From Briefing.com: S3 INC. (SIII) 10 CLOSED. Another day, another warning, and in this case the stock of this multimedia acceleration
hardware and associated software concern will likely get hit at the open. According to yesterday's earnings warning
announcement, the company expects its 2nd qtr revenues to come in around $108 million, plus or minus 2% due
to pricing pressures, which also evident at the end of the previous quarter. In addition, the company's earnings outlook is
being affected by situations impacting its major customers, which suggests that problems in the sector are likely to
prevail for a longer period than just this quarter, in which case, demand for the company's products are likely to remain
depressed, aside from receiving lower prices. Prior to yesterday's warning, the company was expected to earn $0.09
a share, while revenue estimates ranged between $105 million and $121 million. In the year-ago period, the company
netted $0.18 a share on revenues of $104 million. The company did not provide indications on its profit line, but it did
say that it expected its operating expenses to run at about $35 million, plus or minus 2%, and for gross margins to
be approximately 35%, plus or minus one-percent. Thus, given the uncertainty of its outlook due to the problems its
major customers are currently experiencing, this quarter's warning could be perceived as a warning for further
periods as well, although as might be expected, the company remains optimistic that demand for its products will
improve as early as next quarter. In the short-term, however, expect the stock to drift lower as it could easily test its 52
week low of $8 7/8 at the open. |
