Dan,
I wouldn't recommend shorting IOM based on the Barron's article. First of all, Mr. Savitz points out that Clik! drives weren't in any cameras displayed at Comdex. Well, the same can be said about the Sony drive - it's not in any PC's. Right now the Sony drive has been announced, but it is not a real product, because they haven't announced a price for it. By the time it hits the market, IOM will have shipped millions more Zip drives. Even if Sony has a competitive product, I think they are too late to take away all of the high density floppy market from Zip. Some might even consider all of the competition as bullish for IOM, as that means there's lots of money to be made in the segment. Right now it looks like IOM has the best position in the segment with the Zip drive, IMO.
As far as "IOM selling at rich levels right now" - this is true compared to other disk drive manufacturers, but that's because they're all selling at depressed prices. IOM usually does well in the 4th quarter, and if they do so again this year, I don't think their stock is too pricey. Consider the upside potential if the Zip does in fact replace the floppy. And that doesn't even take Clik! into account.
Craig
P. S. As you might imagine, I am long IOM. |
