Michael
>>I think it's VERY safe to assume that they AREN'T making a profit on the 3GB deal. In their most recent quarter, their gross margin was 3% (yes, THREE PERCENT), and that was before the 3GB deal. Since SyJet made up a large part of their revenue, I think it's very safe to assume that the SyJet gross margin is about the same.<<
Not necessarily. While waiting for the far east plant to come on line the Syjet drives were primarily manufactured in the U.S.. I wonder how much of their production, in that quarter, represents California production?
>>Now, the customer already has two cartridges. Instead of buying two or three more, they will be buying one or two more. That's a HUGE decrease. I think that the impact on future sales AND margins will be large.<<
Your concerns are based on the assumption that Syquest's margins are and will remain at 3%. I'm not convinced this is so. Additionally, (IMHO) SYQT needs sales inertia. If they can get people buying Syquest products, they can then reevaluate their 3GB 'special'. Isn't it reasonable to assume the sale will only run for a specific amount of time? The 3GB deal is a great one. You'd better buy yourself one before they stop the special. :-)
Regards - Emory |
