Bob,
i got a bit ticked when i first wrote the post, and edited it a bit after. i should have just answered your confusion. everyone gets confused and uncertain.
i think you need to read the 10Q and 10k's in great detail, and ask specific questions. the CC posts on the thread help give non financial direction. the PR posts give market direction (non in our case).
after the earnings release, i had (still have) lots of financial questions, those will be answered in Nov. 12 10Q release.
Everyone is looking at S3 prospects, trying (essentially) to forecast future cash flows.
Here's another way you can do it. Can you recommend (with clear conscience - sp?) for your good friends to buy S3 products?
I can if they are looking for a cheap mid range product, and don't care about leading edge PCs. i.e. if they have kids who want to play games, but are on a constrained budget.
my insistence that S3 buy Nvidia is to claim a high end product for the US add in market.
The GX3 will not be hurt by the purchase, since it is a 2X AGP product (568Mhz thru put?), which means it will be targeted to high end products for next year (P2).
Nvidia can be the new mid range product next year, (the $129 price range), and GX3 mid/hi range ($190).
The product transition of GX3 may be forecastable given the current tech that S3 has. GX3 may eventually incorporate imbedded DRAM (2 meg), which is perfect for AGP. (see MXi product)
AGP 4x does not seem possible given that AGP bandwidth is limited at 568Mhz (what is 8 times 66 Mhz?).
GX2 is an ok low end PCI chip, and a crappy AGP implementation. ATI's AGP solution (ATI at work/home) is a 2x AGP chip but sells around $200/$220.
your top question about share holder dilution of stock can only be answered by sales/net income outstripping the dilution factor (not happening), or for a share buyback by the company to fund the options.
With (GJ-"around") 12 million chips (i think really 11.75) last quarter, S3 has a healthy market share in the low end market. NCs have them, <$1k computers have them, Packard Bells will have them.
The question is if S3 can expand OUT of the low end market BACK into the mid/high end market.
If S3 buys nvidia, i would buy up to $12. if they do nothing, the risk of $7 is VERY high in next 2 months (dec. tax loss selling season), AND $4 in jan/ feb. time frame if they report a heavy loss in Q4 earnings. (This is RISK, or possibility, not probability)
It is just a matter to cash flows, and market position.
i am HOPING the price goes to $4 (below intrinsic value) because i have cash that i want to use. i am long for 19 months now. i am losing money on my S3 position. But its a LONG game, and we are in the 3rd inning. i didnt sell my S3 position because its long term potential is pretty good in my perception. i will hold for 5 years, if i can withstand the pain, and hope that management will be able to create a $2 billion revenue company by 2003.
The shorts will say a $2million rev. co. or outstanding shares of 200 million (no splits).
i take my solace from intel price performance circa 1987.
BL |
