Actually, I am long on IOM for now.
I have nothing against SyQuest's new products, but do feel that the
stock is a joke. Heck, I may buy some for the earnings euphoria
and/or an announcement of that 4.7 GB drive. Didn't the stock
shoot to 6 for a couple days after the SparQ was announced?
In my mind, the best way to compete with IOM is to develop a 1 GB
drive in the $250 range with $50-75 disks. Heck, if the SparQ were
$250 and $50 per disk, would their sales suffer all that much? At
least then they could make some money.
Does SyQuest make any money on their drives? I would say that the
money is in the disks, but at $33 per GB for the SparQ, that's hard
to imagine.
Let's say that they break even on the SparQ drive. Let's also
assume that the disks have a gross margin of 50% (very generous).
If tie-ratios are around 3 disks/drive, that's gross margins of
around 15%. Obviously, they don't have that much margin on disks
and drives may not be selling at cost. With gross margins below 25%,
it's hard to imagine the SparQ line being profitable.
-Andrew |
