Any info about Iomega (IOM)? Message Board

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Non-Tech : Any info about Iomega (IOM)?

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To: james tolson who wrote (23518)	5/28/1997 12:05:00 AM
From: Steve Wiz	of 58324

ALL: Market Participants on this board are still extrapolating a one time "Event" in 96 (short squeeze) and feel that it will continue. What if I told the participants on this board that Iomega will grow by 50-60% this year and next year. And I also said that Iomega will not produce above average returns over this year and next. How could this be? Technology stocks are extremely hard to value. Most present value models, dividend discound models, cash flow models can not be used with Technology stocks ordinarily. The best way to value technology stocks is "How much someone is willing to pay for it". For instance, what in the world is different about 3Com now at $46 compared to 5 weeks ago when it was at $24, Nothing. 5 weeks ago market participants were not willing to pay 25,26,27 dollars for 3Com. Now they are willing to pay 46,47,48. I think it is important for participants to realize that fundamentals and an equities stock price are not as positively correltated as one might think. Yes, it is possible for Iomega to grow that fast and fundamentals to be that strong and yet the stock will not make a sustained move upward. I can also assert that Iomega's non-performing stock price will actually begin to hurt their fundamentals at some point. Talented executives may not want to go to Iomega because their option related compensation might not appreciate enough. Or maybe Iomega can not make that stock based acquisition of another company with promising technology because its stock price is so depressed. These effects are real but usually not understood or seen. It can also be demoralizing to executives who watch their company stock go no where. Regardless of Iomega's fundamentals, unless market participants are willing to pay 18, 19, 24 etc Iomega will go nowhere. After studying several boom/bust sequences the stocks involved usually underperform the market for several quarters if not years. Probably due to the "compression of their future returns" that is experienced during the boom phase. Good to talk with you Steve

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