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delayed 20 mins - disclaimer
Wednesday November 18, 11:32 am Eastern Time
Iomega insiders scoop up shares near lows
By Daniel Bases
NEW YORK, Nov 18 (Reuters) - Insiders at Iomega Corp. (NYSE:IOM - news) recently purchased stock in the company at prices at or near 12-month lows, just days before Iomega's major competitor, SyQuest Technology Inc. (Nasdaq:SYQT - news), decided to close down.
Stock in Iomega, a maker of removable data storage devices for personal computers, climbed from less than $3 a share on October 8 to as high $9.94 on November 6, settling back to $7.75 by the close of trading on Tuesday.
Edward Briscoe, president of the company's personal storage unit, with responsibility for the flagship Zip Drive product, was by far the biggest purchaser of stock.
On October 29, after watching the stock price rise 71 percent in three weeks, Briscoe bought 200,000 shares, paying between $5.25 and $5.46 per share in open-market purchases totaling $1.08 million, according to U.S. Securities and Exchange Commission filings.
''I would say Mr. Briscoe thinks the future looks promising and that the company is headed in the right direction,'' said Iomega investor relations officer Tyler Thatcher.
The Zip Drive, introduced in 1994, holds 100 megabytes of data. On Nov. 16 Iomega said it would unveil a 250-megabyte version of Zip as well as a new product called Clik! that can store 40 megabytes of information.
Clik! is being aimed at the mobile computing and digital camera markets.
''He (Briscoe) could have waited for it to pull back, but he pulled the trigger and we infer a sense of urgency in that move,'' said Bob Gabele, president of CDA/Investnet, a Rockville, Md.-based tracker of insider buying and selling.
Briscoe's purchase reestablished an equity position he cleared out in 1996 by selling 400,000 shares at $21 each.
The stock reached its all-time high of $27 on May 26, 1996.
Iomega's stock price has been driven higher by SyQuest's November 2 announcement that it would cease operations.
At least one analyst is confounded by Briscoe and by four other insiders who bought a total of 39,000 Iomega shares in September and October, closer to its lows.
''I hate to bet against the insiders, but I don't get it,'' said Howard Rosencrans of the Great Neck, Long Island, research firm HD Brous & Co. ''I don't see the real value of the technology today, and I don't really believe the demise of SyQuest makes them closer to being anointed the standard-bearer in this business.''
Rosencrans rates Iomega as a ''sell'' and thinks the shares are fairly valued at $4-$5.
Iomega has gone through a transformation over the past year. It named a new president and chief executive officer, Jodie Glore, on October 22.
It has changed its business model from a retailer of its products to an original equipment manufacturer that supplies the drives to computer manufacturers such as Compaq Computer Corp. (NYSE:CPQ - news) and Dell Computer Corp. (Nasdaq:DELL - news) for use in their products.
''Things are definitely better now than they were a few months ago,'' said S&P Equity Group technology analyst Brian Goodstadt. ''But I think good news is already incorporated into the stock price.''
Goodstadt maintains a ''hold'' rating on the stock, and like Rosencrans believes the company will eke out a small profit in the fourth quarter.
''While SyQuest might be out, new competitors like Sony Corp. (NYSE:SNE - news) who are bigger and potentially more formidable'' are moving in, Goodstadt warned.
Glore was a buyer on October 29, establishing a 15,000-share position worth $79,650, or $5.31 a share, according to the SEC filing.
James Taylor, Iomega's chief marketing officer, bought 10,000 shares on September 3 for $3.69 each.
Fred Forsyth, president of the professional products division, bought 10,000 shares on September 3 at $3.56 per share.
James Sierk, a director who once served as interim CEO, bought 4,000 shares at $3.88 each on September 8, then gave away the stake as a gift.
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