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Technology Stocks : S3 (A LONGER TERM PERSPECTIVE)
SIII 0.00010000.0%May 12 5:00 PM EST
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To: Mighty Mizzou who wrote (14349)5/10/2000 1:03:00 PM
From: Bill Lin  Read Replies (1) of 14577
 
Lets look at this deal:
1) S3 takes the R&D design risk (good-most already done)
2) Nike takes the market research risk (good - Nike knows how to do market research)
3) S3 takes distribution risk (bad - S3 has to order components that are now at 10-40 weeks order lead time. also sales become VERY cyclical due to consumer buying patterns - Christmas season, et al.)
4) Nike branded product (good- will spur S3 to redesign the product quickly to adapt to consumer tastes or will dump S3 as partner and quickly move to Sony. bad - dependent upon another company's whims, especially Nike, who's fashion goes in and out of fashion in a flash.)

Overall - neutral - volume from this relationship is uncertain. Nike electronics is too new a brand to know if it will be 'hip' against the Sony walkman juggernaut.

Relationship strength - neutral. People involved in this from both sides will probably not be the same people this time next year. Very fluid relationships here.

Key issues: Nike marketing has to be sharp to make Nike Electronics 'hip'. Nike is going up against Sony. S3 pricing. Flash memory pricing.

Snide remarks: dang, can't say nuthin' bad. This is a VERY good start into consumer branded products. KP hedged significant distribution risk and got a reputable partner.

Hey, here's a remark: what if he 'buys' some shares in the open market???

BL
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