Stock Purchases by Executives May Signal Rebound at Iomega
interactive.wsj.com
By LAURA SAUNDERS EGODIGWE
Staff Reporter of THE WALL STREET JOURNAL
Recent purchases of Iomega Corp. stock by company insiders have caught the
interest of insider-data trackers, who say their actions may finally point to a
turnaround at the beleaguered computer-data-storage company.
From Sept. 3 to Oct. 30, four Iomega insiders bought 239,000 shares of the
company's stock at prices ranging from $3.56 to $5.46 a share. Tuesday, Iomega
closed at $7.75, unchanged, in New York Stock Exchange composite trading.
Iomega, based in Roy, Utah, makes the popular Zip drives and disks for personal
computers.
But one stock purchase was particularly
interesting, analysts say. Edward Briscoe,
president of Iomega's personal-storage division,
bought 200,000 shares on Oct. 29, at $5.25 to
$5.46 a share. His last transaction was two years
ago, when he disposed of 400,000 Iomega shares
at $21 a share.
Mr. Briscoe's recent purchase "implied a sense of
urgency" that suggests Iomega shares might not fall to a lower price, says Bob
Gabele, president of CDA/Investnet, a Rockville, Md., firm that tracks
transactions by company officers and directors, known as insiders.
After Mr. Briscoe's purchase, Iomega shares rallied to as high as $10 before
settling back to around $7. "The recent run-up indicates a great deal of investor
enthusiasm in the short term," Mr. Gabele says, "but insiders may also be
signaling that the stock is, in reality, more of a long-term idea."
Though Iomega shares are up significantly
since hitting a two-year low of $3.063 in
October, the stock is off 41% this year,
compared with a 10.7% decline in the
Russell 2000 index of small-cap stocks.
Iomega's all-time high was $27.56 in May
1996. Iomega has 263 million shares
outstanding.
Craig Columbus, vice president of
research at Disclosure Inc., Bethesda,
Md., notes that Iomega insiders have
shown good timing in the past. "In 1995,
insiders were buying just before the
company became the darling of Wall
Street," he said. Now, Iomega is one of
the few instances where company insiders were buying in October.
Iomega doesn't comment on personal investments by its executives, a
spokesman said. But, he added, "with the progress we've made toward returning
to profitability, we're encouraged about the future of the company." He said Mr.
Briscoe's purchase wasn't related to stock options.
Analysts were impressed with the size of Mr. Briscoe's bet. "This is a guy who
can see on a day-to-day basis the company's inner workings," says Joseph
Besecker, president of Emerald Research, Lancaster, Pa. Considering the fact
that Mr. Briscoe has plenty of options, the Emerald analyst adds, "For him to
step up was extremely significant. I don't think he made this type of investment
as a speculation to anything short-term."
Other buyers included new President and Chief Executive Jodie K. Glore, who on
Oct. 29 bought 15,000 shares at $5.31 each. It was Mr. Glore's first purchase
since his appointment Oct. 22.
On Oct. 20 through Oct. 30, Chief Operating Officer Scott L. Flaig bought 20,000
shares at prices ranging from $4.40 to $5.44 a share. Vice President James
Taylor bought 10,000 shares on Sept. 3. On Sept. 8, James Sierk, a director,
bought 4,000 shares at $3.88 a share, and on Sept. 4, Fred Forsythe, president
of the professional products division, bought 10,000 shares at $3.56 each.
The purchases came at a time when one big Iomega competitor, Syquest
Technology Inc., is experiencing financial difficulty. Though Iomega is expected
to benefit from the problems at Syquest, which Tuesday sought bankruptcy-law
protection from creditors, Emerald's Mr. Besecker says that Syquest wasn't a
major retail competitor and not at all on the original-equipment-manufacturer level.
Iomega, with about 86% of the removable-storage market, is the de facto
standard, Mr. Besecker says. He adds that if the company's new mobile drive,
called Clik!, takes off, "this can be an exciting stock again." |
