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 (8636)	1/4/1998 10:49:00 AM
From: JAG	Read Replies (2) of 14577

Based upon the sale to UMC, the value of the 23.75% (prior to sale) interest of S3 in the foundry is $213 million and this is before the additional value from the payment if a "liquidity event occurs" which basically seems to mean payment in the event that UMC goes public. In this case, and assuming the liquidity payment would apply to all S3 shares, the value of S3's stock in UMC is $347 million. Now, read S3's 10q and you will see that S3 has a $89 million in cost invested in the UMC fab. S3 has 52,380,000 fully diluted shares outstanding. The $347 million exceeds the $89 million cost by $258 million, or $4.90 per share. Therefore, not only does the company have book value per share of around $6.00, but now we have identified another $4.90 per share in hidden equity in the UMC fab. Questions: Why did S3 sell, what will S3 do with the money, and will they sell the remaining 15.75%. Also, my value assumes that the additional payment for the liqidity event will also apply to the remaining 15.75% investment.

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