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

To: MoonBrother who wrote (5624)	2/21/1998 1:47:00 PM
From: jackie	Respond to of 7685

Moonbrother, Good analysis. Gathered your facts and made some tentative predictions based on your conclusions. I can also see where you have made your assumptions. If those are correct, your conclusions will be as well. Appreciate the post immensely. Others could learn from your style. I don't care if your positive or negative, just give me your reasons. It might help me with my own decisions. Thanks, Jack Simmons

To: MoonBrother who wrote (5624)	2/21/1998 3:04:00 PM
From: dartmouth	Respond to of 7685

ray of hope. but what about dilution of stock? -dart

To: MoonBrother who wrote (5624)	2/21/1998 3:26:00 PM
From: Joon Song	Read Replies (1) \| Respond to of 7685

>>>>>>>> 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. <<<<<<<< The SparQ actually started shipping in the middle of November so it was more than 3-4 weeks. >>>>>>>> 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. <<<<<<<< I would be somewhat cautionary with SyQuest's production estimates. Last quarter they even put out a press release saying they would ship 50,000 SparQ's in the quarter, but then actually shipped less than 40,000. >>>>>>>> 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!!! <<<<<<<< I wouldn't assume revenues for the other products to remain the same. Remember the December quarter is the biggest quarter for SyQuest. There is normally a significant drop in revenue from December to March. Look at last year. SyQuest went from $48m to $16m. I don't think it will fall that much, but it will fall. And you should keep in mind that increased sale of SparQ will cannabalize sales of SyJet and EZFlyler. >>>>>>>> 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. <<<<<<<< Yea, let's wait for the March quarter results. >>>>>>>> 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. <<<<<<<< This is where I completely disagree. I don't know where you got that $10-15mil figure from. I didn't see anything like that in SyQuest's report. For the last 12 months, SyQuest has consistently maintained zero or negative gross margins. I don't see why you think SyQuest all of a sudden came in with 15% gross margin excluding SparQ. In their 10-Q, SyQuest said the latest quarter's gross margins were negatively affected by price reductions on SyJet and EZFlyer, drop in sales of their higher margin legacy products, low yield on cartridge production, and finally on startup cost for SparQ. I think the order in which the items are listed is the order of their significance. Since the rest of your analysis depends completely on the gross margin of SyQuest's products, I think I'll stop here. Joon