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Technology Stocks : SYQUEST
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To: Michael Coley who wrote (5207)1/10/1998 3:56:00 PM
From: Joon Song  Read Replies (1) of 7685
 
Going through SyQuest's recently released 10-K for 1997. I came across the following info:

"Cartridge net revenue as a percentage of total net revenue was 48 percent in fiscal 1997 as compared to 49 percent in fiscal 1996."

So basically SyQuest got half their revenue from disk sales and the other half from drive sales. Now SyQuest's gross margin for fiscal was 1997 approximately zero (slightly negative). So whatever POSITIVE gross margin SyQuest had on their disk sales, they had equally offsetting NEGATIVE gross margin on drive sales.

We all know gross margin on disks is pretty high. Even if they were low, I would say they would have to be at least 30%. That would mean SyQuest sold drives for at least 30% below cost.

Holy cow!!! Why does anyone think SyQuest is going to have a good quarter? Higher sales maybe. But that just means higher losses.

Joon
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