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Technology Stocks : 3DFX

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To: Piranha who wrote (1321)	1/22/1998 6:38:00 PM
From: Mitchell Ryan	Read Replies (1) of 16960

Piranha, Projected revenue increase over Q3 = 8 (all numbers in millions unless noted). Cost of product revenue remains the same percentage wise. (In actuality, you would expect it to decrease with higher volumes.) R&D multiplier = 30% increase due to Voodoo 2, Banshee costs. SG&A multiplier = 30% increase due to Voodoo 2 rollout, etc. Interest and other income is flat. Outstanding shares remain constatant at 12.454 million. Using this analysis yields the numbers below which are in line with the analysts estimates. 3Q/97(act) 4Q/97(est) Product Revenue $10.02 $18.00 Cost of Product Revenue 5.35 9.63 Gross Profit 4.67 8.37 R & D 3.20 4.16 Selling, General & Admin 2.69 3.50 Total Operating Expenses 5.89 7.66 Interest & other inc 0.35 0.35 Net (loss)/gain (cents) (0.87) 1.06 Net (loss)/gain per shr (cents) (0.07) 0.09 In order to improve the EPS by $0.01, you would need $125K increase in net gain. Since R&D and SG&A can be assumed to not increase substantially with incremental sales, you would need an additional $270K in revenue, and not $1.8M. Ryan

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