Here's a copy of the email I sent to Barron's . . .
Would like to see others, too.
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Once again, Barron's foretells the doom of Iomega. And, once again, you are wrong.
In Eric Savitz's Dec. 1 column on Comdex, he makes many erroneous assertions. First, that Sony's HiFd drive will be the next "Iomega-killer". How many times have we heard this before? It's interesting how a product that won't be out for at least 1 or 2 quarters will
disenfranchise a product with an installed base of over 10 MM units and growing at a rate of 1 MM per month. Savitz also ignores the fact that almost all major box makers have declared Iomega's Zip drive the "standard" and are including it in many of their SKUs already.
Savitz addresses Iomega's "high" P/E. He obviously doesn't understand the relationship between earnings growth and P/E. The market dictates that P/E should not only be a function of historical earnings, but of earnings growth. Iomega has consistently posted revenue and earnings growth in excess of the P/E the market affords it. And, they have
yet to disappoint those that understand this principle.
Savitz ignores the fact that there are many competitors out there with products designed to compete with Iomega. And, the market has clearly shown Iomega to be the winner. Syquest and Imation both have competing products, and both are failing. Note that Imation's LS-120 is backwards compatible with the 1.44 floppy, yet no one is buying this product. What is it about Sony that Savitz thinks that they will do any better?
Savitz downplays the importance of Iomega's newest product, Clik!. Although scores of major players in the digital photography marketplace have endorsed Iomega's Clik! and many have entered into agreements to market it, Savitz says that "none of the gazillions of
digital cameras we saw at Comdex make use of Clik!". Of course they don't Eric. It is a new product that Iomega clearly states will be available in the 2nd half of 1998.
Regarding Eric's comment about Iomega giving away "annoying little clicking gizmos" at Comdex (referring to clickers, the toy that makes that clicking sound), maybe Eric should take Marketing 101 again so he can understand how effective a marketing program this was on Iomega's part. Needless to say, everyone at Comdex was made aware of this exciting new product.
I am consistently dismayed by Barron's seeming "lack of love" fest with a company that rewards its shareholders with stellar results each and every quarter. Months ago, you had a column foretelling Iomega's doom. And you were wrong there too. Come on guys, do
your homework before writing your biased articles. |
