Wrong, wrong, wrong. (Excuse me for carping) USRX is rebating to maintain competitive lead against MOT, ZOOM et.al. IOMG has no effective competition where Zip is concerned (Syquest, LS-120; are you kidding? SYQT will be busted in another year and the LS-120, while attractive, is slow, expensive to produce and, by the way, have you seen any yet, are Compaq PCs all sporting LS-120s, has any other PC manufacturer announced they will make them available as an upgrade option? No, no and no.) IOMG is rebating Zips to establish market dominance in portable storage in a blitzkrieg effort (which will probably take another 18 months) to be the successor to the 3.5" floppy. That's the game as far as Zip is concerned, and it's a big game with huge profits to IOMG if they come out on top. When that playing field comes into view it becomes clear that, where Zip is concerned, giving up some margin on the drive (the razor) to establish Zip as the new floppy standard, so that IOMG can make a fortune selling disks (razor blades) makes perfect sense. In fact, IOMG intends to get the drive down to $99 -- I'll bet sometime around 6 weeks before XMAS to penetrate even further into homes and businesses markets (and we haven't even touched on Jaz or Ditto, or the other peripherals that IO is surely developing with the hefty R/D spending they announced last quarter).
Don't let the market whipsaw artists and shorts scam you. Buying IOMG at under $20 is about as sure a thing in the IT business as I've ever seen. It's already financed my daughter's college education and this is a chance (honest to God, I can't believe it's happening again) to get my son's education costs out of the way four years early! It's not quite a rocket stock any longer though--just plain old solid growth at this stage. The story now is profitability, market leadership, managing the business, becoming the de facto standard and developing further follow-on products (laptop Zip--1Q 97, 200 Mb Zip disk next, etc.). And did I mention consumer branding and name recognition? Seen the ads in the PC mags yet? I can't wait until post-Xmas fourth quarter earnings are announced. Barring a catastrophe, I can't see how IOMG will fail to be a $45-60 stock again in 6-9 months. This is like buying CompUSA at $9 (pre-split) two years ago. God, this is a great country! |
