Tom, you mentioned a New York Times article containing the following sentence: "One day in June, for instance, shares of Iomega tumbled
27 percent when Mitsubishi Electric said it would build
a computer disk drive that would be faster than Iomega's."
I think this is a clear indication of one reason why Wall Street analysts took that news so seriously. The Mitsubishi news release said that the LS-120 would hold 120 MB of data, would be compatible with exisisting 3.5" floppy disks, and would be four times faster THAN EXISTING DRIVES. What the non-technical analysts did not realize was that the phrase "existing drives" referred to floppy drives. Many, if not most of them, I believe, thought that it referred to the Zip.
My bet is that this belief is still prevalent on the Street, and is probably one factor that is holding Iomega's share price down.
For anyone investing for the long term, this should not be a problem. The LS-120 will fizzle, and the writing on the wall will be impossible to ignore, even for the least techno-savvy analyst.
BTW, I don't know who mentioned that in order for the Zip to beat the LS-120, it would have to be cheaper to buy both a Zip and a 3.5" floppy than just one LS-120 drive. That is already the case. Plus, unless you bought certain models from Compaq, if you have a computer, it came with a 3.5" floppy. (Others have pointed this out here, I know.) So you're not going to save anything if and when it becomes possible for you to buy a LS-120 drive.
What's bothering me right now is not any perceived competition Iomega may have. It's the extreme inflation paranoia on Wall Street. It seems every little bit of good economic news is sending them all into a selling frenzy. But I'm sure if I had as much riding on the market as all of them do, I'd have a hair trigger, too.
It was nice to see that IOMG and other techs closed a little bit up today, even amid the general downturn.
- Allen Murdock |
