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Technology Stocks : ESST-the new beginning.

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To: Steve Reinhardt who wrote (2365)	2/10/1999 2:28:00 PM
From: Synapsid	of 3493

I would guess that the Deskpro line is easily greater than 50% of all Compaq shipments (and probably the vast majority of ESS's Compaq revenues, while Compaq might be $10M to $20M of ESS revenues in total in Q4, much less in other quarters). It isn't clear whether the Creative "option" is a "standard" option that would replace an ESS chip in many systems, or merely a "luxury" option that goes with luxury speakers. From the press release, I would favour the second interpretation (the Compaq spokesman clearly talks about an option, and emphasises that even without the Creative board, Compaq PCs offer a complete solution). It is possible that Creative is having inventory and manufacturing difficulties, which might have made them offer boards for low prices. Last quarter, they let Ensoniq (the Creative subsidiary that makes the AudioPCI product) built 3DFx-based graphics boards in high volume for Gateway, but they had problems and lost the contract. We probably have to wait until Compaq updates its website to know the real story.

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