Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: HRP who wrote (6897)	7/22/1998 11:41:00 PM
From: Dale Stempson	Read Replies (3) \| Respond to of 7685

>>> Would it be fair to say that Syquest has been able to obtain financing during the past year, notwithstanding substantial losses, because of the expectation that Sparq drives would eventually lead to a profit? <<< I believe that the SparQ's potential played a minimal role in attracting major investors. The terms and conditions of the various special financing deals were a much more significant attraction. Floating conversion prices coupled with a multitude of discounts and special incentives virtually assured the major investors of substantial returns regardless of which direction the stock was headed. The bottom line is that the major investors have and will make a handsome profit at the expense of the common shareholder. Don't get me wrong, the EdHeads had their backs against the wall and could not have come this far without doing something like what they did, but the fact is that the SparQ has not yet become a strong enough reason for SyQuest to obtain financial support in a less costly and more traditional form. This could change in the future if the SparQ hits a homerun and begins bringing profits to the earnings statement. >>> I noted Rosencrans' claim that Sparq sales volume is starting to stagnate. If the after market volume holds steady and Syquest puts more emphasis on OEM sales, is Syquest heading down the same path as Iomega which suffered because of the smaller margins on OEM drives? <<< I think it's almost a certainty that SyQuest OEM margins will be lower than retail. I doubt it will have the same impact as we've seen with Iomega and the Zip, simply because I expect only a minimal number of SparQs to be sold through OEMs. OEMs will only include the SparQ in their boxes if the price is right and more importantly, if the customer demand is there. If Rosencrans is correct, and sales are already beginning to stagnate, then the demand will not be there to support widespread OEM inclusion. >>> Considering the above together with the announced hiring of CIBC Oppenheimer, how likely is it that Syquest now realizes that the necessary sales volume for a profit is not in the cards and that a purchaser is being sought before all future financing dries up? <<< While this is a possibility that one must consider, I think it is more likely that SyQuest simply needs "professional help." <gg> SyQuest management must focus every effort on ramping and selling SparQ. This is critical to their survival. They need the help of Oppenheimer to ensure that they have as much money as is required to make this possible. It also appears the Legend joint venture is beginning to look like a real possibility again. Oppenheimer could help get this project going. I will add that it would probably be wise for SyQuest to find out just what interest there is out there from potential acquirers, as it wouldn't hurt to be prepared. Regards - Dale