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Technology Stocks : SYQUEST -- Ignore unavailable to you. Want to Upgrade?

To: FuzzFace who wrote (5623)	2/21/1998 9:26:00 AM
From: MoonBrother	Read Replies (3) \| Respond to of 7685

SYQT Future Earning Potental Analysis ------------------------------------- I've spent some time collecting the numbers regarding SYQT's possible future earnings. Here is a list of them. From the numbers you will see that SYQT will definitely have at least another run or two to the $6 or higher by July Q3 reporting time. Here is why, 1) March Qtr Sales As we know, SyQuest had $32mil sales in Dec. qtr. That was accomplished with SparQ on the market for only 3 - 4 weeks. There were about 40,000 units sold in that period, and it was 20% of revenue. According to the company, by early Feb. it has already sold 40,000 units. That means SYQT may sell up to 120,000 in March qtr if they keep the same pace. Now the company already said that they will ramp up the production in March to 100,000 monthly, (up to 400,000 by June), that will increase the total March qtr units to around 180,000. Since 40,000 units = 20% Dec. revenue, or about $6.4mil, which hinted about 6,400,000 / 40,000 = $160/unit, the March qtr revenue got from 180,000 unit will be about 180,000 x 160 = $28.8mil. If revenue from other products stays the same, that will be around 32mil x 80% = $25.6mil. The total revenue for March qtr will be 28.8 + 25.6 = $54.4mil, whicl is a 70% increase over Dec. qtr!!! The same analysis shows that June qtr's revenue could be as high as $118mil with 600,000 SparQ units sold! But let's wait until March qtr's result is out to see if we have the right formula. BTW, someone posted on this board that SyQuest's largest customer has a total order of SparQ and SyJet of about 27,000 units, which is about 1/6 of company's total order. That roughly matches the above 180,000 March sales projection. (27,000 x 6 = 162,000) 2) March Qtr Earning Estimate The Dec. Cost of Goods Sold (CGS) was about $39mil, about $10 - $15mil was related to startup cost of SparQ production. Take out that portion, the real CGS was about $27mil, which gave SYQT about 5/32 = 15% gross margin. If that margin holds, there will be about 54.4 x 15% = $8.16mil gross profit. On the other hand, Dec. SA&G was $25.5mil. The large portion of it was related to Ad and marketing. We know that portion will be significantly reduced. The company has already said that March qtr SA&G will be between $14mil and $25mil, say it is at $18mil. So the extra money will come from more revenue + SA&G savings + startup cost, i.e. (54.4 - 32) x 15% + (25.5 - 18) + 12.5 = $22.86mil. Since Dec. total loss was $39mil, the March qtr. loss will reduce to 39 - 22.8 = $16.2mil if other spending stays the same. Using 90mil shares as March qtr outstanding shares, the EPS will be -18c. 3) The Stock Movement Trend Prediction Based on the Above Figures If the above numbers do become true in March qtr., we shall see a huge spark on SYQT stock right after March qtr report is released. SYQT will shot up to at least $6 to clinch the old 52week high. The moving trend after that depends on how the company comments on its business. If the tune is upbeat for the June qtr, than SYQT will continue to go higher, maybe up to %8 a share. Further on, if June qtr can be break even, then SYQT will trade above $10, because by then everyone will talk about $1 - $1.5 earnings for fy1999 which warrants a $20 - $30 stock!!! Keep your finger crossed!