Kenneth, While there have been a few concerns regarding SparQ's quality, the reviews have almost all been very positive and the bearish opinion of the stock has had more to do with Syquest's financial situation, negative margins, stock dilution and current valuation, rather than any inability to compete in the marketplace. The product is still new with only a relatively small quantity having shipped, and time will tell if there's any reason to be concerned about quality. Once again, SparQ offers the best cost per MB of any competing removable out there today.
IMO, the SparQ has a few major hurdles out there that will be difficult to overcome if it is expected to turn the company into the $3 billion dollar company it will need to become next year in order to make current '99 estimates of $1.85.
a) The Zip's popularity with over 12 million sold means that compatibility is a major issue that will prevent many potential SparQ customers from buying. Zip units sold are continuing to increase and the problem only becomes more significant as time goes on. b) If and when Castlewood's Orb is released, SparQ will no longer have an advantage in the marketplace. c) Syquest will have difficulty increasing production because of their financial situation. They sorely need high demand and a fast ramp-up in order to turn a positive margin to generate income etc, etc.
I expect there's plenty of room for SparQ to be successful in the growing removable market even if it never becomes as popular as the Zip. However, I don't think that the price of SYQT stock will ever amount to much unless the SparQ becomes a smash hit winner.
Good luck and Regards - Dale |
