Syquest losses fulfil gloomy predictions
Troubled removable storage vendor Syquest has added a rise in third-quarter net losses to its list of recent upsets, fulfilling its prophesy of a poor performance in the period ended 30 June.
OEM contracts have been very slow in coming to the manufacturer, despite recently signing a three-year agreement with Compaq to incorporate Syquest's 1Gb internal removable cartridge hard drive into the PC vendor's configure-to-order programme.
Third-quarter net losses increased to $42.5 million from $10.7 million in the previous year, on sales of $44.7 million.
The losses included a pre-tax charge of $9.0 million related to the reviewing of Syquest's financial transactions.
In the nine-month period, losses surged to $110.8 million from $51.2 million for the same period last year. Sales were up at $123.8 million.
Warning of the disappointing results came on 6 August, when Syquest predicted third-quarter revenues lower than the preceding quarter and operating losses over and above the $29.9 million incurred last quarter.
In the end, operating losses were $32.6 million. The manufacturer also predicted a further decline in turnover during the fourth quarter ending 30 September and is banking on seasonal growth in the first quarter to 31 December.
At the same time, Syquest revealed that it would halve its staff worldwide to approximately 950, in a bid to restructure in line with a slower and smaller removable disk drive market.
It will also close down its Fremont, California manufacturing facility (PC Dealer, 12 August).
The manufacturer hopes that halving the workforce will more than halve its expenses. In a statement, Ed Harper, Syquest chief executive, said the company 'regretted the impact these actions are having on individual employees and recognised the contribution they have made to the business.'
Over past 18 months, Syquest has been dogged by various lawsuits, including one filed by arch rival Iomega in August last year for alleged patent and trademark infringement.
In June, Iomega was forced to make similar job cuts as Syquest when it lost 14 per cent of staff.