Iega, Nomai stymied in
court
By Suzanne Galante
= December 19, 1997, 5:05 p.m. PT
============================================================================
the link takes a while to bring up so i pasted the whole article.
but if u goto link there are other articles to read.
truff, if u start analyst bashing thread do the title of the threas
as following:
analyst bashing (iom, sunw, orcl, mu, intc)
if u put names of somecompanies then when some one searchs for the
company ur thread will come up. let me know if u need instruxon.
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news.com
update Iomega (IOM) and Nomai headed back to
court today, chalking up another round in the battle to
determine whether Nomai can sell
Iomega-compatible disks in the United States.
Both parties are embroiled in various trademark and
patent lawsuits, and both walked away from today's
proceedings empty-handed.
Iomega, which last month filed for a temporary
restraining order against France-based Nomai and its
U.S. subsidiary Nomus, today was told it would be
taken under submission by the judge. He also
requested the company to submit additional
documents by January 7.
Nomai, which was seeking to overturn the temporary
restraining order, had its request denied. Iomega
wants to prevent Nomai from selling its cheaper
XHD cartridges, which are designed to work with
Iomega's 100MB drive, and also from advertising
them as Zip-compatible.
The hearing was a small piece of a larger puzzle for
Iomega. Today's courtroom face-off with Nomai
may cut into the core of Iomega's high profit margins
on its disks.
Iomega's popular portable Zip drives carry a profit
margin of 10 percent. But it's the Zip disks that reap
most of the profit--about 50 percent, Brian
Goodstadt, a technology analyst at S&P Equity
Group, said.
Those disks are estimated to kick in about 70 percent
of Iomega's total gross profit this quarter, analysts
said.
Iomega last month filed for a temporary restraining
order against France-based Nomai and its U.S.
subsidiary Nomus. Iomega, in this trademark and
patent lawsuit, wants to prevent Nomai from selling
its cheaper XHD cartridges that are designed to
work with Iomega's 100MB drive and from
advertising them as Zip-compatible.
Meanwhile, an appellate court in France earlier this
week lifted a temporary injunction against Nomai in
this dispute. A separate hearing on the French case
is also expected today.
But despite the threat to Iomega's cash cow,
analysts say even if Nomai is able to start selling its
products by January, Iomega won't feel the effect
until the second quarter at the earliest. Nomai's
capacity to produce disks is small, analysts say.
"They will have to sell those disks cost effectively
and in mass production," Crawford DelPrete, a
storage analyst with International Data Corporation,
said.
He added that Nomai will need to produce enough
disks to fill store shelves, if the competitor is to take
market share and revenues away from Iomega.
Iomega, however has brand recognition on its side. If
Nomai moves into the U.S. market, Iomega will try
to educate people about the importance of buying an
Iomega approved disk, analysts say.
"Iomega has an incredibly strong brand. Some people
do buy on price alone, but most people do look for
Zip compatibility or Zip certification," DelPrete said.
And analysts note that when new industry players
step into the market, the question of quality and
compatibility will arise. Nomai could sell disks
cheaper, but, are they as good? asked Stan Corker,
an analyst at Emerald Research.
The natural progression of any industry is to
eventually have more than one player. And that will
be good for the consumers because everyone's
prices will have to come down, Jeff Kingston,
Nomai's attorney, said.
"Iomega has been raping the consumer with its
monopolistic practices. We are going to bring lower
prices to the market and give consumers a choice,"
he said.
And that could put pricing pressure on
Iomega--cutting into their profit margins for the
drives.
But Corker said even if competitors enter the
market, the demand is growing so rapidly that there
is almost a need for a second manufacturer of Zip
media disks to satisfy the market requirements.
He predicts that the 1998 market for Zip cartridges
to be 100 million units, compared to just under 50
million units in 1997. In 1996, 22.5 million units
shipped.
Corker predicted that Nomai would not be able to
produce more than 10 percent of the 100 million units
expected to be produced in 1998. That leaves 90
million units for Iomega, an 80 percent increase in
unit shipment growth.
Iomega's stock fell 2-1/2 points yesterday with
almost twice its daily volume after the company
reported that its new Jaz 2GB drives and disks,
scheduled for shipment in the fourth quarter of 1997,
are now expected to ship in the first quarter of 1998.
The company said the products needed to go through
additional quality testing. |
