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Technology Stocks : Castlewood Systems
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To: Michael Coley who wrote (7)8/26/1998 1:55:00 AM
From: Rocky Reid  Read Replies (1) of 38
 
RE: Why the delays with ORB? >>1) Legal problems with SyQuest.<< I have not heard ANYTHING about this recently. There is certainly nothing at www.castlewoodsystems.com that indicates this is a problem. There has been no press release from Castlewood stating that this is a problem. Syquest has been very quiet about this too. And Trans Capital's press releases (www.transcap.com.my) certainly seem very eager to start production ASAP. They plan to start with 5000 drives the first month but plan a 150,000 drive/month capacity December. This isn't enough in Syed's mind, so he is actively shopping elsewhere for MORE production means. It seems that any legal problems with Syquest don't have any merit. Remember all those lawsuits about Iomega suing over Syjet? Nothing. >>2) Insufficient funding to produce Orb in quantity.<< Sanyo and Aiwa are partners in this Orb endeavor. I doubt that funding is a problem. >>3) No supply chain or OEM's.<< This is false. Sanyo is already an OEM and buiding a VCR-like device with Orb built in. They are also OEM-ing Orb into a security camera system. Aiwa and Sanyo have a vast distribution network and a supply chain that won't quit. >>4) Inability to find funding given reputation of selling below cost.<< This is also false. Castlewood's overhead will be exteremely low, as all production is presently by Trans Cap in Malaysia, with additional production by Aiwa and Sanyo. As a result of low US overhead, costs will be very low and a profit should be realized at the pre-announced $199 price point. Castlewood's web site points out that the MR technology on which Orb is based means fewer parts, resulting in lower production costs and greater reliability. As far as funding goes, Trans Cap is very eager to expand its 5% stake in Castlewood Systems to 10% or more. There seems to be eager parties all around concerning this product and company, and interest in other hinted future larger capacity (8 Gigs and more) products to follow. Castlewood should prove to be a very interesting IPO next year.
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