Ken, I am glad that you pulled out and profited while you were way ahead.
But you and Joe Rizzo were just plain lucky in the timing of your call, IMO.
IOMG fell with the entire Nasdag during a huge correction, the biggest in
more than a decade - and which most WS experts missed completely.
Initially, IOMG held up extremely well during the first part of the correction
(we bulls were bragging how well it held up), but after so many folks got
hurt badly by margin calls from PRST, DIANA, Zoltex, etc. they had no
choice but to cash in IOMG and other strong stocks to cover margins
(a lesson to be learned here). One thing led to another, and before we
know it, the Nasdag was crashing big time -- and folks were panicking
like the end of time was near.
It was extremely bad timing also that 2Q reports came out during this
market crash period. Remember all those blowout reports by companies
like ASND, CSCC, after which they crashed some more? The nail in the
coffin was the reference to a "challenging 3Q" by KE - which is like a
1000-ton rock sitting on top of IOMG while it was down. This rock will only
be lifted by a couple of great quarters, IMO. The market is 90% human
psychology near term, and the IOMG patients have had a severe mental
breakdown and must be rehabitated toward a slow recovery. The longer
the recovery period, the stronger the recovery when it happens, according
to "medical" researches.
If the Nasdag did not suffer that huge correction DURING reporting
period, missed by nearly all experts mind you, IOMG would still be selling
in the high 30's or lower 40's today, IMO. Of course, the bears who sold
last year and ealier this year totally missed a great runup which even the
last huge correction couldn't wipe out.
I for one, knew that the market was too frothy back when the Comparator (IDID)
incident occured and communicated as such in my posts. I expected the
market to correct and was prepared to take a 30-35% drop in IOMG from its
high instead of selling and paying taxes. However, the magnitude and timing of
the correction surprised us all. If my capital gain was not so great and did not
provide a huge cushion, I probably would have sold near the top to protect
my capital, since I sensed a correction was imminent. Then I might even brag
a little about my good senses. But l learned a lesson - better to pay some taxes
than nothing at all.
In every battle, one of the generals will declare victory. But whether he/she has
won the war is another matter. Over the long run, are you sure that those of us
who have bad habits of holding on will not do better than you or Joe Rizzo who are
either a bear or a market opportunist? The most successful investors I know of,
some are my close friends, are very longterm - holding fast-growing companies
for years and years. Many of them buy the stocks, demand the paper
certificates, then lock them up in their safe for years. Some of the certificates
turned to solid gold over time.
Now for your concerns:
>>"I'm concerned about:
#1. rebates
#2. fad factor
#3. 'giving' away drives to OEMs, hurting margins.
#4 the Jazz factor
#5 number of shares."<<
#1. Rebates and price drop - clearly layed out by KE to IOMG investors
in terms of target prices for Zip, Jaz, Ditto drives/disks, as well as the
timing.
#2. Fad factors. I guess you have missed all the market analyses and
projections for high-capacity floppy drives published recently. Those
of us who work with computers on a daily basis and have lots of data
to store know that Zip ain't a fad. It's a lifesaver.
#3. 'giving' away drives to OEMs, hurting margins.
I TOTALLY DISAGREE. The more Zip drives IOMG make and sell,
the lower the net margin (net profits divided by revenue). Simple math.
To increase net margin, IOMG must produce less Zip drives and sell
more Zip disks. This is exactly what they are doing. Give the drive away
for peanuts (licensing fee) so others can market it for you. Make a killing
on the disks.
I think that if IOMG make and sell no Zip drives at this point, their
net margin will be in the 20's % from selling Zip disks and Jaz. But that's
not practical, they must maintain production capability. However, I think
they should minimize exposure to Zip production and focus on the
high-margin businesses. Leave the low-margin side like Zip drive to
others with commodity production expertise, like MCI.
#4 the Jazz factor
You are seeing this as a possible negative? Nearly all the experts
and publications disagreed with you here. Even Seagate.
#5 number of shares."<<
I agree. Too many for a good short squeeze. Oh I love those squeezes!
Take care.
Young |
