Oh what a tangled web we weave....Syquests incredible money machine....Spar Q is announced, but cash is almost depleted, and most of the authorized shares have been issued. The figures just released are awful...If these figures are examined with objective ratios that aren't distorted by the rapid expansion of shares outstanding, they become even worse (Look at sales per share, for example.)
In an attempt to gain market share, SYQT has cut selling prices rapidly, and is again selling product at a loss. What leads you to believe that they won't keep issuing shares to fund the making and selling of products at a loss, all the while hyping prospects for the future? Last quarter, we were lead to believe that there was great improvement. Then, there was the recent "hyping" about "exponential" increases is sales due to their advertising campaign and tremendous demand. (RE:Oct10,1997 SyQuest plots a comeback course (CNET) "SyQuest's sales into its distribution channels have increased five- to six-fold during a two-month stretch, said Ed Harper, the company's president and chief executive".) The quarterly report seems to indicate that there must be alot of inventory in the "sales channel", since sales were disappointing! Some in the media and on the "boards" ate the bait and catapulted the stock to levels where I suspect that huge volumes of Conv. Pfd were pressed into "$Syquest's amazing money machine." Financiers are free to obtain stock at discount prices in exchange for cash needed to feed this "CASH COW." They soon reap huge profits at the common shareholders expense. The only thing growing "exponentially" here is the shares outstanding. Now they want to double the shares again so they can continue to operate "$Syquest's amazing money machine."
It appears to me that SYQT is working very hard for the interests of their Conv. Pfd. holders, at the expense of their common shareholder...
Every time that there is a big volume spike, John Q. Public gets excited about the prospects for the future and buys the stock. Meanwhile, there is almost always a "conversion play" going on, when the pfd. is being exchanged for stock, which is, or often, has already been exchanged for "cool hard cash." (They have used complicated techinques to sell common before the conversion, then replace those shares with the newly converted shares. The dates when they can occur [see SEC filings], often corresponds with a volume spike.)
If SYQT really wants long term shareholders, they would offer them warrants, rights, or conv. pfd., instead of just their "FAT CAT" friends. While being intrigued by the "carrot" of the Rocket and the SparQ mentioned in this otherwise dismal report, management doesn't show the least bit of concern for their shareholders.
It is rough feeling like you have been lied to...It is even harder when significant time has been invested along with the money...I find it interesting that H. Montgomery, former CFO, resigned before the recent events. I feel like managements credibility is severely damaged.
Good luck SYQT holders....hope you don't drown in the flood of new shares. I strongly recommend withholding approval to increase the outstanding shares until SYQT deals with this issue!
Sincerely
XCLENTLY |
