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SyQuest Shares Sink After Fincl Chief Denies Merger Rumor
By Carmen Fleetwood
NEW YORK (Dow Jones)--SyQuest Technology Inc. (SYQT) shares fell 36.4% after its chief financial officer denied in a news report late yesterday that the company was in negotiations as a takeover candidate.
SyQuest shares had risen sharply from their closing price of 6 1/16 on May 17 to close at 17 7/8 yesterday after rumors that the company would be taken over flooded Wall Street earlier this week.
San Francisco Chronicle columnist Herb Greenberg mentioned in a column Monday that there is ''speculation that someone is accumulating SyQuest's share as a possible takeover candidate.''
But in a story on another wire service yesterday, SyQuest Chief Financial Officer John H. Luhtala said the company wasn't engaged in talks to sell the company and that it hasn't been approached for that purpose. Earlier this month, Syquest retained Needham & Co. to assist it in identifying potential strategic partners and sources of financing.
SyQuest shares were off 6 1/2 today at 11 3/8, on Nasdaq volume of 10.2 million shares, compared with average daily volume of 812,400.
Officials from SyQuest weren't immediately available to comment.
Some observers note that SyQuest stock might have been riding the coattails of its main rival in the removable disk drive market, Iomega Corp. (IOMG), whose stock shot up most of the week.
''Retail investors don't want to get scorched,'' said analyst Cliff Josephy of H.D. Brous & Co. ''Everybody wants to own the next Iomega.''
Iomega shares, which were the most active Nasdaq issues for a few days this week, were driven up by a stock split and several OEM deals announced with major computer makers like Packard Bell Electronics and Acer Group.
Iomega has gained a lot of publicity in the past year for its removable Zip drive product and has become a legend in on-line bulletin board lore - where it first started getting attention. But many established securities firms, industry experts and the media were surprised by the rapid rise of Iomega stock.
Iomega shares ended March trading at about 12, then more than quadrupled to a 52-week high of 55 1/8 yesterday, both accounting for a 2-for-1 stock split on Tuesday - the company's third split
in two years.
Today, Iomega was off 5.9% at 48 1/4.
Still, while the two companies make similar products, SyQuest is no Iomega, according to many industry observers.
Sales of Iomega's Zip drive have been excellent, while SyQuest's EZ135 drive hasn't done as well. Users found the EZ-135 drive hard to use, while Zip was easy, Josephy said.
Iomega earned 16 cents a share in the first quarter, compared with a loss of 3 cents a year ago. SyQuest lost $4.49 a share, including charges, in the fiscal second quarter ended March 31, compared with 31 cents a year ago.
Perhaps the most telling difference is that Iomega's market value is close to $4.9 billion while SyQuest's is around $95 million.
''The book value'' doesn't justify a takeover at the prices SyQuest shares reached this week, according to Josephy |
