TO ALL: WSJ article. Sounds kinda positive. Are they getting our message? Any how, I keep holding. No jitters here. Although I will say that I hope it stops dropping as I'm running dry on funds to buy any more.
Dow Jones News Service -- June 26, 1996
Iomega Shrs Off As Cabot Mkt Letter Cuts Stk In Model
NEW YORK (Dow Jones)--Iomega Corp. (IOMG) shares fell sharply at opening and some
market players attributed the fall to the Cabot Market Letter's decision to ''sell'' the stock in its
model portfolio.
''Momentum is weakening,'' a voice said on the Cabot hotline today about the decision to sell. The
hotline said the stock in the model would be sold at a profit of 200%.
Iomega recently was down 3 3/4, or 14.2%, at 23 1/8, on Nasdaq volume of 8.2 million shares,
compared with average daily volume of 10.9 million. The stock sank as low as 21 1/2.
The company has no news to account for the activity and the Cabot newsletter has not spoken to
Iomega, an outside spokesman for Iomega said.
Some supporters of the stock were surprised that the Cabot sell recommendation was creating so
much stock movement. Others noted that an article about Cabot and Presstek Inc. (PRST) on
page one of The Wall Street Journal today probably gave added publicity to any moves by Cabot.
The Wall Street Journal story discussed Cabot's support of Presstek stock and allegations by
some short-sellers that Cabot's overly positive earnings predictions boosted the stock. The article
noted the Securities and Exchange Commission has been investigating the allegations and other
issues involving the newsletter.
Investors should realize Iomega ''ain't no Presstek,'' said Emerald Research analyst Joseph
Besecker.
Iomega, which has never been better fundamentally, has strong revenues and products, Besecker
said. The analyst's earnings estimate for 1996 is 57 cents a share on revenues of $1.3 billion. His
1997 projection is earnings of $1.20 on revenues of $2.3 billion. Iomega earned 42 cents a share
on revenues of $326.2 million in 1995.
Iomega stock at its current level is an attractive buy, particularly in relation to 1997 estimates, the
analyst said.
Shares of the Roy, Utah, company have also been pressured by other factors, such as the fact that
the company is now too big for the Russell 2000 index, so some index fund managers were forced
to sell the stock, Besecker added.
There is added pressure from people who bought the stock on margin and end-of-the-quarter
''gyrations'' as well, he said.
The stock has dropped sharply in the past nine days from its closing price of 37 on June 17.
Iomega has been one of the most volatile of stocks over the past year as the company gained
publicity because of its success with the removable Zip disk drive. It has also been among the
most popular subjects of discussion on the on-line Motley Fool financial bulletin board.
Today's sell-off provides a buying opportunity for ''people with a tolerance level for volatile
situations,'' Besecker said.
On the Motley Fool bulletin board earlier today, discussion, which has been quite heated in the
past, appeared to be relatively calm about the price fall.
One message said Iomega shares were comparable to the Disney Space Mountain roller coaster
in that ''you can never see what dip or turn is ahead.''
Others noted that the stock has been through several corrections that have not lasted long.
-- end
Regards,
Erik. |
