RE: SyQuest. The Next Iomega?
>> if one looks back IOM was not that much different from syqt at some point in time before, remember syqt started the removable storage product and IOM started out small and eventually beats syqt at their own game. <<
The situation is VERY different with SyQuest than it was for Iomega:
1) Massive dilution of SYQT. SyQuest has about 170 million shares of stock accounted for. When Iomega ramped up Zip, they had around 20 million. They never had to resort to dilution in order to fund the ramp-up.
2) Intense Competition. When Iomega introduced Zip, there was no consumer removable storage market. They built it from scratch. The removable storage market at the time was composed of professional power-users. Iomega didn't steal SyQuest's market, they built a new one. But this isn't a virgin market anymore. There's an aggressive leader at the top of this hill, and his name is Iomega. And down at the bottom of the hill there are a lot of also-ran's and me-too's knocking each other off the hill before they even get a good run.
3) Poor Financial Condition. Iomega was never in the financial position that SyQuest was in. Iomega has maintained positive gross margins (in fact, always above 25%!) and positive net margins (2.6%, 4.7%, and 6.6% for the past three years). They're a textbook example of how to successfully handle breakneck growth. SyQuest has been a textbook example of how to lose more and more money without increasing their market.
4) Management Focus. Iomega had a bright, new CEO who clearly focused the company on the consumer market. They provided a product that met consumer needs at a price that the consumer was willing to pay. SyQuest is still focused on technology. They want to provide the biggest, fastest, best product on the market, at the lowest price.
Those who are looking for SyQuest to be the next Iomega will be sorely disappointed. The situation is entirely different, SyQuest (and SYQT) are in pitiful shape, and management still has a misguided focus.
- Michael Coley
- wwol.com |
