Here is my letter to Barrons. i'm not sending it untill Monday, if anyone seeing something that needs to be changed, please let me know.
Subject: Eric Savitz's article is deceptive and has no basis in reality
The December 1, 1997 issue of Barrons contained an article entitled:
"Comdex Trade Show Offers Few Humdingers But at Least One Threat to Iomega's Zip Drive." That story is by far the most unprofessional, biased and repugnant epistle that you have ever published.
After reading this article it is clear to me that Mr. Savitz wrote that piece with a premeditation to deceive. I find it discomforting that a publication with your reputation would employ a writer that engages in this sort of yellow journalism. As Editor, I am
confident that, once you realize that Savitz utterly betrayed his journalistic duties to you and your readers, you will waste no time, but will rather make haste in removing him from your staff. I am convinced that failure to do so would result in yet another stain on the already tainted reputation of Dow Jones and Company.
In support of my contention, let us take a look at some of the misleading statements written by Mr. Savitz concerning Sony and Iomega:
SAVITZ:
[Iomega] faces a huge new challenger in the market for removable storage. Sony, which expects to introduce the new drives in the first or second quarter of next year, says the standard will also be supported by Teac and Alps Electronics. Eventually, if all goes according to plan, the new standard could replace the much lower capacity drives that now come with every personal computer.
FACT:
The Zip drive is currently built-in as a standard or optional feature
by leading desktop and notebook computer makers, and by original equipment manufacturers (OEMs). Such computer manufacturers include Acer, Apple, Chicony Electronics Co., Clevo Co., Compal,
Compaq, Dell, Gateway, Hewlett-Packard, Hitachi, IBM, Micron Electronics, Motorola, Packard Bell, NEC, Power Computing,
Siemens Nixdorf, NEC Computer Systems Division, Sony, UMAX, and Unisys.
Not one of those manufactures has even suggested that they would discontinue Zip or include HiFD. Sony's drive appears to be a repeat of their BataMax system.
SAVITZ:
Sony says an HiFD floppy will have twice the capacity of a ZIP cartridge, with much faster data transfer rates.
FACT:
Current Zip disk hold 100 MB, the company plans to release the 200 MB version when there is a market for them. There are currently several removable storage devises on the market that offer higher capacity than Sony's HiFD (Iomega makes two), but Zip is the fastest selling removable storage device in the world: over 10 million sold and increasing at over 1 million per month.
HiFD has a slower transfer rate the Zip, Savitz lied.
SAVITZ:
According to Zack's, the Street expects Iomega to earn about 89 cents a share this year, and $1.25 next year. Trading at close to 26 times estimated earnings for next year, Iomega is far, far more expensive than others in the data-storage sector.
FACT:
According to Zack's, Iomega's earning per share are expected to increase by over 38% next year, and 30+% for the next 3 years, this makes the forward PE of 26 very cheap. It should also be noted that Zack's list 7 analyst covering Iomega with 3 rating it a strong
buy, 3 a buy and one hold.
For comparison, Dow Jones and Company is trading at a forward PE of 36: talk about the pot calling the kettle black!
SAVITZ:
Last week, Iomega shares were trading at about 32, having more than doubled since March.
FACT: Earnings per share increased 107% for the first nine months of the year; the share price still lags the growth rate.
SAVITZ:
Now, to be fair, Iomega had a new product of its own to show off... a line of ultra-small drives called Clik! targeted at digital cameras and hand-held computers.
FACT:
Iomega had more than six new products, clik! was one of them.
SAVITZ:
None of the gazillions of digital cameras we saw at Comdex made use of the new Clik! drives.
FACT:
clik! was introduced at Comdex, therefore it could not have been included in existing digital cameras. External clik! drives can be used with all of the "gazillions of digital cameras" that are currently available.
Over 15 companies currently support Iomega's clik! product family. Equipment manufacturers,
including HP, Digital Equipment, Kodak, Hitachi and InFocus Systems have all endorsed clik!
Citizen and Matsushita each announced that they have each signed non-exclusive letters of intent to license, manufacture and market clik! drives; and portable accessory vendor, CNF Inc. announced plans to build a version of the clik! drive.
In addition, companies that supply operating systems, components and hardware design to original equipment manufacturers (OEMs), including Microsoft, Sierra Imaging, FlashPoint, Sound Vision, Vadem, ATMEL, LSI Logic, Motorola, Texas Instruments and Zoran announced that they will be collaborating with Iomega to support the clik! product family.
Iomega's General Sales Manager, Tony Lagalante, stated that: "Those companies didn't write those letters to waste their time, they're all designing products using clik! It's just that these companies, as a rule, do not pre-announce products."
SAVITZ:
Iomega, which still likes to claim the ZIP drive will replace the floppy drive, now faces the prospect that the floppy will, in fact, be replaced by a super-duper floppy with backwards compatibility.
FACT:
Of course, the 1.44MB floppy was not compatible with the original standard, the 5.25" floppy, but that didn't stop it from becoming the new standard. Iomega's CEO Kin Edwards addressed (or more rightly dismissed) HiFD more than a month ago: it appears that Savitz is incapable of staying abreast with current events in this sector, you owe it to your readers to relieve him of this duty.
In conclusion, I reiterate that the Savitz article published in Barron's was woefully incomplete, deliberately deceptive and criminally biased. Unfortunately, it is all too typical of the heapings of waste matter that you regularly spew upon your readers. Increasingly, I find it best to use your publication as a contrarian indicator.
Expecting your prompt reply, |
