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Non-Tech : Any info about Iomega (IOM)?
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To: John Chan who wrote (3909)7/2/1996 6:43:00 AM
From: Phil Tran   of 58324
 
Reply to IOMG long holders:

I am truly sorry for "dropping the bomb in the parenthesis" without any explanation. My main reply was for Terry on my thoughts of E*Trade; the "iomg at $16" was just a quick sidenote.

Now I will post why I believe IOMG price will be at $16 in three months.

First some people belive the JPM recommendation at $42 or more. Others follow the Cabot "sell" rec. I think you should be your own analyst and find out as much about the company you are investing.

Well, I've done my research and concluded that IOMG is not for me. I know of no one having the ZIP/Jazz/Ditto drives. How many people do you personally know that ACTUALLY bought, use, and like an IOMG drive. The store sales people at two stores (Fry's and UC Computer) told me their customers are not satisfied with the IOMG drives. Many are disappointed with the slow speed and low performance.

I don't like the high 170 PE ratio. Some say high PE is okay because IOMG has a lot of growth. But I don't believe that IOMG will grow so fast in the near future as to compensate the high PE number.

Ever since mid-May, IOMG has been on a decline path, at about $7/8 down per trading day. $55 in May, now $27 and declining. I see the earnings estimates later this month to fall short of earlier "optimistic" expectations. This is just a conclusion from my observation; I have NO inside information ( I don't want to go to jail).

Currentlly, at $27 price, IOMG's market cap is $3.5 billion. This is more than Quantum ($800 mil) and Western Digital ($1.3 bil) combined.
IOMG is worth almost as much as Seagate ($4.9 bil). I believe the IOMG is worth $2.0 billion (128.8 mil shares x $16 per share). So currently IOMG is not cheap at $27.

Many see the recently $50 rebate as an attempt to increase volume and to make the ZIP the industry next standard floppy drive. I don't see it like that. The ZIP with 100 MB and 29 ms seek time is a too shoddy product to be the "standard". The rebate came about due to slow down in IOMG sales and due to increased competition in the removable/backup drive market.

I stand by my $16 price. ---PT
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