focused on domain names that the company supposedly registered, though this information is only rumor right now. Supposedly the company has registered the URL "www.browse.com," and it might own another domain name having to do with television, too. Amazon sells and provides information on books, music, videos, and movies, so it makes sense that television might be next. And if Amazon does own www.browse.com, some Fools are hypothesizing that it would use the address as an Internet portal of some kind. Dunno. Whatever Amazon does, let's hope that it continues to surprise, which is what Rule Breakers do.
As a sidenote, reportedly Bertlesmann was interested in teaming with Amazon before it signed the deal with BarnesandNoble.com, but Amazon's price was too high. Amazon reports third quarter results on October 28.
To close, I'd like to share a book review of the new Motley Fool Investment Tax Guide. This handy book might actually make a fun gift for someone you know who likes to invest, or who needs to invest in the future. In fact, you might need to send the book to someone following the e-mail that you might have had the Motley Fool send yesterday to any non-Foolish friends or family you know. The book is $15 from FoolMart and all proceeds go to feed us.
DELIVER - Get Fool Portfolio Nightly Reports
delivered straight to your e-mailbox every evening!
Today's FoolWatch: all the latest in Fooldom.
Day Month Year History Annualized FOOL +2.97% 2.95% 46.82% 392.74% 46.01% S&P: +0.80% 6.04% 11.13% 135.27% 22.51% NASDAQ: +1.67% 0.52% 8.42% 136.42% 22.66% Rec'd # Security In At Now Change 8/5/94 710 AmOnline 3.64 113.50 3021.19% 9/9/97 580 Amazon.com 19.11 114.69 500.12% 10/1/96 84 LucentTech 23.81 78.38 229.19% 5/17/95 1960 Iomega Cor 1.28 4.13 222.16% 8/12/96 130 AT&T 39.58 64.38 62.65% 4/30/97 -1170*Trump* 8.47 4.75 43.91% 2/20/98 200 Exxon 64.09 71.75 11.95% 2/20/98 215 DuPont 59.83 61.38 2.58% 2/20/98 270 Int'l Pape 47.69 47.19 -1.06% 8/24/95 130 KLA-Tencor 44.71 32.56 -27.17% 8/13/96 250 3Com Corp. 46.86 33.19 -29.18% 7/2/98 235 Starbucks 55.91 38.50 -31.14% 1/8/98 425 3Dfx 25.67 10.50 -59.09% 6/26/97 325 Innovex 27.71 10.63 -61.66% Rec'd # Security In At Value Change 8/5/94 710 AmOnline 2581.87 80585.00 $78003.13 9/9/97 580 Amazon.com 11084.24 66518.75 $55434.51 5/17/95 1960 Iomega Cor 2509.60 8085.00 $5575.40 10/1/96 84 LucentTech 1999.88 6583.50 $4583.62 4/30/97 -1170*Trump* -9908.50 -5557.50 $4351.00 8/12/96 130 AT&T 5145.11 8368.75 $3223.64 2/20/98 200 Exxon 12818.00 14350.00 $1532.00 2/20/98 215 DuPont 12864.25 13195.63 $331.38 2/20/98 270 Int'l Pape 12876.75 12740.63 -$136.13 8/24/95 130 KLA-Tencor 5812.49 4233.13 -$1579.37 8/13/96 250 3Com Corp. 11715.99 8296.88 -$3419.12 7/2/98 235 Starbucks 13138.63 9047.50 -$4091.13 6/26/97 325 Innovex 9005.62 3453.13 -$5552.50 1/8/98 425 3Dfx 10908.63 4462.50 -$6446.13 CASH $12005.75 TOTAL $246368.63