Michael,
There are a lot of things I find hard to buy regarding the conf call.
1) I don't buy this reasoning that the stock is down because of the
large ad campaign announced in the call. I think this is the
best excuse because it was a decent quarter. What upsets me the
most and what I believe crashed the stock, is the extremely
upbeat 3rd qtr conf call which left everyone thinking the 4th qtr
would be exceptional. With the 3rd qtr momentum, holiday sales,
no more supply issues, and a huge backlog to be filled, missing
the 4th qtr was hard to imagine. The fact that they did, sends
up numerous red flags.
2) Asian Crisis. I was sickened when I heard this. IOM does very
little of their sales in Asia. Another red flag.
3) $100 million ad campaign. I've always thought they needed to do
a massive ad campaign, but doing it now in the face of the missed
quarter and you get very nervous investors. This issue was not
explained well in the call and left everyone to draw their own
conclusion as to why they are doing it now. Hmmm, must be
decreased Zip demand. Big red flag.
It is now the perception (rightly or not) that Iomega needs to succeed
with this ad campaign or their flagship product is dead. Exactly
what the bears have been craving. Is this really what KE wanted or
expected people to take away from the call ? I highly doubt it, but
that is what he did. So now the market still trying to understand
how this company could miss earnings has to deal with big time
uncertainty going forward. A lot to swallow.
I am still long this stock, but am very concerned going forward. It
is amazing because I was quite comfortable holding this stock just
2 days ago. There is a lot here that doesn't smell good. KE sells,
split the stock, and then miss earnings with very cautious forward
looking statements ? Hoping for better news to come.
Regards,
Dave |
