Ken, IOM's share price demise has had to do with expectations. IOM has been a victim of its own success due, primarily, to it's past. expectations for IOM are higher; therefore when inflated expectations are not met, it is punished thrice (IOM the company has let many of those expectations bully them instead of letting their unique strategic plan do the guiding).
Zips continue to sell at a clip of 1,000,000 a month. you'd think this rate would slow. it's not.
also, an IOM fault has been that certain key leaders within IOM believed in their own longevity and didn't adapt quickly to change. IOM the company has had a workable strategic plan; they've not executed it well. throwing dice at the market to see what works is suicide. they're not that fatalistic.
look at Sandisk. Sandisk has $145 million in sales and $1 bill marketcap. THAT is a highly leveraged storage medium. IOM with $1.6 bil sales and less market cap than Sandisk. Sandisk's profit/gain history is also spotty, which says little about future potential. but, clearly, at current price points, flash is not a medium for the masses - it remains a niche, although a growing niche.
relative to Sandisk, many analysts in the market have this view of flash as the future and magnetic as the past. that must be wrong thinking. only at given price points is flash a medium for the masses; and those price points are at least three years away. in the meantime magnetic, due to it's cost (and upgrades coming from Seagate et al) will continue to keep market share. storage needs are rapidly expanding and corporations certainly aren't looking to solid state to fill their storage needs.
in Nomai IOM has the capability of entering flash; although - why they continue to study this game and not enter it, i don't know (they want a product which offers a unique position i suppose). if IOM can obtain the correct cost/product demand mixture, there is no reason it shouldn't make a profit going forward. the demand is there. i speak to real techies and they don't necessarily care if the name says IOM or IBM. they want it to work in the least possible time given them to get it to work.
the market expected more of IOM than it expected even of SNDK (with SNDK's cash and addtl proper leverage, they could actually make an IOM buy-out offer. funny world.)
IOM has been developing the right model; but they've not executed that model in a timely manner. so, Jodie says that this is changing rapidly. the problem is NOT the zip drive (the jaz developed an image problem and they had the means to correct this last year with the introduction of MR or GMR, but...). if the zip were the problem Dell and other OEMs would have stopped selling the zip long ago. the problems are meeting expectations, creating positive change, and rapid deployment of those changes. IOM needs to regain it's leadership image. if Jodie wants to follow...leading is what the market is looking for.
also, Jodie wouldn't have said "10% sales for the clik!" if he didn't already have contracts in hand, or highly probable clik contracts. i think he's too conservative to blather 10% without backup. i know of some of those contracts, but not enough to make up $160 million - so they're looking at something. |
