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Technology Stocks : 3DFX
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To: jttmab who wrote (8048)10/8/1998 6:50:00 PM
From: Michael G. Potter  Read Replies (2) of 16960
 
Diamond made a very common error when an inexperienced company is pressured on inventory. They choked back inputs so much that they missed sales. They mainly sell to retail so if they miss a shipment there's a very good chance they lose the sale forever.

Diamond made a very bad marketing decision to go with the 8 meg Voodoo2 cards and that started an inventory problem for them. Instead of taking it on the chin and moving the inventory out at a loss (recovers some cash and reduces inventory), they choked input too much and lost sales.

I don't think that they'll be buying many Voodoo2 chipsets and that will hurt 3dfx. I wonder how many Banshees they'll be buying as well.

Michael
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