Saying The Long Goodbye

Got a call from an old friend; we used to be real close.

Actually, it wasn't quite like that. It was more like opening a drawer and discovering a trove of old Zip disks, the contents of which have long since been transferred to an external 80-GB backup drive.

Funny how something once so familiar can fade from memory so quickly. But not from touch. The tactile sensation of one of the drives I held in my hand brought back a flood of Zip memories, including that familiar eject sound. Sort of a cross between a plastic click and a pneumatic whoosh.

That got me thinking about the maker of the Zip drive, Iomega. Five years ago, the company was a thriving entity with annual sales of more than $1 billion and a share price of nearly $35. Today, its sales are less than one-third of that, and its shares trade for around $3 each. That's right, less than 10 percent what they once were. Its head count, once above 1,000, is now down to 400. And more layoffs are coming. In July, the company announced a restructuring plan that will eliminate 30 percent of its workforce. Some way to celebrate a 25th anniversary, which Iomega is doing this year.

Now, after trying its hand in camera storage, MP3 players and online storage, Iomega is betting the future on Rev, a higher-capacity Zip-like storage option. Clever and neat, the external drive offers disks with a storage capacity of 35 GB. Nifty. But enough to attract a following of loyal partners? Let's just wish Iomega well and happy 25th.

There are scores of other companies that IT consultants and VARs once represented. But like Zip disks in storage, they have faded from memory and value. Think SGI, Artisoft, Sybase, 3Com, Borland, among many others. Many reasons explain what happened to these once-proud companies that boasted strong sales, innovative product portfolios and thriving channel practices. Several were completely mismanaged. Artisoft, Borland and Iomega sure were. One Iomega CEO went so far as to basically take on the entire state of Utah, where Iomega was based at the time. He said the company's staid culture and conservative values prevented him from hiring sufficiently talented people to turn the company around. He was shown the door shortly thereafter.

Borland built a campus that was probably better suited as a Four Seasons resort. Had it gone into upscale hotels, it probably would have done better. It has since fallen from view. Actually, it had been falling from view for some time. A year ago, its share price was twice what it is today. Though its software-development optimization tools continue to win awards, the company is struggling. Slow sales early in the second quarter prompted the company to preannounce earnings--rarely a good sign. When it did finally announce results for the quarter in August, they were indeed bad. The company's sales fall-off is actually accelerating, and its losses are mounting. Thanks to another round of restructuring, the company posted a loss of $17.5 million on sales of $66.5 million.

Then there's Artisoft and 3Com. Neither are growing, neither are making money. Despite restructuring, reorganizing and rethinking just about everything from the ground up, the companies have yet to find a winning formula. But at least they are still trying.

It's funny what can upend companies. One-time leaders have stumbled for a variety of reasons. Founders hang on too long after their companies get big. Think Borland. Other companies cling too long to once-fruitful revenue streams. That was Iomega's sin; despite repeated attempts to diversify its revenue, Clik, Jaz and other products never amounted to the future of the company. Still more bet wrong, or worse, crossed swords with Microsoft. That's what WordPerfect, Borland, Novell, Sun Microsystems, Lotus and a raft of others did. All are but a shadow of their former selves.

What's interesting is which companies rebound from near- death experiences. Apple did better than any other. Sybase has rallied surprisingly well. And Novell, once left for dead, is trying awfully hard. In each case, a little luck, a bit of timing and a killer product line have kept these companies afloat--that and a loyal channel and customer following. But, except for the occasional feel-good story, most never come back. What's gone is gone. Sentiment, wishful thinking or even management tinkering can't restore the luster of many a proud, fallen giant. My advice: Tell the old friend when he or she comes knocking that you simply don't have time.