JPB II, I know how you feel. My experience in these situations is that the "suprise" rarely if ever comes. The sustained upward move when it does comes is slow and sweet. Looking back on it, its' hard to tell what actually turned it - a rec here, positive press there, etc. My basis is much higher partly because I became a believer a little later in the game (early on I traded it a few times). Looking back on it there were several factors that I completely misjudged:
I expected TDFX to stand out from the chip sector crowd given its' dominant position and branding strength.
I did not anticipate a major shift in sentiment (IMO unjustified) on the 3D industry.
I overestimated the strength of the pc gaming movement in that I thought graphic capabilities would have received wider attention in the general media than it has to date.
I ignored my initial reservations about smallcap stocks in general using the excuse that the secondary offering and expected growth would establish a sufficient market cap that would resist excessive volatility and wide price swings. I like to trade small caps - not own them outright.
All of these factors will change:
The chip industry down turn has reached significant lows and is due for a turn around in the months ahead. Today's laggards eventually become tommorrow's leaders.
3D will be THE growth area for PC sales in the future. Banshee will be successful and TDFX will slowly expand its' dominance to the much larger 2D/3D general purpose market.
PC gaming will continue to grow helped by the explosive gowth of the internet. PC multiplayer is a powerful advantage of the pc gaming platform and faster internet access (i.e. cable), and continued growth will only make it more popular. Standalone consoles may be unable to compete against lower cost pc's of the future.
Microsofts efforts with 3D Chromeeffects and DirectX will widen the 3D market in the typical slow and deliberate method that they are famous for. Interactive software for business/commmercial usage will adopt 3D to strengthen the message.
TDFX making the Russell 2000 was a good first step towards a hopefully higher market cap. As Christmas comes and the other factors take hold, longer term players should begin to park this stock in their portfolios. Initially, the value players will begin to buy who in turn will sell to the growth players once the price has run up. At some point, a couple of million shares short have to be covered. My goal is a pe of 20-25 on earnings of 2 - 2.50 per year. However, if Rampage is as revolutionary as I expect it to be then these numbers may be higher and as Greg Ballard has said "1999 will be the year of TDFX". Joe C.
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