S3 (A LONGER TERM PERSPECTIVE) Message Board

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Technology Stocks : S3 (A LONGER TERM PERSPECTIVE)

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May 12 5:00 PM EST

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To: Phil Fischer who wrote (7156)	11/3/1997 6:40:00 PM
From: Synapsid	Read Replies (2) of 14577

It is a very curious announcement. It sounds like a sudden accounting method change (conforming to official policy which was not adhered to before), not in principle a shortfall in sales. Of course, due to this change revenues for the past period are stated lower. I think it means that as of September 31, 1997, S3 had $40M to $70M of unsold chip inventory at distributors. Hmm, how does pricing pressure come into play, unsold chips at distributors recorded at (much) higher value than actual current selling price? That would indicate an honest shortfall in sales. This decision does patch up Q4 results dramatically, doesn't it? (at the cost of previous quarters) Similar tricks are done all the time. Even CRUS had some going with the charge for "underused capacity" up to September, but charged in March.

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