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

To: Sajjad S. Hashimi who wrote (6640)	6/11/1998 9:48:00 AM
From: John T. Hardee	Read Replies (1) \| Respond to of 7685

Compaq: Bloomberg Forum Bloomberg News June 10, 1998, 9:50 a.m. PT SyQuest Targets More PC Makers After Compaq: Bloomberg Forum New York, June 10 (Bloomberg) -- SyQuest Technology Inc. is targeting other personal-computer makers to incorporate its SparQ storage products following yesterday's agreement with Compaq Computer Corp., said President Ed Harper. The company's targeting Dell Computer Corp. and Gateway 2000 Inc., as well as ''leading-edge'' suppliers of digital audio and video electronics, Harper said. ''We're going after them.'' SyQuest yesterday said Compaq, the world's largest PC maker, will incorporate its SparQ removable-cartridge hard-drive products in PCs ordered under Compaq's configure-to-order program under a three-year original-equipment agreement. It's too early to determine how much the agreement will add to revenue for SyQuest, the Fremont, California-based storage company that's reported cumulative losses around $220 million since 1995, Harper told the Bloomberg Forum. ''It's going to take a while'' to judge customer demand through Compaq, Harper said. As well, SyQuest itself is still ''ramping up'' production of the SparQ line, which now accounts for ''more than half of our revenue,'' he said. SyQuest makes all of its products in Penang, Malaysia, not far from Dell's Asian manufacturing center and plants run by Hewlett-Packard Co. and other electronics companies. Harper said he'd like to approach all major PC makers, citing Dell and Gateway as likely prospects. ''It's a cheaper way'' to sell SparQ, priced around $199, and other products than selling them through retail channels with their higher distribution costs, said Harper, 53, an electrical engineer recruited from H-P's Colorado Memory Products division in 1996 when new management assumed control of the foundering company. Ingram Micro Inc., which accounted for 16 percent of fiscal 1997 revenue, Merisel Inc. and superstores like CompUSA Inc. now handle just about all of SyQuest's sales. Harper acknowledged that the Compaq agreement, as well as any others that may come, won't be enough to generate a profit for the fiscal year ending Sept. 30. ''We are anticipating losses for the next couple of quarters,'' he said. Monitor Revenue Gains The SyQuest president declined to pinpoint what the full- year losses will be. The company previously reported its net loss for the first half soared 68 percent to $68.7 million, or $1 a diluted share, from $40.5 million, or $2.30, a year ago, with 50 million more outstanding shares. Revenue for the period ended March 31 rose 21 percent to $79.1 million. Investors should closely monitor revenue growth and ''volume we need to achieve,'' Harper said. SyQuest spent heavily to develop the SparQ line, which first shipped in late 1997. Now the company hopes to lower costs and increase its margins. Preliminary results have been encouraging, he said. Revenue in the second fiscal quarter tripled to $47 million and continues to grow, he said. As well, getting the SparQ series certified for incorporation into Compaq machines ''made us a better company'' because it forced engineers to improve installation and ease of use of the removable-drive products. ''Compaq put us through a very stringent qualification process'' that found no defects, he said. Harper also said problems at archrival Iomega Corp., maker of Zip and Jaz removable-disk drives, gave ''us an opportunity'' it lacked before. In March, Iomega President Kim Edwards resigned. Last month, Leonard Purkis, chief financial officer, quit. While Iomega has warned that its sales are slowing, Harper said woes at the Roy, Utah-based rival are opening doors for SyQuest as well as enabling it to increase sales rapidly. ''I do believe we've had an impact'' on Iomega, Harper said. --David Zielenziger in the New York newsroom (212) 318-2304/jcn More News: SYQT Technology industries CAD/CAM \| Communications Svcs \| Computer Svcs \| Distributors \| Internet \| Networking \| PC Hardware