Mary,
I apologize. My math was flawed--too early in the morning. The company needs 41% sequential growth to achieve $1.6 billion. I think this is impossible because the company has stated that they are currently component and production constrainted. So if there are constrains on production, yet orders are growing rapidly, the backlog must increase. So either orders are not exploding as everyone assumes or the company is lying about component and production constraints. I do admit that I do not understand the relationships with Epson, etc, so maybe traditional accounting does not apply. I do believe that regardless of what company produces the drive, backlogs should increase if overall system production is constraint. If components are constraint, I would assume Epson would suffer from the same problem.
Finally, high R&D expenditures are of course not a prerequisite to high growth. However, high R&D expenditures are usually tantamount to high barriers of entry. If Syquest can come up with a competitive product with its financial problems, what do you think Seagate and Western Digital can do? Further Seagate and Western Digital already have established relationships with all OEMs. Finally, according to Bob Blair (WDC's investor relations contact),Western Digital will be entering this market shortly.
I am obviously short, but I just do not believe companies deserve multi billion dollar market capitalizations before proving that they can deliver and execute.
Joe Rizzo
JMR Trading |
