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

To: David Colvin who wrote (8538)	3/26/1999 2:53:00 PM
From: David Colvin	Respond to of 10072

More from the AOL Motley Fool board: Thanks to a poster with the screen name CRobin311 on the AOL Motley Fool board, below is a condensed version of the history of Iomega. I certainly learned some things I didn't know. I've also done a small amount of editing for clarification. Here it is. From Hoover's Handbook: David Bailey and David Norton started Iomega (an offshoot of an IBM research facility in Tucson, Arizona) in 1980 with the help of a venture fund controlled by the Bass family of Texas. It's first product, the Bernoulli Box (developed and abandoned by IBM), was a disk drive system used by the government and based on an aerodynamic principle named after 18th century Swiss mathematician Daniel Bernoulli. In 1983 Iomega launched the storage drive for PC users. Its success was attributed to the fact that it could be removed from the disk casing and featured technology impervious to dirt (unlike rival systems). The company went public that year. Earnings rose to $2.5 million in 1984, but by 1987 poor management and lagging sales had led to a $37 million loss. The firm closed it's plants for four months, cut nearly half its employees, and shifted focus to tape backup systems. CEO Michael Kucha, an early Iomega investor, cut costs across the board except in development. By 1988 the company looked healthy again. Twenty-two-year Hewlett Packard veteran Fred Wenninger replaced Kucha in 1989 and tweaked Iomega's manufacturing and design processes to save time. Earnings reached $14 million in 1990, but within three years the Bernoulli system's niche market had caused another financial downturn and round of layoffs. General Electric marketing heavyweight Kim Edwards took over as CEO in early 1994 and immediately began changing Iomega from a technology-driven into a marketing-driven firm. In 1995 Iomega transformed the consumer market for external storage devices with it's 100 Mb, low-cost Zip drive and it's Jaz drive, which held 10 times the data of the Zip. Shirts and other items bearing the Iomega logo became company moneymakers. "After Bill Gates, Edwards has done the best job of marketing in the computer," one analyst wrote. Sales surged more than tenfold between 1994 ($141 million) and 1997 ($1.74 billion), and the company became the subject of intense speculation and commentary by participants on the Motley Fool bulletin boards on America Online and the Web. Expanding overseas, Iomega partnered with electronics giant Seiko Epson in 1995 to market Zip drives in Japan. The company kept producing smaller and more powerful storage devices, and convincing computer manufacturers to include Zip drives in their products. In late 1996 Iomega eliminated hundreds of jobs in Utah and moved it's manufacturing operations to Malaysia. In 1997 the company recalled 75,000 Jaz storage disks to replace a malfunctioning component that could damage data. It also had trouble keeping up with customer demand. Also, in 1997 a breach of warranty suit was filed (settled in 1998) by users who complained of delays for telephone service and the resulting hefty call charges. In 1998 Kim Edwards resigned as CEO amid slipping sales, poor quality control, and rising marketing expenses. Iomega announced in mid-1998 that the company would cut up to 700 employees (about 14 percent of the workforce) in an attempt to reduce costs. To settle a patent infringement suit with rival disk maker Nomai, that year Iomega pledged $24 million for a majority stake in the French company and for certain Nomai technologies. Late in 1998 Rockwell International executive Jodie Glore took over as Iomega's CEO. In early 1999, Iomega agreed to buy struggling rival Syquest Technology. Hope some enjoyed reading this as much as I did, Dave