Comments from Briefing.com about 3DFX's presentation at the American Electronics Association (AEA) Classic Technology conference. (NEGATIVE TONE OVERALL)
3Dfx INTERACTIVE (TDFX)
What is a company whose reputation is cool graphics doing with old-fashioned acetate slides on an overhead projector? Wouldn't a PC based projection, with some example of how cool the chip's performance really is, be appropriate?
We probably aren't alone with wondering that during the presentation. Analysts come to form impressions about management as well as hear the story.
That aside, here's notes from the presentation:
Product: High-end graphics processor, currently used mostly in game applications. Positioning for Voodoo 2 is games; Voodoo Banshee is computer enthusiast (workstation type user).
Major corporate strategy: Move from retail oriented add-on market to OEM business. Just announced Gateway relationship, shipping 3Dfx board in Gateway systems. Current mix is 95% retail sales, 5% OEM. 1999 goals are 50/50 split.
Elements of strategy: 1) Technical: be faster, better; 2) Content: get game developers to optimize for 3Dfx; 3) Develop brand: get 3Dfx logo on game boxes.
Company stated chips are only ones that support D3D, Open GL, and Glide (3Dfx standard). (Briefing has no idea if this is true or not.)
Current chip does 40 billion processor cycles per second, 100 times more than Pentium 400. Claimed nVidia product has problems (we don't like companies that denigrate competitors). Also showed a chart showing speed test: Y scale started at 490, with Voodoo Banshee at 497,nVidia at 493, making Voodoo "look" twice as fast as nVidia. Even worse, a thin slice showed the Intel i740 at 232, which wasn't even on
scale. One analyst interrupted the presentation saying, "That's the worst chart I've ever seen." Not good for making an impression.
DSO's are 72 days, inventory turns are 4X. These are mediocre numbers, but not unusual. See Neomagic discussion, above, for a comparison.
Company plans to have six month cycle for new product introduction.
Analyst questions focused on why the revenue shortfall last quarter was so awful (Q3 was $20 million below projections, at $33 million, with $54 in previous quarter.) Answer blamed a single customer who promised big purchases, but didn't come through. Doesn't speak well for overall demand, however, and analysts clearly were concerned about the unpredictability of TDFX revenues.
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