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

To: Michael Coley who wrote (5675)	2/28/1998 10:48:00 AM
From: Michael Coley	Read Replies (2) \| Respond to of 7685

RE: SparQ's Disappointments. Now that SparQ has been shipping for more than three months, I'd like to offer some preliminary observations on it: 1) Price Point. At about $190, the price point is fairly attractive. Iomega has adjusted, however, and this doesn't appear as attractive any more. You can get a Zip for $120, a new Jaz for $250-$300, or a refurb Jaz for $200. At about $30 per gig, the media is very attractive. Unfortunately, media price is usually not a selection criteria. 2) Performance. Reviews of performance have been mixed. Some have reported SparQ to be quite fast, while others have reported it to be disappointingly slow. It appears to be very CPU intensive. No real advantage here. 3) Profit. There is very strong evidence that SyQuest is selling SparQ at a loss. For a company on such poor financial footing, this could be a disastrous decision. Those who argue that SparQ is not sold at a loss use logic such as "SyQuest wouldn't sell SparQ for a loss." Hello? Have you just started following SyQuest? I'm not sure that they've sold ANYTHING at a profit for the past two years. 4) Durability / Reliability. For the small installed base, there have been an incredibly large number of problems reported. Disk seating problems seem to be the most common. There have been a number of DOA's or rapid deaths, too. The drives and cartridges seem very cheaply built. 5) Production. There have been continual delays getting SparQ into the channel. Some stores have had plenty of stock, but most have been on continual backorder. Raw Materials Inventory skyrocketed last quarter. SyQuest has not been able to get key components to build more drives. (Maybe the suppliers want cash instead of stock?) 6) Demand. Despite the limited supply, the demand doesn't seem to be as large as anticipated. In the few places where SparQ does stay in stock, they don't seem to be moving very rapidly. Several online stores show their stock levels (which are really their wholesaler stock levels). One that has had SparQ in stock for the last week has sold less than 50 a day, compared to around 500 Parallel Zip's a day. With a few calculations, assumptions, and guesses, that indicates that SparQ is probably selling less than 50,000 units per month. At that rate, they're get less than $25 million in revenue per quarter from SparQ. 7) Cannibalization. SparQ competes most directly with SyQuest's own products. Why would anyone buy an EZ230 or a SyJet? The ones who aren't buying SparQ have been lured away by Iomega's new lower Jaz prices. 8) Mac Alienation. Mac users are the best "early adopters". They were quick to go to the 3 1/2" floppy, and quick to adopt the Zip. They're loyal, repeat customers. And they can't buy SparQ. SyQuest has thrown their final "Hail Mary!" pass. Too bad they didn't send any receivers downfield. - Michael Coley - wwol.com

To: Michael Coley who wrote (5675)	2/28/1998 1:05:00 PM
From: jach	Read Replies (1) \| Respond to of 7685

>> hard to understand the logic for people who short 2, 3$ stocks. There is not much to gain and the potential loss is unlimited. << That's true no matter what the price is. Shorting, your maximum gain is 100% and your maximum loss is virtually unlimited.>>> percentage wise it's correct; simple logic - no say, short 100 shares of 2$ stock, potential profit 200 loss - when stock moves up 1$, 100$ short 10 shares of 20$ stock, potential profit 200 loss - when stock moves up 1$, 10$ in high-tech the underlying value of stock is not that much of a gating factor in appreciation, one key area for appreciation is the product and technology that a company has and potentially will have, therefore, the percentage appreciation ratio does not really apply based on their original stock price; simply put syqt can move as much as a 20$ stock and even more in the same time frame - that's the real-life fact. As for the mkt researchers, one should do their own test by getting the drive and use it - and not put much weight, one can find 100 reports and 50% said great!! and 50% said - not that great! why? most of them have their own agenda depending on who is backing the test and study one thing is for sure though, there are hundreds of millions of PCs, many more are being bought, all have multi-Gig drives, the mkt for just backing these drives is BIG, and the potential for syqt to come out a potential winner is always a possiblity, especially when one has a very good start - it's always possible that with large volume production, syqt can make some profit and as always when high-tech hype is turn-on how high it will go is anyone guess. Just imagine at 28$, the loss for only a small 10000 shares of short interest will be 250,000$ (a quarter million!). Again, hard to understand who'll like to take this kind of chance -

To: Michael Coley who wrote (5675)	2/28/1998 4:03:00 PM
From: Dale Stempson	Read Replies (2) \| Respond to of 7685

Re: >>>Today, SyQuest has about 80 million shares (actually more than double that when you consider the potential dilution from preferred and warrants).<<< According to Syquest's recent S-3/A filing, it appears that share dilution is happening very quickly this month. Here's a brief status update: (common shares rounded to millions) ___________12/10/97 & 02/05/98____02/20/98 Issued & Outstanding:___72 Mil.____98 Mil. Options & Warrants:_____80 Mil.____69 Mil. Total Accounted for:___153 Mil.____167 Mil. Total Authorized:______240 Mil.___240 Mil. Total Available:________87 Mil.____73 Mil. I calculated the current 98 million shares issued and outstanding number from the following statements in their SEC filing: "As of February 20, 1998, the Company had outstanding options and warrants to purchase approximately 68.6 million shares of Common Stock, at a weighted average exercise price of approximately $2.80 per share." and "On February 20, 1998, assuming the conversion of all remaining Preferred Stock, the exercise of all warrants and other stock commitments, the Company would have had approximately 166.5 million shares of Common Stock issued and outstanding." If we take into account the recent (2/18/98) financing of $28 million which added 8.3 million common share equivalents and 4.2 million warrants, along with the reported overall reduction of warrants and options by 11 million, we can assume that there were recent conversions to the tune of about 24 million shares. I would venture to guess that in order to make this happen, the EdHeads may have followed through with their plan as stated in their recent SEC filing: "Management may have to entice existing warrant holders to exercise their warrants by offering discounts to the contractual exercise price and/or issuing exchange warrants at market or negotiated discount exercise prices." If this is what has happened, I would expect that Syquest would have to show some sort of corresponding loss in their next earnings report. Increasing the issued and outstanding shares by such a huge amount could account for some of the recent share activity. The spike in volume and share price could be the result of major players setting things up to unload the new shares and lock in a profit. JMHO - Regards - Dale