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Non-Tech : Iomega Thread without Iomega -- Ignore unavailable to you. Want to Upgrade?

To: Michael Coley who wrote (5975)	1/17/1999 8:50:00 AM
From: Bob B.	Respond to of 10072

Michael, Thanks for posting Neil Sperry's column. It illustrates a point I've been trying to make for months. We may argue about whether Iomega's technology is obsolete, but there are a few million users out there who don't know what a Zip drive does. They will become convinced of the need to back up their work in the coming months, and will be amazed and delighted when they discover how easily and effectively a Zip drive gets the job done. The best thing that could happen to our stock is for two points to become "accepted wisdom": -- you need to back up all your files before 12/31/99, and -- a zip drive is the way to get that done.

To: Michael Coley who wrote (5975)	1/23/1999 10:39:00 AM
From: Michael Coley	Read Replies (2) \| Respond to of 10072

RE: Several Comments. I've finally caught up with the messages, and had a number of comments that I wanted to make. 1) Many of the people here need to just take a break. Get away from the message boards and just forget about IOM. For a few years, even. My 5 year price target on IOM is $70. I don't care what it will close at Monday. I don't care how low it drops in the meantime. If you're that concerned with the daily movements, learn TA, check out the IOM TA thread, and try to trade it. 2) I've seen many people talking about how Iomega can't keep up with the Zip 250 demand and implying that this means that the demand is huge. This isn't necessarily the case. This is the same thing that SYQT investors did with SparQ. SyQuest couldn't keep up with demand. The demand was higher than the supply, but the demand wasn't as high as they thought. My point to them then and to several here now is that you can't determine the demand until you have the supply. From what I've seen (online channel checks and local channel checks), the supply is relatively small but they aren't selling out. I don't think the demand is as high as people think. I don't think that's necessarily a problem, though. See #10 below. 3) I'm glad that Jodie is lowering Q1 expectations. At 4c, they were looking for something almost on level with Q4. And with the optimism, that probably would have been pushed out even further. That's unrealistic. We have history to tell us that Q1 is a pretty big step down from the seasonally high Q4. It's a whole lot easier to set those expectations now than two weeks before Q1 ends... I think we'll ALL be happy that Jodie lowered the expectations. 4) We've been talking quite a bit about tie ratios being around 6, but from my calculations it's actually a little lower (right now). As far as I can tell, tie ratios were about 7.5 in 1996, 6 in 1997, and 5.5 in 1998. It looks like it's leveling off, but I don't think we can count on 6 as a long-term number. I'm not quite ready to back up my numbers, but I believe them to be pretty accurate. 5) One big surprise for me was the gross margin numbers in Q4. They had set a goal of getting them into the 25% range. 28% is absolutely incredible! Since prices aren't going up, this can only be attributed to decreasing component and manufacturing costs. That means a lot going forward. 6) Everyone has been disappointed with Jaz sales (7% annual decline in unit sales), but I think the real story is in sequential sales. Unit sales were up 38% and sales dollars were up 29% over Q3. Tie rates were about the same as Q3, but up considerably over last year. Although unit sales declined 7%, revenue INCREASED 10% over last year. 7) I'm 100% behind this reorganization. I find it to be VERY positive for Iomega. In the press release describing the reorganization, they stated that the purpose was to increase TOP LINE revenues. This is what's been lacking for the past year. It's about time. Jodie surprised me (in a good way) with this reorganization. He's jumping right in and making things run the way he wants. I'm also happy to see Iomega tearing down the "empires" and making one company focus. It hurts now, but it'll be great for the future. 8) Some people have expressed concern over the amount of time this turnaround is taking. From what I've seen, it's been one of the fastest turnarounds ever. You can't make changes of that magnitude to a company this size overnight. 9) The reorganization press release also mentioned a "New Ventures Group". Sounds exciting! Should help the top-end growth! 10) Even if the Zip 250 doesn't have a large demand, it HELPS the sales of the Zip 100. A lot of times, people don't want to buy the biggest product available. By having a bigger one, it helps focus attention on the smaller one, while giving those who do want higher capacity a choice. Either way, Iomega wins. Some of that I've said is bearish (Zip 250 demand, Falling Tie Rates). Most of it is bullish. Don't read anything into it. I'm holding my shares for the long term. - Michael Coley - wwol.com