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Technology Stocks : Diamond Multimedia
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To: Jonathan Quick who wrote (3568)5/13/1998 2:10:00 AM
From: Javelyn Bjoli  Read Replies (1) of 4679
 
I also have to say, if DIMD was good at sniffing out high-margin opportunities, they would have done a better job of profiting at their current business over the years. It wasn't so long ago these guys "lost", what was it, $30 million in inventory? They have a history of doing a mediocre job for long periods, punctuated by short bursts of high-profit, high-volume products like the old CD upgrade kits & 14.4k modems or the new Voodoo 2 cards. They do at times seem like a "marginal company" but somehow they keep hanging on while many others disappear. I don't see them going out of business anytime soon but neither do I see them striking it rich on some undiscovered high-profit niche of the computer market. Motherboards are far from a goldmine, but maybe they are just good enough to keep the company around while they look for the next good idea.

The examples you gave are not good examples of high-margin opportunities for DIMD. CRT's are a mature business. Flat panels are in such oversupply right now that desktop FPD monitors will probably be reasonably priced several years ahead of schedule. Speakers come free with most PC's these days and cost $30 at retail unless you're Bose.

In my opinion, the whole consumer PC industry will continue to see margin squeeze until they stabilize on sealed boxes which are revised only every year or two. People are tired of upgrading every year unless the prices are dirt cheap - PC's are "good enough" now that you really don't need the latest & greatest anymore. Once the market is saturated and people only replace the box every few years, the better boxes can command premium again. But we have to get to the new market model first.
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