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Technology Stocks : S3 (Multimedia semi's place 2be)

SIII 0.0001000

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May 12 5:00 PM EST

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To: Ibexx who wrote (7190)	1/21/1997 2:20:00 PM
From: Ibexx	of 9477

All, --continued with Chaplinskty update-- OUTLOOK (continued) > Current product mix is 50% 2D graphics; 45% 3D graphics; and 5% others. This mix is expected to become more heavily weighted toward 3D approaching 50-55% this year. 2D graphics are still shipping in volume and appear sufficient for many corporate desktop customers, but as the price differential declines and more multimedia business applications arise, 3D will make a stronger move into the corporate market. The overall 3D market is estimated at 25M units for 1997. > The challenge the company is now facing is to preserve market share in the face of increasing competition. Cirrus's product portfolio looks stronger than it has been historically with the 3D Laguna chip being well accepted. Trident's graphics portfolio also looks to be improving and the company grew 16% in Q4 over Q3 in comparison with S3's 11% growth Q4 over Q3. We (H&Q) believe S3's key to success in 1997 will be to maintain its strong market leadership at its key accounts such as those name earlier (Diamond, C&W, DataExpert, STB, Intel). > We (H&Q) are lowering our estimates slightly based on this weaker sequential growth guideline. We had originally estimated 10% revenue growth on $148 million and $0.31 eps. We are now estimating a 6% revenue growth in the March quarter with margins expanding to 42% producing an eps of $0.30. Our new FY 1997 estimate is $1.30 compared to recently revised estimate of $1.33. We also introduce a FY 1998 estimate of $1.54. That is it, folks. Again, please read and interprete the above at your own risk. Ibexx

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