Hi Steven, and All IOM posters... I agree that we do need some new higher density Zip drives/disks, and as far a we know the 200 MB model is in development and there has been a working prototype in the lab as of sometime in the last year or so. You mention smaller size, well unless Iomega comes out with a caddy that will take a smaller high density Zip, then the idea of it being "compatible" with other Zips just doesn't make sense. To be compatible the new Zip would have to be able to fit into present drives without any extra devices to add to the mix of stuff on your desk. KISS... Keep it Simple...
With all the talk about newer magnetic packing densities, I would imagine that the IOM research and development engineers and scientists have bread-boarded MR technology and this is going on now in their labs. IBM has already mentioned that they will be able to put up to a Gig of memory storage in a match book size tiny drive "sometime in the next several years", so if they can do it, why not IOM? If the Clik! drive does anything, it will get IOM engineers working hard on smaller and smaller drive mechanisms, motors, LSI multi-function chips and simplifying manufacturing technology. One new product tends to add to the technology for the next new product down the line.
I for one am optimistic about the Clik! drive, even if a built-in Clik! drive is not picked up initially by an OEM and put into a digital camera or PDA, etc. I still think that having a pocket size Clik! drive will be a fantastic add-on for folks who have bought digital cameras or have PDAs and palm-size mini-pcs and don't want to carry a laptop computer around with them just to off load their photos and data from flash memory to the HD or Built-In Zip Drive. Iomega did just this when it brought out the Zip drive. I also think that the news about the sign on of Citizen was not given the importance that it deserved due to the negative tone of everyone nowadays. This was very welcome news!
All Zips were initially sold as add-ons to PCs as parallel or SCSI flavors and the market responded to its "added value and ease of use" and bought the idea. Later on, OEMs saw that by adding a Zip to its boxes influenced many buyers who saw this as a "value added" item and its demand increased (note the new inclusion as a standard by several European PC makers mentioned in an earlier post #51507) and the fact that Micron has now made the Zip standard as the boot drive on its entire consumer line of PCs. The inclusion of Zip in "build-to-order" PC companies like Micron, Gateway, and Dell will continue to increase as long as the cost of adding a Zip drive still seems reasonable to the buying public and resellers alike.
Each Qtr. the rate of OEM penetration by the Zip goes up. I would not be surprised to see this trend continue for at least the rest of this year. There just isn't any competition in its price range when you take the "is it compatible with the other 13 to 14 million Zip drives that friends and business associates use?". This factor must be taken into account. From the figures presented here by persons in the "reseller" market, Iomega removable storage devices, both Zip and Jaz, appear to be selling very well and the over-inventory that built up in contemplation of a "better than usual Christmas season" is being sold down to acceptable levels as I write this.
Yes, I was as shocked as anyone here when the news came out that Mr. Kim Edwards had tendered his resignation! But when you look back you realize that although Kim brought this tiny, insignificant, removable storage company, from near bankruptcy to where it is today, a company that essentially "owns the removable storage market" and has a market capitalization well over 2 billion dollars and world-wide brand name recognition, he has already established marketing methods that will far outlast his presence within Iomega. Did he make some mistakes, oh yea! And because of these the board must have decided that he was now more part of the "problem" that part of the "solution" to the current woes of the company. According to the news item in the WSJ on the day of this resignation, Kim was said to have approached the board on an informal basis about his stepping down "several months ago"! Just how long ago is not indicated, but his leaving appears to have been in the process much longer than some posters have expressed on this thread.
What were his major mistakes"?:
1. Not establishing a reliable line of critical components for building Zip drives, thus leading to low inventory levels which caused serious shortages of certain flavors of Zips, especially those sold to the general public through resellers and computer outlets like CompUSA, Computer City, Best Buy, Insight, and mail order PC outlets.
2. Not realizing the demand of OEMs would be as high as it turned out to be. Thus, drying up the supplies for the after-market crowd... as mentioned above. This may continue even today, but we will have to wait to find out more during the next conference call.
3. Not facing the problems with consumer support early on with a massive system upgrade as to how IOM dealt with Zip and Jaz owners who were having problems with the "click of death" in Zip and quality control problems with the Jaz. If KE only gave IOM a "C" grade on this part of his business, I would bet that most consumers who waited at the other end of those trouble calls waiting to talk to a human, and not be lead around the convolutions of "if your problem is with... press 7" type of "support", they would have given this service a "D" or and "F"grade depending how good the final outcome was and how much it cost them in toll charges and service charges from IOM.
4. The "rebate" program also led to even more negative feelings in those who sent in their coupons and waited for most of a year to see their money sent out or in some cases, the entire rebate record was lost somewhere in the limbo of whoever was contracted to handle the rebate program.
5. Quality control was also not up to par... expanding into the market too quickly, especially with the embarrassment from the recall of the 75,000 Jaz cartridges. That surely hurt the bottom line and was very costly to the public image of IOMEGA products as well. Yes, IOM handled this in an expeditious manner, but it did hurt them and the next Qtr. earnings figures as well.
6. Early hype about new products that turned out to be less than they were touted to be or ones that still are "vapor ware". Note the n-hand announcement far in advance of any real product. This finally resulted in the Clik! and much, much, more hype about a product that was at least most of a year away from being sold. Could some of this hype have been done just to drive the price of the stock UP, just at the time that some folks sold a large number of shares? Only your class action lawyer knows for sure!! Buz is getting less than desirable reviews and Recordit may not have turned out to be as great as it was touted. Again, it is usually a mistake to get involved with products outside your core competency! Many examples of this exist in the history of conglomerate companies that have made similar ventures outside of what they really know! If they thought that these products would increase the number of Zip disks or Jaz disks sold... maybe so, it could work, but the products would have to be very compelling and easy to install and use and ones that provide real value to the consumer. I don't think that the Buz or Recordit products really meet this standard.
7. The Stock Split! A really dumb thing to do! Didn't make sense to the Market and only led to a feeling that IOM was doing some things that were not well thought out and wound up not adding value to the investor. And then they gave a pretty lame reason for the split... "We need to have more stock to provide incentives to hire more really smart people to expand the company and for giving bonuses to the big guys when they needed more compensation than was warranted by their performance!" The split also acted as a magnet to keep many small investors in the stock right up to the "bad quarterly report"... I know this did influence me to stay long. It was a nicely laid TRAP!
8. Announcing that the Jaz 2 delay would not affect the bottom line. And, the delay itself... why announce that you are coming out with a revolutionary product and then pull out the rug from the waiting consumer? After all if you were going to buy a Jaz drive, wouldn't you be willing to wait just a little longer to buy the newer improved model? This undoubtedly hurt sales of the 1 gig Jaz drives and disks and hurt cash flows into Iomega during the very critical Christmas quarter! How many strikes are we up to now... Oh what was that... Maybe we are just running out of innings!
9. The last gasp tone of the 100 Million dollar ad campaign was also very unfortunate, especially when NONE of the analysts could quite fathom why Iomega would want to do this rather than to respond to lower sales in the USUAL MANNER, by LOWERING PRICES~! This was the last STRIKE, INNING, OR STRAW to the investment community and the MARKET as we all saw what happened as investors, funds and insiders all voted with their sell orders, driving down the price of the stock to near its 52 week low in a matter of hours. If the ads had been mainstream and not "extreme" to borrow a quote from George Bush, then they might have worked to bring back some of the confidence in the stock... but this did not happen. I don't know who hired the ad firm to do this recent series of ads, but by now he ought to be tied to some nice ant hill near Roy, Utah. The ads just didn't click... The airplane ads were just plane dumb! And the family loosing everything in the house was sort of cute with the dog and the retainer, but made Iomega customers to look like a bunch of less than functional folks out there in consumerland who misplace just about everything. How would they ever be expected to find an orange, yellow or green Zip disk when they really needed their stuff? So a change in ad agencies is certainly called for as well as cutting back on expensive, dumb TV ads as the first measure to take. Lowering Prices would be Nice TOO!
10. I have a feeling that Kim knew he was on his way out when he gave his "poorest" performance yet at the Conference Call in January! I'll bet that this is why he was so "negative" and showed such a change in his confidence level during the call. He may have just been fired or maybe he had just announced to the board that he was leaving the company. This would explain a lot, especially when you go back and read the tone of his remarks during the CC. This was not the same man that had given the previous CCs. Maybe, he was never that good at handling questions from the analysts, some of whom were quite friendly to IOM, but he just came off as a beaten, defensive, chief executive... and no one knew why.
11. Getting back to his insider sale of IOM stock, this alone could have indicated that he was thinking about leaving the company even back in the fall when IOM was trading at a high of 32 bucks a share.
Wow, were those ever heady days! The world was right, I was at the bow of the Titanic yelling... "I'm King of the World!" ... but little did I know that KE may have known a lot more about the "ice bergs" that lay ahead for us all. There sure weren't enough life boats on board this time either! And the sinking took such a brief time, most of the casualties took place "after hours" when no one except the captain and crew could get off the deck fast enough.
Yes, KE brought Iomega to a new level and helped produce a new standard in removable storage, but he also contributed to the fact that the stock is now moribund and broken for months to come. A multitude of Law firms are lying in wait to bushwhack Kim and several other board members as well as the company itself. Frivolous or not, lawsuits and their defense always cost big bucks and take away the company's revenues and the focus on where they are going. The Nomai problem is still unresolved as are lawsuits against Syquest. All which leads to lower confidence in the stock by investors and funds and which will keep the stock in the doldrums for months to come.
Are there glimmers of hope for us all? Yes! But how long will we have to wait before these uncertainties are cleared up... Who knows? Only time will tell what the final outcome will be. However, I am going to continue to hold on as I still think that the company will continue to do well in spite of the loss of "Mr. 1995 Entrepreneur of the Year" Kim Edwards....Good Luck and thanks to all who took the time to read this very long post. Still hurting from my paper losses, but Long and Holding IOMEGA... My Best to all the other IOM Investors on the thread, Sorry Rocky, I just can't bring myself to include you! >>>Mel
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