S3 (Multimedia semi's place 2be) Message Board

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

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May 12 5:00 PM EST

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To: stock talk who wrote (8548)	4/4/1997 12:08:00 PM
From: Matthew Rome	of 9477

Hey Frank...Long time no see ;-) My...my...my...haven't these S3 threads turned into quite the little carnival sideshow. I hope somebody is archiving this for posterity, should make for an interesting investor psychology course text, sometime in the next millenium. Who is this Hamilton guy? and why isn't he on Prozac? Makes me wish for the good old days when that Todd kid would post the stock price every half hour, Marshall would gaurentee the stock would be $40 by now, and that college kid from Texas would play devil's advocate....Ahhh memories.... ;-) While I'm still long on S3, I have to agree partially with John in that the "Street" still has little faith in S3 and seems to be in a long term "Show Me" mentality with regards to S3's future prospects. Ironically, I believe S3's strengths are partially what's created this situation. At getting close to a half billion in revenue this company is really in the big leagues and unfortunately still gets all its revenue from a a couple of products and a handful of OEM customers. They are trying hard to diversify, but as yet nothing is proven...(Whatever happened to Sonic Vibes???). At 50% marketshare they are the leader but also have the most to lose to competitiors, while their marketshare growth in their core business is realistically limited by strong competitiors and niche players. Remember this graphics chip business is a zero sum game based on the total number of PCs and add-ons shipped in a year. The arguement that the growth in 3D(freeD) is 7 mil to 27 mil fails to mention that every new Virge is replacing a TRIO or equivilant 2D part. So can S3 continue to execute well and bring in revenue and earnings growth - the answer is yes. Can wall street continue to ignore this for another year and price the stock at 10 to 15 times earnings- unfortunately the answer is also yes...If you don't believe S3 can earn 1.32 a share an still be selling at $13 at this time next year...please check out Trident's situation. Thats not to say we can't spike back up to high teens and low twenties during brief moments of market or S3 euphoria...but looking at this stocks chart and financials since its big run-up in 95 indicates that the honeymoon is over and this stock must now prove to wall street in can successfully diversify and move to the next level. Contrast this to the "honeymoon" that TDDDF continues to be having with the street and which has not suffered in this downturn...I guess it doesn't pay to get big and successful ;-)) So as I posted 6 months or so ago, 4Q 97 will be make or break time for S3, by then we'll know if they trully can profitably diversify and where the next generation products stand vs competitiors. This is the potential that can move the companies revenue/earnings and stock price to a permanant new level. If not it may also be the time for the long term "stock farmers" to plow this crop under. Any ideas on where to find some new "seeds"??? Regards, Matt

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