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

To: Michael Coley who wrote (5676)	2/28/1998 7:05:00 PM
From: FuzzFace	Read Replies (1) \| Respond to of 7685

Michael. Since no one here has responded to your excellent post today, allow me. Keep up the good work. I think the reason people here are long is it is cheap per share. But as you noted, it is at a ridiculous cap level. If this sucker would ever poke it's head above the $5 mark, which Datek seems to require to be marginable, I'd go short in a heartbeat. So here's hoping you SYQT longs get your way and SYQT goes to 6 again. Of course, it would have to stay there long enough for Datek to make it marginable again.

To: Michael Coley who wrote (5676)	3/2/1998 12:29:00 PM
From: Ping Ho	Read Replies (2) \| Respond to of 7685

Michael, You are too kind in saying that the Sparq is at a good price point at $190. Having 10X the capacity of the Zip for $70 more is very attractive. Channel checks have indicated that sales of the Sparq are going well, and what the stores need are more units of both the drives and the cartidges. The Fremont facility has reportedly ironed out the kinks in the Server Writers and now the best engineers have gone to Penang to help the ramp there. The crucial question is whether the Units from Penang will get out this quarter. As to the profitability question, the company is not profitable right now because they aren't putting out enuogh units. However, a fixed cost business such as SYQT makes money near the end of the quarter when its operating leverage takes effect. We need to be focused on the number of units shipped. The cost structure question that you should focus on is the media. This is where the money is made for both SYQT and IOM. However, the Sparq is more profitable in its media than IOM because it only has two heads compared to 4 for IOM. Therefore, they can produce the cartidges at a cheaper cost. This is crucial to remember when comparing the two companies cost structure. Another bullish sign--look at the finanicing terms of the series 7 convertible preferred stock and the series 5 convertible preferred stock. The investors are the same people, Castle rock investors, RCG, Nelson Partners, Olympus investors. If you compare the terms, the company has financed a similar deal with more preferrable terms for the company. The warrant ratio is keyed off of .5 warrant for each share of pfd stock whereas in series 5 the warrant ratio was .7 for each dollar spent. This shows the company is in a stronger bargaining postion with some sophisticated investors (all are offshore funds). In addition, TDK, the tape head supplier for syquest has agreed to stop requiring COD for SYquest and has taken syqt stock for down payment in exchange to delviver component head parts for the Syjet and Sparq media for the next 3 years. TDK or any other supplier would not take stock in luau of cash unless it felt comfortable with Syqt's position. There definately remains quite a lot of downside to this stock if the production problems continue, however, with the ongoing delay of the Jaz 2 by Iomega, the window of opportunity for syqt remains. I would like to hear some responses regarding the production in Penang if anyone has any sources. Ping Ho