Some comments in response to Herb Greenberg, regarding his hatchet job on Iomega:
One fascinating section went "Enter CEO Kim Edwards and his conference call with analysts.
"In the call, he used the word ``challenging'' to describe the company's current quarter. Any derivative of the word ``challenge'' is never good news. It's a euphemism that must be taught in CEO school for trouble. Red light! Do not pass go. Do not collect $200.
"Companies that trade at 50-times next year's earnings, as Iomega does, can't afford that kind of trouble. "
The big problem with that last statement is that it's just nowhere close to factual. 50 times next year's earnings? Based on what figures?
I note also that his entire article contains not one mention of Jaz or Ditto product lines. As if Iomega's entire fortunes and those of its investors rest only on the Zip. Iomega actually does make more than one product, Herb. Does the word "research" ring a bell?
He brings up one analysts about the sales to manufacturers, and says that KE said they were "not significant." This was supposed to prove that the PC manufacturers signed on to include Zips in their PC's would not boost future sales. Of course, KE meant that such sales had not impacted Q2 sales. Most of the manufacturers who will be including Zips in their PCs have already announced that shipments of such PCs will begin in the fall.
Then, he goes on: "Rebates are never good news. They usually mean a product isn't selling fast enough. But the company tried to put a positive spin on the story, saying they were part of a long-term program to reduce prices and increase market share. (Care to buy a slightly used bridge?) "
Considering that the strategy of lowering prices to increase market share was announced months ago, this hardly seems like a reasonable response.
Finally, Mr. Greenberg compares the Zip to the Sound Blaster, and discusses how Creative Labs stock has fallen even though they created the "standard" sound card. It's hardly a valid comparison. If Iomega succeeds in making the Zip (and/or Jaz) a standard, then people won't be buying "Zip Compatible" drives. They'll be buying Zips and Zip disks, because the technology is proprietary.
Anyway, David, thanks for posting this article, even though it did burn me up.
Anyone got Greenberg's email address?
- Allen Murdock |
