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: JAG who wrote (8537)	12/22/1997 12:45:00 AM
From: James Luk	Read Replies (2) of 14577

Management changes at S3 should balance certain level of pessimism. Recent S3 prices represent over-sold conditions due to prolong period of silence from S3 management as well as over-reaction to S3's near-term difficulties. Another reason being that investors have lost total confidence in Gary J. With him sidelined, I think that near-term the stock should hover around $7 - $8, with S3's short-term difficulties. This price is based on intrinsic valuation of the stock. Note that it was less than 3 month's ago that the price was $16. The price can go up just as fast as it comes down. With regard to year-end tax selling, there is also year-end buying by many who want to be ahead of others before the "January effect." So anticipation of year-end tax selling may provide a boost to the stock. If you look back on the last two week of 1996, many stocks were up. Having said these, I believe that Terry has a lot of work to do before the stocks will recover to $16+ and here are my suggestions. 1. Take immediate action to trim deadwoods who are crowding the plants. 2. Massive layoffs to cuts costs in order to be profitable in the low and middle end of the graphics market which S3 still dominate. These segments will be under intense pricing pressure as time goes on. 3. Strategic negotiation with key suppliers to reduce costs. 4. Massive program of product yield enhancement to reduce cost. 5. Streamline ALL organizations to be nimble, efficient and effective. 6. Reevaluate the capabilities of critical personnel for GX3 and Vortex to assure that they can indeed execute. It will be a boost to S3 if it can announce that these two programs are ahead of schedule. Best of luck to all S3 investors.

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