OK, here it is:
Top Stories: TSC on the Strip: Lost Vegas
By Cory Johnson
Staff Reporter
11/21/97 6:17 PM ET
LAS VEGAS -- There was a time when this was Frank's town. Back in the early 1960s, when Sinatra owned a piece of the Sands and the Rat Pack defined the glamorous life, Vegas was burned into the American psyche as a players' town. But that was then.
Now, things done changed. Except for Sinatra, the Rat Pack is all gone, and they blew up the Sands last year to make way for another mega-hotel -- hotels being the current stars of the Strip. In 1997, slickster crooners are history, while rappers like Mace rule the charts and define living large. But the myth of old-school Vegas lives on, and this city still lives off that mystique.
Which brings us to disk drives. All the old players in the disk-drive business were at Comdex in style: Seagate (SEG:NYSE), Quantum (QNTM:Nasdaq), Quarterdeck (QDEK:Nasdaq) and Western Digital (WDC:NYSE) all tried to make a splash. But in the 1997 market, it's becoming clear that those onetime highflyers are in the September of their years.
But the crowds at Comdex flocked to a new and unlikely star that defines living large in the disk-drive world -- none other than Internet darling Iomega (IOM:NYSE). Some of Comdex's biggest crowds have been crammed six deep to see demonstrations of Iomega's new Clik! drive. An Iomega presentation at its funky yellow and purple booth seats 75 people, but has been drawing crowds of more than 300 every hour of the show, all week long. And on Wall Street, while the rest of the disk-drive stocks have been blown up (not unlike the Sands), Iomega is erecting new peaks.
Not bad for a stock that was dismissed not too long ago, like the Internet investors who rabidly followed it.
"I think Iomega has finally caught up with the hype," says spokesman Tyler Thatcher. "We've become a grown-up company, and I think that's why we're drawing these crowds. But we've gone from $142 million in annual revenue in 1994 to $1.2 billion in 1996 -- that's faster than Microsoft (MSFT:Nasdaq), Compaq (CPQ:NYSE), faster than any company I know of."
Iomega is also drawing love from analysts on the Street. Earlier this week, Hambrecht & Quist analyst Todd Bakar trashed the entire disk-drive sector, downgrading Read-Rite (RDRT:Nasdaq), Quantum and HMT Technology (HMTT:Nasdaq) to hold from buy; lowering estimates on Seagate, Western Digital, Read-Rite and Quantum -- but he left Iomega untouched.
In the quarter ended Sept. 30, Iomega reported record revenue of $431.7 million, up from $310 million a year earlier. Net income rose to $30 million, or 22 cents per share, more than double the $12.8 million, or 9 cents a share, a year earlier. The stock closed Friday off 3/16 at 31 13/16, giving it a trailing price-to-earnings ratio of 43.6.
Thatcher, whose voice is hoarse from a week of trying to talk over the noisy crowd, finds some irony in the company's fortunes and status on the Net. "I see that we're always in the top 10 of subjects on The Motley Fool," he says. "But those postings -- and the posters on Silicon Investor -- don't cause the wild swings in the stock that I think they used to cause."
Indeed, in the last six months, the average daily volatility of Iomega has been 1.03, with a standard deviation of 0.56. But the six months before that, Iomega shares would swing harder than Sinatra with the Count Basie Band, with an average daily volatility of 2.42 and a standard deviation of 2.05. "The volatility has gone away," says Thatcher. "We've seen a lot less pressure to prove that we're a successful company. Regular quarterly earnings increases will do that."
Like the Strip itself, Iomega has gone legit and has legit profits to show for it. And going forward, it would be no surprise to see IOM up there starry-eyed, where the air is rarefied...
Awww, where's Frank when you need him? |
