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Non-Tech : Any info about Iomega (IOM)?
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To: Ken Pomaranski who wrote (7177)9/17/1996 9:15:00 AM
From: Bill Fischofer   of 58324
 
Re: Market Cap

You ask if a company that makes floppies is worth a 1.5 or 3.0 billion market cap? Perhaps one could equally ask if a company that makes sneakers (NKE) is worth a 17 billion market cap?

The difference is perception. NKE takes a $2 shoe and through marketing wizardry convinces you to pay $50+ for it. IOMG takes a floppy disk that costs maybe $2 (or less) to produce and convinces you to pay $15+ for it.

What's the difference? IOMG is the only competitor in its industry that appears to understand consumer marketing. Rebates? Price reductions? A fact of life in the technology business. Name any successful tech company that is raising prices. In tech you don't grow profits by holding/raising prices. You do it by keeping ahead of your competitors on the innovation/marketing curve, which allows you to lower prices faster to grow market share and by pumping out higher-margin successor products. It looks to me like IOMG is just executing a well-publicized growth plan. The fact that the stock temporarily got ahead of itself doesn't change the bigger picture that its execution to date has been near flawless.

Every $10 billion company was once a $2 billion company. As long as IOMG keeps executing and growing its market and share, the fundamentals haven't changed. Today's prices provide an excellent entry into a superior growth stream.
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