Iomega's Jaz 2GB doesn't seem to be very cost-competitive at all compared to the SyJet, which sells for $299 including 3GB of storage for the internal version. With the Jaz, that would cost over $600. Unless pricing changes, I think the SyJet will remain the price/performance leader. Syquest has a reasonable product for now.
Dale V., good posts. I grudgingly came to accept your analyses on Syquest on the AOL boards some time ago, after losing quite a bit of money on the stock. Live and learn, right? I appreciate your efforts, as I'm sure most people on this board do.
Are you sure that the company only gets $3.5 million for all 1.38 million shares plus the 3.5 million warrants? If your calculations on the cost of capital in the latest warrant transaction are accurate, it would indicate indeed that this company's finances are in bad shape.
I got out of Syquest (OTC: DOGG) back in February or so. I can't say I've regretted the move. I just wish I hadn't been so boneheaded about this stock earlier, when I was buying it at 10.
I would advise anyone considering an investment in Syquest to keep in mind that this company has a corporate culture based on lies and deception. They started announcing the imminent release of the SyJet back in January 1996. They displayed the prototype for the first time at Comdex in November.
Strategic vaporware announcements are one thing. Product preannouncements to generate the FUD (Fear, Uncertainty, Doubt) factor is a time-honored tactical marketing technique in the computer industry. No one does it better than Microsoft. But there is a difference between preannouncing with vague long-term time schedules of 6 to 9 months, vs. preannouncing every month that your product would be out next month... for almost a year straight. There is absolutely no way in hell that Syquest did not know in January that their product would not be out by February... and in February that it would not be out in March... and so on.
SyQuest is a company run by dishonest people. I was fooled once and I won't be fooled again. Risk is one thing, and a natural part of the technology industry. When a company has such a impressive history of out and out lies, you would be a fool to invest in it WITHOUT a guaranteed profit, like these financiers are getting.
Actually, I just realized something... Syquest is probably not really paying a "risk" premium, but a "lie" premium. If your word is your bond, Syquest's word would be a junk bond selling for about 6 cents on the dollar. The corporate history of dishonesty makes every word that comes out of Syquest suspect, and therefore almost useless for purposes of anticipating investment returns.
I am sure this factor plays an important role in this company's cost of capital. Investors rely on information to make capital allocation decisions. Companies such as Syquest, which are known to consistently and knowingly output false information, thus increase the volatility of investments based on the application of that flawed information. This "lie" premium adds to investment risk over and above normal industry risk, thus raising investment risks for the investor and therefore, in the long run, for the firm releasing the deceptive information.
Syquest made their bed; now they have to lie in it-- no pun intended. I got screwed over by these guys, and I just hope other investors don't get screwed over as well.
Monir |
