To: Philip J. Davis who wrote (54803 ) 5/16/1998 9:55:00 AM From: Jock Hutchinson Read Replies (1) | Respond to
The 10-Q is not surprising. It reflects the cut throat nature of the business. Phil, sometimes people miss the forest because they spend too much time gazing at the trees. Why would you even care about SyQuest? One needs to take a step back and look at Iomega as an investment. What does it do? It's in the storage business at the low end of technological sophistication. Historically, all storage companies have had repeated brushes with bankruptcy due to both technological obsolescence and intense competition in this commodity like business. There are many industries that are commodity like. There are many industries that face technological obsolescence on a daily basis. But for a combination of the two, storage is as tough as it gets. Worse yet, Iomega is in a business where there are an increasing number of competitors some of whom have much larger bankrolls--including one that has by far the largest share of the removable storage market. Iomega spends a disproportionately lower amount of its revenues in R&D and is wasting millions in an ill-conceived ad campaign. Iomega's greatest strength, its installed base, only amounts to at most five percent of the PC market, and that base is not growing relative to the increase in the PC market. Iomaniacs are not alone in their nostalgic wish for the glory days of '95 and '96. We all wish for our glory days. But the simple fact is that this is a tragic investment that you Phillip Davis would not even consider spending a dime on in fresh money today, yesterday, or tomorrow. I have not seen one new investor post on this thread since February. And notwithstanding the utterly ludicrous opinions of our so-called legal experts that Iomega is insured for its potential losses resulting from various stock manipulation suits, no sane company would consider taking over Iomega with the threat of punitive damages. And folks, for the last time. A successful stock manipulation verdict often includes a sizable punitive damage award. As a matter of sound public policy, one is not allowed to insure against punitive damage awards. This means that any punitive damage award would come straight out of Iomega's pockets. Could Iomega hit eleven again? Yes. Could it also face BK? Without a doubt. Is there any compelling reason to hold onto Iomega? Yes, if you the individual investor are so deeply in debt that selling out at the current level will reduce you to near insolvency, then you might want to hold.
