"Regarding the debate, Jonathan is obsessed with 'unstable' drivers and
customer complaints regarding Diamond to the point where it biases his
opinions about everything and anything to do with the company."
So it is your contention that customer feedback and customer
support should not be considered in evaluating Diamond
Multimedia as an investment choice. It seems to me that
excluding a variable that is certain to effect the stock price
is a far better example of "bias" that including such a variable.
"From an investment standpoint, the write-off of old stock and the release
of new products leads me to believe they can improve on the $120,000,000
revenue of last quarter. "
Of course your evaluation of the products in question has
been far from thorough. Presenting the S3 Virge as a real
candidate for use with NT 4.0 and OpenGL reflects a
fundamental misunderstanding of Diamond's positioning
in the video accelerator marketplace. The next thing you'll
be saying is that the Monster 3-D is another great alternative
for businesses using NT 4.0.
"I would hardly suggest selling this stock prior to the next earnings report or
prior to Comdex and the start of the xmas selling season."
Of course the fact that 3D Labs and Rendition
willl have higher performance competing products
available by December has apparently escaped
your attention. The Chromatic MPACT is also lurking just
over the horizon.
"Diamond is on target to crush the $500,000,000 sales mark this year; anybody betting otherwise?"
Lets step back a bit and put things in perspective. In the past
year, Diamond has retreated from the CD-ROM business and
the sound card business. Margins at the Supra division have
been squeezed. In the video accelerator add-in market, Diamond
is facing competition from system manufacturers that now have
access to the same processors that Diamond utilizes in its add-in
accelerators. Making matters worse, S3 further diluted the
market for Virge accelerators through sales to eight of
Diamond's competitors in the add-in market. Diamond is
an industry laggard in customer service and driver support,
giving any of the eight add-in makers that choose to exploit
Diamond's weaknesses a huge competitive advantage
during the Christmas sales season.
The trend towards integration of video acceleration functions
directly onto the system motherboard is clear. Intel, Compaq,
HP, IBM, and a host of other large PC makers have elected
to directly integrate video acceleration chipsets into their
motherboards rather than rely on add-in solutions from
companies like Diamond Multimedia.
Over the next two years, Intel and Microsoft will enter
Diamond's market with 3-D acceleration chipsets of
their own. Intel is readying Real 3-D for use in
mainstream applications while Microsoft concentrates
development efforts on Talisman. As I've indicated in
the chart area, Diamond Multimedia is neither Intel nor
Microsoft. In the medium term and in the long term,
betting on Diamond means betting against two industry
giants with a proven track record of success.
Jonathan |
