S3 (A LONGER TERM PERSPECTIVE) Message Board

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Technology Stocks : S3 (A LONGER TERM PERSPECTIVE)

SIII 0.0001000

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May 12 5:00 PM EST

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To: Jan A. Van Hummel who wrote (7514)	11/10/1997 12:50:00 PM
From: Bill Lin	Read Replies (1) of 14577

Jan, i'm just greedy with the $4 forecast. But i'll give you a scenario where it MIGHT come true: 1) Restatement of Q2/Q3 income produces a slight loss in each quarter ($0.05) 2) Sales of Trio64 and Virge plummet in Q4 as inventory overstock suspicions at distributors take hold. 3) Inventory levels at S3 are filled with about 30% old product (on $64mm guesstimate = $19.2mm) 4) They write off the old Trio 64 in anticipation of the TRio3D (DX chip performance?) 5) Q4 is basically an inventory sell through quarter. They spend some cash for GX/DX/MX/MXi and GX2 product. Also some money for Trio3D. but keep inventory levels LOW (i HOPE) 6) you CAN see $0.33 LOSS (from $19mm inventory writeoff) in Q4. 7) then you get more DOOM/GLOOM forecast on this thread and people panic out at $4. and if S3 misses its Nov. 14 filing period for Q3 10Q, it gets the "E" designation on its name (SIIIE), which will make investors REAL nervous. as for Cost to get into graphics market, nVidia, 3Dlabs, 3Dfx, ATI all have R&D budgets of $3 - $10mm/qtr. And there is plenty of Venture money in the Valley. but i agree with your idea about buying S3 by someone. The argument against is that doing so is throwing good money into a sinkhole (a la Apple, SGI), and the investor is betting it'll be a turnaround situation like NSM. S3 isn't a dead company, and there is lots to like about it (I WANT a GX2 board for the duo display capability). BUT i just bought a DX board 4mb in SF for $45. it was in OEM box. gotta make you wonder what they are selling DX chip for... bill

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