Ken, perhaps the tone of my post came across more negative than I intended. I was just happy to read someone else see Iomega managers less than all benevolent. Of course management wants all shareholders to do well. They just prefer some to do better than others. And yes, they do have options for quite a bit of stock, but I wager their cost basis is quite a bit lower than most Iomegans. They also have a company to run and know it's not a good idea to alienate the bankers and the brokers. The reasons given for the lower than market price of the secondary was that they wanted to stabilize the investor base. In effect, they are saying the small investor is unreliable. One only needs to read the bullish posts in this conference to know that reason is BS. It just confirmed my gut feeling that the overall market for the stock is getting soft for several reasons and that's the best they could do and didn't want to spook the herd. As for the CB, a comparable call option would have required a premium twice as large. That's why it was an oversubscribed and virtually unobtainable offering. No hindsight needed and another freebie for selected institutions.
I have no delusions about the Zip not being a hit. The facts are incontrovertible. The point I was trying to make is that for Iomega to live up to expectations, they have to execute perfectly and the overall market needs to stay favorable. Every equity financing and split makes that harder to do. Any failure and the fall from it's lofty valuations towards something approaching normal will be far.
At the current price, I am neither long or short, but ambivalent. Below 30 I would become fairly bullish short term. Long term, if Iomega does make it through the next couple of quarters OK and succeeds in setting the new standard, there'll be plenty of time to get rich with this one. If EPS growth slows to just 40%, which I think is likely, you'll still end up doubling your money every few years. BTW, I have made quite a bit of change shorting Syquest on two occasions and being long on IMP twice :-)
Finally, if you'd like to email me, Ken, let me know and I'll send you my address. I do not make it public, sorry. |
