You can be certain IOMG will move when the crowd least expects it.
IOMG has been trading in a fairly narrow range for the past 6-8 weeks. All the margin-call buyers are long gone. Iomega the company is in far stronger shape fundamentally then it was at this point in 2Q. IOMG the stock is still making the transition from "hype/momentum" stock to "growth" stock. In retrospect the stock clearly got ahead of itself and the May 2:1 stock split, coming so soon on the heels of January's 3:1 split was probably premature, but that's history (painful for some, nostalgic for others). It's the future that now counts.
The plain fact is that IOMG has no effective competition and ironically that's one of the main things holding it back. There is no shortage of ghosts and boogeymen who constantly pop up to scare the unwary, but until something resembling real competition is actually in the market and analysts can see for themselves that consumers overwhelmingly choose IOMG's products it takes vision to see IOMG's lead. Analysts aren't paid to be visionaries. They're paid to be spreadsheet wizards. When you plug too many zeros into a spreadsheet you get all these nasty divide-by-zero errors, so nobody wants to go out on a limb.
A good analogy can be found in the footwear industry. Until companies like Nike turned the dull-as-dirt sneaker market into the sexy "running shoe" market who could have imagined how such a sleepy sector could become so important? IOMG is doing the same thing with the heretofore yawn-provoking "backup device" market. Make no mistake, virtually all Wall St. professionals view Zip, Jaz, and their competitors as "backup devices". What IOMG has done is taken the backup device sneaker and is transforming it into the running-shoe "personal storage" market. This is as much a marketing shift as a technology shift and is the real reason why IOMG has such a commanding lead--they understand consumer marketing while their "competition" is still focused on raw technology. While the "competition" is stuggling to get ungainly first-generation advertizing horrors named "LS-120", "UHC", and "SyJet" into production, IOMG is building consumer brands around "Zip", "Jaz", and "Ditto". The fact that they represent superior technology to go with the cost advantages and marketing savvy just makes the real competitive situation that much plainer to those who can see the bigger picture. Rest assured you won't be seeing any "Hey, is that a UHC on your desk?" ad campaigns anytime soon.
The downside, of course, is that consumer brand building takes time. Years, in fact. One can expect some compression due to the intensity of the technology field (erstwhile competitors will die off a lot quicker) but longs should realize that the full IOMG story may take five or ten years to unfold (look at a 10-year chart for NKE and you'll see what I mean). Of course, by then IOMG will be worth many, many times today's valuations, but for those with the luxury of patience it will be like the poor fools who held MSFT from its (split adjusted) run from below 2 to over 9 and then back down below 4 in 1986-87. |
