Compaq: Bloomberg Forum
Bloomberg News
June 10, 1998, 9:50 a.m. PT
SyQuest Targets More PC Makers After Compaq: Bloomberg Forum
New York, June 10 (Bloomberg) -- SyQuest Technology Inc. is
targeting other personal-computer makers to incorporate its SparQ
storage products following yesterday's agreement with Compaq
Computer Corp., said President Ed Harper.
The company's targeting Dell Computer Corp. and Gateway 2000
Inc., as well as ''leading-edge'' suppliers of digital audio and
video electronics, Harper said. ''We're going after them.''
SyQuest yesterday said Compaq, the world's largest PC maker,
will incorporate its SparQ removable-cartridge hard-drive
products in PCs ordered under Compaq's configure-to-order program
under a three-year original-equipment agreement.
It's too early to determine how much the agreement will add
to revenue for SyQuest, the Fremont, California-based storage
company that's reported cumulative losses around $220 million
since 1995, Harper told the Bloomberg Forum.
''It's going to take a while'' to judge customer demand
through Compaq, Harper said. As well, SyQuest itself is still
''ramping up'' production of the SparQ line, which now accounts
for ''more than half of our revenue,'' he said.
SyQuest makes all of its products in Penang, Malaysia, not
far from Dell's Asian manufacturing center and plants run by
Hewlett-Packard Co. and other electronics companies.
Harper said he'd like to approach all major PC makers,
citing Dell and Gateway as likely prospects.
''It's a cheaper way'' to sell SparQ, priced around $199,
and other products than selling them through retail channels with
their higher distribution costs, said Harper, 53, an electrical
engineer recruited from H-P's Colorado Memory Products division
in 1996 when new management assumed control of the foundering
company.
Ingram Micro Inc., which accounted for 16 percent of fiscal
1997 revenue, Merisel Inc. and superstores like CompUSA Inc. now
handle just about all of SyQuest's sales.
Harper acknowledged that the Compaq agreement, as well as
any others that may come, won't be enough to generate a profit
for the fiscal year ending Sept. 30. ''We are anticipating losses
for the next couple of quarters,'' he said.
Monitor Revenue Gains
The SyQuest president declined to pinpoint what the full-
year losses will be.
The company previously reported its net loss for the first
half soared 68 percent to $68.7 million, or $1 a diluted share,
from $40.5 million, or $2.30, a year ago, with 50 million more
outstanding shares. Revenue for the period ended March 31 rose
21 percent to $79.1 million.
Investors should closely monitor revenue growth and ''volume
we need to achieve,'' Harper said. SyQuest spent heavily to
develop the SparQ line, which first shipped in late 1997. Now the
company hopes to lower costs and increase its margins.
Preliminary results have been encouraging, he said. Revenue
in the second fiscal quarter tripled to $47 million and continues
to grow, he said.
As well, getting the SparQ series certified for
incorporation into Compaq machines ''made us a better company''
because it forced engineers to improve installation and ease of
use of the removable-drive products. ''Compaq put us through a
very stringent qualification process'' that found no defects, he
said.
Harper also said problems at archrival Iomega Corp., maker
of Zip and Jaz removable-disk drives, gave ''us an opportunity''
it lacked before. In March, Iomega President Kim Edwards
resigned. Last month, Leonard Purkis, chief financial officer,
quit.
While Iomega has warned that its sales are slowing, Harper
said woes at the Roy, Utah-based rival are opening doors for
SyQuest as well as enabling it to increase sales rapidly.
''I do believe we've had an impact'' on Iomega, Harper said.
--David Zielenziger in the New York newsroom (212) 318-2304/jcn
More News: SYQT
Technology industries
CAD/CAM | Communications Svcs | Computer Svcs | Distributors | Internet | Networking | PC Hardware
|
