<< RE: Surprising Analyst Comments
During the Iomega Analyst Conference Call today, analyst Howard Rosencrans of H.D. Brous made a
number of comments regarding SyQuest. Rosencrans researches both SYQT and IOM.
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You can listen to the replay at: vcall.com (you must register, but it only takes 15 seconds and is
free).
Note: There are two Iomega CCs you can listen to:
a) Iomega Corporation - Quarterly Results - July 16, 1998 - 4:30 PM EDT
b) RadioWallStreet - Analyst Conference Call on Iomega Corp - July 16, 1998 - 6:30 PM EDT
Rosencrans' comments can be heard about 10 minutes into: b) the Analyst CC.
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In addition to the audio replay, the actual transcript of both CCs will soon be available to read on the Vcall
site. Please listen or read the analyst's comments for yourself, but for now, here's a brief summary in my
words:
* SyQuest is not expected to be profitable in any quarter this calendar year
* SparQ sales are already beginning to stagnate
* SyQuest revenues for the June quarter are expected to be relatively flat with the March quarter at around
$50 million
* SparQ shipment for the June quarter are running somewhere around 150K units
* December quarter SparQ shipments are estimated to be around 275K, well below SyQuest's forecast of
500K units
* SyQuest must reach 400K to 500K SparQ units per quarter to reach profitability
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If these estimates are correct, SyQuest is in deep, deep trouble (IMO). >>
Regards - Dale
Dale:
Would it be fair to say that Syquest has been able to obtain financing during the past year, notwithstanding substantial losses, because of the expectation that Sparq drives would eventually lead to a profit?
I noted Rosencrans' claim that Sparq sales volume is starting to stagnate. If the after market volume holds steady and Syquest puts more emphasis on OEM sales, is Syquest heading down the same path as Iomega which suffered because of the smaller margins on OEM drives?
Considering the above together with the announced hiring of CIBC Oppenheimer, how likely is it that Syquest now realizes that the necessary sales volume for a profit is not in the cards and that a purchaser is being sought before all future financing dries up?
hrp |
