Re: News from CMP, 11/24
Tom, Thanks for the post. There's one statement that I certainly agree with:
"We needed a breakout product for the consumer market to make people pay attention," said Gary Marks, SyQuest executive vice president of marketing.
SparQ? Yes, of course. On paper the product looks hot. Very good specs and an incredible price. If we forget about the Orb for the moment, and assume the SparQ performs as stated, then positive reviews and press comparisons should follow in short order.
With all the warrant conversions, Syquest should also have the cash available for continued product ramp-up and marketing expenses.
Assuming no quality issues or component shortages, then Syquest has everything it needs for a truly successful product. Once the product is widely available at retailers, consumers will certainly be taking notice. Sales could really start hummin'.
Will it impact Jaz? Yes. SyJet? Yes. Will the impact be significant? Well that's the real question here, because I believe that if the SparQ were to become a smash hit, then future Jaz and SyJet sales will have to suffer as a result. If the SparQ turns out to only be moderately successful, then Jaz and SyJet sales will probably remain mostly unaffected.
Syquest needs a smash hit. Another "good" product is not enough. Syquest needs a product it can grow with, one that it can start making some real money on before having to upgrade it or replace it. Like Gary Marks said, "We needed a breakout product for the consumer market to make people pay attention".
So let's say that SparQ becomes a smash hit. What will it mean to Syquest in terms of sales and revenues? Answer: probably still not enough. I've run my own models and I still can't come up with a sane scenario that justifies anything close to today's stock price.
I remain long term bearish on Syquest.
Regards - Dale
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