SYQT -- BLITZKRIEG
My first Blitzkrieg pick is <gasp> Syquest.
As alot of you know, SYQT is a competitor of Iomega (IOM) in the removable disk drive market. Their product is good and people tell me the drives are faster and cheaper than IOMs (Me, I have IOM drives, never tested a SYQT drive in my life).
This is a short term, news driven pick for the following reasons. First, IOM is failing bad. They couldn't even make rock bottom estimates, per today's earnings report. Second, as reported in TheStreet.com, the bad sales of Jaz drives have been theorized to be due to ramping sales of Syquest's removable disk drives. A very limited channel check shows this to be true. Third, I have visited the neuroradiology departments of all hospitals I am on staff at, and they use Syquest drives to hold the digital data from PET scans. They **hate** IOM drives.
There has been some large insider buys in the last 5 months at prices higher than now.
The bad news: Shares outstanding have rocketed to about 72 million after a series of private placements. This is tempered by the fact that SYQT has no trouble getting alot of financing. Their business strategy is very high risk, namely, sell their drives at below cost (that reminds me of an old joke, but never mind) and hope they capture market share before raising prices. It worked for the Japanese for years, but look where Japan is now.
This is very high risk, but looks like a good short term play off the news. The news is so fresh, I have not even started a position yet, so I could get screwed with the rest of you.
Remember: Never let a trade turn into a investment. (Aside: Yeah, I blew it with DGIV, but that is a one in a thousand scenario where a stock goes from 30 cents to 6 bucks in a month).
DocStone |
