This is exactly what the shorts want to hear. The longs are currently in a state of confusion, because they cannot understand why tdfx is down so much. We have two scenarios that may be played out in the next two weeks. First, the trend towards oem graphics will supplant entirely the card business in the next year or so, and tdfx will be boxed out by other competitors for one reason or another. This is the fundamental reason why shorts are shorting this stock. TDFX has no future beyond next Christmas. TDFX will have no positive forward statements, even if they come in with good earnings. Words like challenging will be the tip off.
The other scenario is that TDFX will come out with a slightly better than expected earnings, and that they will announce positive forward statements about oem's implementing banshee.
Given these two scenarios, what are the odds for each occurring. I give the nod to the second scenario, and that is why I am holding on. Even if the shorts win, I do not believe there is much more down draft from here. Shorts may cover in any event. In the first case, they pounce back at around 22. In the second case, they will be running for the hills.
Dan Dwyer
In the first case, you will get a thorough |
