<What do you think?>
About the 2M after hours shares: George Soros and/or Fido (the big dog, not the little one) wanted out. Very bad news. When those guys got in, it made me nervous because I knew some day they'd want out, probably while I was still in. That day was today.
About the merits of advertising vs. more price reductions: I would have preferred one more round of price reductions first, then advertising. $99 Zip, $6 Zip disk, and then if you got the money, do the Superbowl ads. Given that IOM stock is getting hammered even though IOM is making money like a beer concession on a troop ship, I wonder if IOM shouldn't adopt the Syquest strategy.
Think of it - tomorrow 260M+ shares of IOM will be priced near $9/shr, and each shr made $0.42 last year. At the same time, 58M+ shrs of SYQT will be priced near $3 and each of those shares lost $3.25 last year. Now to compare to IOM, we dilute the SYQT shares by a factor of 4 (coincidentally, what they are doing this year anyway) giving a loss of $0.81 on 232M+ shares - close enough to IOM's count. Thus:
IOM : 0.42x + y = 9
SYQT: -.81x + y = 3
add : -.39x +2y = 12 ===> y = 6 + 0.2x
subbing back to IOM ==> 0.42x + 6 + .2x = 9 ==> 0.62x = 3 ==> x = 4.8
So x ~= 5, y ~= 7, and so Price = (eps * 5) + 7
Thus we see if IOM had posted no earnings, and instead spent the whole $36M bucks on price reductions and advertizing, tomorrow, it would only go down to 7. Yet they would have clinched the floppy replacement race for sure. It's not too late to try it. What do we have to lose but 2 more bucks off the share price.
Now I know the above analysis is fatuous, but it underscores the idiocy of the way the market evaluates these two companies. If 20 months ago IOM was worth $26 (split adjusted) because it had a rosy future, why is it worth less than a third of that today when the future is arriving? Surely there was more doubt then about its ever arriving at that future than there is now.
About the Rock? He made a good guess, and thus a good trade. I have no idea if it was a paper trade or not, but I like to give people the benefit of the doubt if they say they put their money on the line. |
