Two Questions for the Faithful

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By dallasevt
November 9, 2001

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Since you reached back and time to find my old posts, I thought it would be appropriate to bring some context to those posts. They are accurate as you posted them.


I do not agree with your conclusion that BA was either an idiot or a liar. After that interview, I had some email exchanges with BA to make sure that I had understood the projections properly. Although that was some time ago now, I recall Bruce telling me that one of those market projections was in error. As I recall it was the CR-RW figure of an $18 billion market. Bruce had intended to say the total market was $1.8 billion with Iomega targeting about 10%.

In his emails to me, he also clearly stated to me that all of these were market projections Iomega had done for them. In the case of Fotoshow (digital imaging) they did not have a market study available so Bruce used the best alternative he could find for that which was the digital photo imaging market.

Obviously, Iomega fell far short of all these targets (except possbibly CD-RW) so they now seem far fetched. At the time the estimates were done, the economy and market conditions were totally different and the estimates used were not out of line with what everyone was using at that time.

While there seems to be some strange desire to continue to beat the BA tenure to death here, it is not nearly as complicated or sinister as some have attempted to portray it.

Bruce was charged with trying to find new sources of revenue with as little capital expenditure as possible. He did the best he could with what was available. It was a difficult goal to start with made impossible by the economic downturn. For some reason folks want to look at Iomega as some sort of aberration from the norm. In fact the opposite is true. Iomega did what everything else did when the economy turned downward. Lets take EMC for example, EMC lost 90% of its stock price. That company is far superior to Iomega in every way and even today has $5 billion in cash with no debt. The simple truth is that Bruce got caught trying to expand while the economy was contracting just like everyone else did. Even the Federal Reserve was caught off guard by the swiftness of the contraction. For other examples see Lucent, SNDK, Cysco, Sun Systems, HP, Compaq, etc.

In addition to the above, Dunn, Heid, and the whole Iomega Board supported BA's plan all along the way. When it was obvious that the economy was not going to rebound, they did the sensible thing by cutting costs. There persists an assumption here that BA was opposed to cutting costs and that is why he left. That is an unproven assumption and I don't think it had anything to do with his leaving. I think it had to do with other differences of opinion.

As for the present, why do we keep arguing about all this? It makes no difference at all now. Bruce has gone on to other ventures and is doing well. He wishes Iomega and its shareholders well. My opinion that Bruce was not dishonest is not based on "belief" but rather on direct contact with him. He honestly and forthrightly answered every question I asked him except for questions he could not answer due to SEC regulations.

VJ has gone on to a new venture that is doing extremely well and doesn't even follow Iomega any more. Since there is no one now interested in buying Iomega, he hopes the current management improves the share price just like all the other shareholders.

Group 3 is not active now having made its case on the rss which passed. Now that the rss isssue is settled, Group 3 shareholders hope the current management and company does well as far as I know. So far, it does not appear that the rss has had much impact one or another. Perhaps is will be helpful in reducing the float going forward if Iomega can produce results.

As for myself, I sold 1/2 of my Iomega position and re allocated it to other investments which have done pretty well so far. I kept the other 1/2 in case Heid is able to improve the situation. I hope he does but he has a tough job in the current economic environment.

My biggest concern with current management was that they might have been thinking of taking the company private. I pursued that question with Iomega and recieved a very satisfactory response which I posted on this board. I remain convinced that there is no plan in place to take the company private and that they are doing the best they can.

Most of us no longer post because there is just nothing to talk about. Heid has laid out his plan. It will take awhile to see if he can make it work. I hope he is successful.

ps- I do know what happened to the AAA deal, the "800 lb. gorilla" and a number of other issues that many have speculated on. I cannot discuss them here, but I can say the speculations are totally in error. If those doing the speculating knew the actual facts, they would be very surprised.


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