Syquest is no threat to Iomega. For the sake of argument, look ahead a year from now and let's say that the Iomega makes no price reductions or improvements whatsoever to the JAZ and Syquest takes over the entire high capacity segment with the SyJet and the Rocket. Even in this worse case and extremely unlikely scenario, Iomega's prospects for massive sales and earnings growth remain mostly unchanged. It's the ZIP and those stupid disks that are going to make or break this company, and Syquest's EZFlyer has never been considered to be a threat. IMO, the potential for n.hand is far greater than JAZ anyway.
Syquest is getting a lot of attention lately, but here are the facts:
The company is in terrible financial shape and is not expected to turn a profit in the near future. Their shares continue to be diluted. It has been reported that if all conversions etc. were to take place at once, SYQT would have 42 million shares outstanding. Syquest will need to obtain additional financing soon in order to stay in business.
The SyJet has finally started to ship after a years worth of delays. The product appears to meet expectations, however there are so few of them out there, it is still too early to know for certain. Syquest does not have the resources to supply very many SyJets at this time. Their reported backlog for SyJets seems to be significant, however, we do not know if the number is skewed by what may be a one time order from the Bank of China through Legend. We also do not know if Syquest will be making much if any money on their sales through Legend. It is also not unreasonable to expect that their backlog would initially be somewhat large after hyping the product, accepting orders, delaying shipments and then only being able to ship in small quantities.
The Rocket technology/product(s) are a year away. It would be important news if Syquest were shipping the product soon, however, a year is a long time from now and there's no telling what Iomega might come out with by then.
IMO, the only competitor to Iomega is Iomega. They control their destiny by how fast they can reduce costs and begin selling the ZIP at $99. This is the key that will produce the additional sales to ensure the ZIP becomes the standard. With increased volume, Penang manufacturing, and the new chip, I believe this will happen soon. When it does, I doubt if any IOM shareholder will care if Syquest is bankrupt or the turnaround story of the year.
Regards - Dale |
