RB,
RE: I may be that lunatic you're looking for
>> I am very bullish on SYQT and basically reflect a totally opposite viewpoint from your most recent post this morning. I like SYQT short, intermediate and long term. <<
I'm glad to see a SYQT bull with some reasons behind his bullishness. The general consensus here is "Iomega is bad", "SYQT stock is cheap", "SYQT is going up" (but no reason given), and "SyQuest makes better products" (maybe that's their reason?).
>> Although I felt the CEO could have used a few lessons in positive speech deliveries, his message came through loud and clear to many of those that have taken the time to research the big picture. In other words would it have been better for the CEO to have replied, "We will do everything possible to ensure that we can meet the demands to fill the pipeline, by taking whatever measures are necessary to finance this unprecedented demand." <<
That does sound very positive (about meeting demand), but be careful what "measures" they take to "finance" that demand. Dilution helps SyQuest the company but hurts SYQT the stock.
>> Don't underestimate the power of the retail shelf, nor the effect of a short covering, if that revenue stream is validated. <<
Very good point. SyQuest has certainly penetrated the retail shelves. At one point, they had equal shelving with Iomega in at least one store here in the St. Louis area. (They don't now, though.) It's possible that their penetration in retail will increase sales some, but I don't think we've seen it yet. They's still FAR below their sales levels of the last several years.
Short covering will not be an issue, IMHO. There are under 4 million shares short (as of 7/15). That's 4 days average volume and only about 5% of the currently outstanding stock. That's low.
>> Yesterday's action from 2:00 on, millions of shares at the offer price without resulting price movement was indicative of shorts piling on the wood. Today's drop to the 2.75 level was expected, as it represented yesterday's gap up at the open, and needed to backfill to that level. If we can raise back above the $3.00 level, it will test the conviction of the shorts, and we could see an explosive upside movement. <<
I think the runup yesterday afternoon was more likely due to speculation on the earnings. The selloff today (which I admit has so far been less than I expected) shows that the speculators were disappointed.
>> But, as both a trader and an investor, I am betting that there are several press releases waiting in the wings that will further test the shorts resolve. <<
You're probably right. I'm sure there are many positive press releases to be released in the months to come. But what about the releases about further dilution?
>> On a longer term view, I feel that as the trade press continues to spotlight Syquests drives, and the price per meg continues to be lowered, it will only enhance Syquest's market share and apply margin pressure to Iomega, that they can ill-afford. <<
Iomega can afford much more margin pressure than SyQuest. Don't forget that Iomega's goal is to get Zip down to $99 at retail. They're rapidly approaching that target, while maintaining margins. Iomega is continuing to lower product cost through extensive R&D. SyQuest is cutting R&D.
>> I am in no way saying that Syquest is a gimme, quite the opposite, I feel it is a very speculative gamble, but at the present I feel the momentum is more in favor of those long the stock, rather than short. <<
The short term (1 week, maybe) momentum is up, but long term, the momentum is clearly down.
Likewise, the short side is also a gamble. There IS a chance that SyQuest will turn things around, and there's also the short term possibility that the (IMHO) unrealistically high price will continue or even go higher.
- Michael Coley
- i1.net |
