Here's an interesting comment on AOL regarding Syquest:
Subject: Re: Be careful
Date: Fri, Oct 10, 1997 9:19 PM
From: RB61
Message-id: <19971011011900.VAA29448@ladder02.news.aol.com>
Just a note to those who may be impressed with Syqt's recent stock rise and
are thinking of investing:
1) Syqt's 4th qtr ended September 30, 1997. This means that they must
conform to an annual audit by their outside CPA firm.
2) Since their CPA firm is fairly new to the engagement (don't remember
exactly when, but there was a change in firms within the past year or so), they
will be looking very closely at all reserves.
3) IF (and I am going on past history here), Syqt is unable to produce product
at a profit, the CPA firm will make them write down inventory and future
purchase commitments to a "lower of cost or market". Historically, inventory
is valued at cost. However, if the market price of the goods sold is higher than
it's costs to produce, Syqt will have to expense the difference. This led to
negative gross margins in the past.
4) Syqt has in the past, deferred releasing their 4th qtr results until the last day
available to file by the SEC. This is never a good sign.
The 4th qtr for any company is a critical quarter. They must satisfy their
CPA's of the reasonableness of a position in their reserves and accruals.
Whereas on a quarterly basis, a company can somewhat "manipulate or guide"
the numbers, at year end, with an outside audit, this becomes much more
difficult.
Invest wisely and with care.
Fool On,
Robert
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