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Technology Stocks : 3DFX
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To: Sun Tzu who wrote (5837)7/28/1998 4:09:00 PM
From: Patrick Grinsell  Read Replies (1) of 16960
 
Direct Sales

Sun Tzu:
<<I think 3Dfx is trying to do the direct sales but not for V2 or Banshee, rather for Rampage. The problem for doing it for V2 or Banshee (i.e the ATI model) is that it will make 3Dfx a competitor of its clients (i.e DIMD and CREAF).>>

I think you may have something here. The problem with going through a board maker is that there is another markup. Diamond was saying that Voodoo2 was their high margin product and it represented half of their sales. Eyeballing their numbers, I would guess that margins on Monster 3D II would allow Diamond to make about $80-$100 per board. This is in comparison to the $20 or so that 3dfx makes on the chipset.

Had 3dfx been making their own boards the company would have more cash than its market cap. The problem is that 3dfx still needs the distribution channels for the retail sales. Oh, did I mention 3dfx should have enough cash at the end of the quarter to buy STB (108M)? STB has excellent channel and OEM penetration BTW.

****************************

On another note, a thought just came to mind. 3dfx said that the higher advertising money wouldn't be something to be concerned over. Could they be getting close to a settlement with their lawsuit? Chip, I think you mentioned before that the suit was for 100M. Is that right?

Pat
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