RE: Easier for SyQuest to increase 25% than Iomega?
>> I submit, considering the present situation, it will be easier for Syquest to increase sales 25% than it will be for Iomega. And that my friend, is why my money is on Syquest and not Iomega. <<
And if that's truly the case, that's where your money SHOULD be. History indicates otherwise, though. A couple questions for you:
1) If SyQuest were able to increase revenues 25%, why wouldn't they have done it last quarter, the quarter before, or any of the last eight or twelve quarters? Take a look at their revenues over the past several years:
1994: 221.0 million
1995: 299.5 million
1996: 200.4 million
1997: 122.7 million
It's going the wrong way!
Now let's look at Iomega:
1994: 141 million (SyQuest is ahead at this point!)
1995: 326 million (Have no fear, Zip to the rescue!)
1996: 1,122 million (WOW!)
1997: 1,740 million (WOW again!)
In three years, they grew from 141 to 1,740. That's over a 1000% increase, which is 130% annualized or 23% quarter over quarter.
Are you really that confident that SyQuest will do something that they haven't done while Iomega will fail to do something that they've consistently done?
2) If they ARE able to increase revenues by 25%, will they take any of that to the bottom line? In 1995 [SyQuest's "best" year recently], revenues were $299.5 million, which is more than double current revenues. They lost $11.8 million that year.
SyQuest is bleeding cash at an incredible rate, and they are running out of stock to trade for A/P and parts. In the past two years, they've diluted the stock from 11 million shares to 153 million (or 72 million if you prefer to ignore the warrants and options--bad idea). Through that, they've generated $180 million in cash. But in that same time period, they've lost over $200 million on revenues of only $325 million. You just can't do that indefinitely. This merry-go-round is about to stop.
Good luck with your investments! I may be wrong on this. I've certainly been wrong before. But from my point of view, a gamble in SYQT is like betting on the a horse that's dead last when the race is almost over.
- Michael Coley
- wwol.com |
