Sheila/all: A rough day for IOM - when to be a bull is frankly bullheaded.
You just can't beat a market that has turned over 32 M shares in one day.
The uncertainty will linger and make IOM volatile, even if the price is
able to recover dramatically. However, there has got to be a lot of
new investors in the 32 M share bought and short covering can't
explain that volume. So they missed our earning expectation.
Does that kill the company? With such a stupendous rise in revenues
and earnings the last several years, isn't setbacks, slowdowns and
disappointments inevitable? Can't say the cup is full, but it sure is more
than half full.
..The people that created the growth pattern of the last 3 years
say they must concentrate on demand creation with a focus on TV ads
with an educational slant. They also say price reductions, while part of
their eventual strategy, are not so important now as getting up the sense of
need and value among potential customers, many of who are frankly
unaware of the availability and usefullness of Zip drives. They plan to
spend about $100 M on advertising, and the superbowl ads are just the
beginning. KE said about 15% ($15M) the 1stQ, 15% the 2ndQ, 25%
the 3rdQ, and 40% the 4thQ. This is a driving campaign to build market
share by motivating demand - a very determined, marketing strategy,
based on knowing how to sell, not based on putting more tech performance
on the table at a lower and lower price. This is the way to make the Zip
a standard. Quite different from repeatedly upping capacity and lowering
price. Look what happen to memory chip makers who have been doing
just that. Their products become a commodity.
..Maybe KE knows what he is doing - sacrificing revenue/earnings a bit
to expand built-in market share and to increase customer demand for both
built-ins and externals. The CC so-called analysts that were upset with IOM
on this strategy are babies. Listen to their voices, all in their 20's & early
30's. What do they know other than what they have learned from number
crunching school.
..I am staying long but waiting to load up on the retest of the lows
that has got to happen. Pissed but hanging in there. Stick tight Sheila.
Regards, David S.
Long on Intel and Iomega (still) |
