RE: SyQuest
Mark, I've followed SyQuest for a number of years now, so perhaps I can provide a few answers.
>>> My local paper mentions the winners and losers for the quarter and they have Syquest leading the loser category down 83% trading at 25 cents. <<<
No doubt about it, SYQT has been consistently losing money and heading south for now over two years. I expect the trend to continue with the likely shareholder approval of a proposed 5 or 10 to 1 reverse stock split.
>>> Syquest has been a damaged issue ever since Iomega became popular, (a classic example of not picking the underdog for investing), and I've been wondering if they will go bankrupt. <<<
Bankruptcy is a very real possibility. The company has recently stated they did not have enough cash to last through the end of the last (September) quarter. They could get a very short-term reprieve if the reverse split is approved, as some of the preferred stock holders have promised to back about $8 million in financing it the split goes through and a registration statement is made effective.
Also - While Iomega had a lot to do with SyQuest's current situation, I'll point out that Nomai was a significant factor as well. Nomai (now owned by Iomega) produces SyQuest compatible disks and took a large share of SyQuest's most profitable products. FWIW, I do not believe Nomai has yet produced disks for SyQuest's current product lines (SparQ and SyJet), and does not appear to be much of a factor right now.
>>> My concern is there must be some head and media players that are willing to take some risk and extend more credit to Syquest than they should. Could the collapse of Syquest be the last nail in the coffin? <<<
SyQuest is and has been off and on a COD customer with many of their suppliers. Their AP is often very late, and in the past they have paid off suppliers with common stock in lieu of cash. I'd think that suppliers would be extremely cautious about extending ANY credit to SyQuest.
>>> Syquest announced a Jazz like drive recently with MR heads. Wasn't HMT a big supplier to Iomega? <<<
SyQuest's MR drive is the Quest (SparQ is not MR). The company is looking for an OEM to help launch the Quest, but at this time the product remains a no-show.
HMT produces for both Iomega's Jaz and SyQuest's SparQ. Since the SparQ was introduced late last year, Jaz has felt the impact. IMO, the bottom line here is that since HMT produces for both, they'll make the sale to one or the other with very little impact overall.
In fact, they should benefit from the overall growth in this removable market niche since Iomega and SyQuest are more or less the only participants, (I'm of course referring to 1GB+ removables). CD and DVD read/write variations will likely stunt growth potential, but I believe we'll still see "some" growth as speed remains an important feature.
Regards - Dale |
