UTAH TECH WATCH - - by David Politis - - 5/4-6/96 Edition

A little less than two years ago you could have bought shares in Iomega for
less than $.67 per share. Today those same shares would be worth roughly
$150.00 apiece.

The meteoric rise of Iomega's stock price and its business fortunes have
been mind-numbing.

With its 58.9 million shares outstanding as of late this week (following a
3 for 1 stock split in late 1995), Iomega now commands a market valuation
of close to $3 billion.

That's amazing when you consider that as of January 31, its market
capitalization was less than $800 million.

Making millionaires

The depth of the transformation of Iomega didn't really hit me until I read
its news release announcing that sales for the first quarter were $220
million, up from $40 million one year ago. One year ago!

And then I read the news reports about the jubilation at the annual meeting
and I was just floored. Most annual meetings are pretty staid affairs, not
lovefests.

But that's what it was. I guess people get that way when they realize that
a tiny investment just helped them buy a car or a house, or allowed them
to retire.

It really hit home the other day, however, when I was talking with one of
my clients.

Less than a year ago he worked for Iomega, and as a result he informed me
that he had had options on roughly 15,000 shares at $.86 a share.

With the 3 for 1 stock split and the price run-up, those same shares would
have brought him $2.3 million. If he had held onto all of his shares,
which he hadn't.

But he had held on to them long enough to pay for both of his daughter's
college educations and to buy them both houses.

Looking for reasons

There's no doubt in my mind that Iomega has identified a huge pent-up
market demand for easy-to-use portable storage devices with its Ditto tape
back-up systems, the Zip drive and Zip disks and the Jaz drive.

I know, because we bought a Zip drive two months ago and it works great,
both on Mac and PC. I also plan on buying a Jaz drive later this summer as
a back-up medium for our local area network.

It's also obvious that some Iomega shareholders and adherents border on the
fanatical, just as its detractors have been nearly as outspoken.

These two facts alone can not, however, account for the incredible stock
price rise over the past 18+ months.

But Mark Hulbert believes he has found an additional reason for this
stock's price performance.

Hulbert is the editor of the Alexandria, Va.-based Hulbert Financial
Digest, which is a monthly service that monitors the performance of
investment advisory newsletters.

In addition, Hulbert writes a regular column called "Wall Street Irregular"
for Forbes magazine.

In the April 22 issue of Forbes, Hulbert writes about the results of a
recent study that suggests that every time a company has a stock split,
these stocks will generally outperform the stock market for up to three
years.

Specifically, every 2 for 1 stock split on the NYSE and Amex stock
exchanges between 1975 and 1990, the split stocks gained an average of 7.9
percent more than the market. On a compounded basis over a three year
period, the stocks gained 12.1 percent more than the Wall Street average.

This phenomenon alone is not enough either to explain Iomega's stock
run-up, but when taken in concert with all of the other factors out there,
it helps.

Another Iomega split

By the way, Iomega is planning another stock split.

According to a news announcement on April 23, Iomega's "directors have
approved a 2-for-1 stock split to be issued as a 100 percent stock
dividend."

According to Iomega, the dividend will be distributed on or about May 20 to
stockholders of record May 6.

Not that I'm advocating buying Iomega stock, mind you. But you have an
opportunity pre-split on Monday, May 6.

A marketing communications consultant that specializes in high-tech and
life sciences clients, David Politis welcomes column ideas at 801-569-2592
or via the Internet at dpolitis@politis.com.
 
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