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Strategies & Market Trends : Roger's 1997 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Dan Ross who wrote (7629)	12/1/1997 1:51:00 AM
From: Bearded One	Read Replies (2) \| Respond to of 9285

Yes, don't post to the IOM thread, you'll get yelled at -g-. Seriously, I think Iomega is in long term trouble because they will fail in their attempt to replace the floppy disk with their Zip disk. Their other major future product is the Clik!, a 40 mb removable storage device aimed at the digital camera market. The flash memory people will not let that happen, the digital camera market in Japan will not let Iomega set their standards, and the Clik! won't be around for at least 8 months anyway. Another issue for Iomega is their ratio of disk to drive sales. They claim a "give away the razor and sell the blades" model where they make profits on the disk. They don't disclose their 'tie' ratio, but it is key to their profitability. I personally think the ratio is decreasing, bwdik. In the short term, however, you have to understand that Iomega is making money and shipping lots of their drives, and will continue to do so for a few months. I also don't see much chance of any negative announcements for a while, either. Additionaly, this stock has a lot of strong followers, sorta like the Apple crowd. It is also somewhat of a manipulated stock--tell me what other company announces a split at a $28 share price--with momentum players interested in it. So be careful.

To: Dan Ross who wrote (7629)	12/1/1997 9:53:00 AM
From: Craig Richards	Read Replies (1) \| Respond to of 9285

Dan, I wouldn't recommend shorting IOM based on the Barron's article. First of all, Mr. Savitz points out that Clik! drives weren't in any cameras displayed at Comdex. Well, the same can be said about the Sony drive - it's not in any PC's. Right now the Sony drive has been announced, but it is not a real product, because they haven't announced a price for it. By the time it hits the market, IOM will have shipped millions more Zip drives. Even if Sony has a competitive product, I think they are too late to take away all of the high density floppy market from Zip. Some might even consider all of the competition as bullish for IOM, as that means there's lots of money to be made in the segment. Right now it looks like IOM has the best position in the segment with the Zip drive, IMO. As far as "IOM selling at rich levels right now" - this is true compared to other disk drive manufacturers, but that's because they're all selling at depressed prices. IOM usually does well in the 4th quarter, and if they do so again this year, I don't think their stock is too pricey. Consider the upside potential if the Zip does in fact replace the floppy. And that doesn't even take Clik! into account. Craig P. S. As you might imagine, I am long IOM.