RE: Why do I post here?
Recently, I got an e-mail asking why I post here on the SyQuest thread. Since I get those fairly regularly, I figured it would be best to give my answer here publicly:
1) Although I have considered shorting SYQT, I never have. I do not have a financial interest in the stock either way, and have never made or lost a dime on the company.
2) I do have a very large long position in IOM. The success or failure of SyQuest will not, in my opinion, materially affect Iomega. Personally, I would rather see SyQuest survive and prosper. A little bit of competition is always good. They make good products, and I would consider buying one if I thought they would be around to support the product and supply cartridges for it.
3) When I first started posting here, I knew a few people who were buying SYQT. I wanted to make sure that my friends made a wise investment, so I did some research on the company. At the time, SYQT was quite a bit higher than it is now, so it wouldn't have been good if they had stayed in.
4) Very few investors (or gamblers, as the case may be) in SYQT realize the tremendous dilution that has taken place and is in still continuing. I feel that Dale and I have done a good job of making the readers of this thread aware of the problem. The general public IS NOT aware of this problem. You can confirm this by reading messages just about anywhere else--usenet, Yahoo, etc. I believe it will all come to light with this quarter's report and the new SEC reporting rules. I think it could be very dangerous to be holding this stock in the next month, particularly after earnings.
5) There are tons of false rumors floating around and "new reasons why SYQT will do good this quarter", which are actually the same stories that have been given for several quarters.
6) With the research that I've done on Iomega, I consider myself very familiar with this sector of the market. When I think I have something to share that I think will help others out, I share it.
7) I have absolutely no desire to see anyone here lose money (even Rocky). Anyone who knows me, knows that I'm very honest and will report things as I see them.
8) If someone is truly bullish on this stock, my bearish comments should only help them to understand the potential problems, do more research, and hopefully come to a better understanding (whether bullish or bearish) of the company that they are investing in.
I certainly don't think that I'm always right, and have made my share of mistakes investing. I'm usually horrible at predicting short-term movements in stocks, but believe very strongly that the fundamentals are always eventually reflected in stocks.
My basic problems with SYQT, which can all be supported with a little bit of research (that I have already done, and that you need to do before you consider investing in the company) are as follows:
1) Massive dilution is still not fully reflected in the company. There are over 70 million shares issued and over 150 million accounted for.
2) They have been totally ineffective competing against Iomega.
3) They have a pattern over the past couple years of selling products below cost and obsoleting products rapidly.
4) There is massive overhead resistance around $3 due to the large number of warrants exercisable at about that price.
5) R&D spending has been steadily dropping.
6) I've built models of 1998 SyQuest financials, and even with the most liberal allowances for growth, positive margins, and level or reduced operating costs, I don't see them making a profit this year.
I hope this helps the readers on this thread understand where I'm coming from. I really do wish you all well in your investments, whether they be in SYQT, or some other stock. I think that it's possible to make some money trading SYQT, but investing in it is (IMHO) like investing in used Lotto tickets from last week.
- Michael Coley
- wwol.com |
