Sorry Pat, but this analysis does not strike me as being quite right. For the record, I think the merger was the right move (its timing and proper execution is another issue of course, and remains to be seen). I also understand that *if* 3Dfx can sell its cards to the retail *successfully* then it stands to benefit greatly. Having said that, I am not making any assumptions for the retail side. Based on what I've gathered from STB, on average they sell their boards for $88 and make $3.56 in profits on them. I don't think their profit margins (as a division of 3Dfx) will improve just because they are getting the chips from 3Dfx internally instead of buying it from them. Implicit in your assumption was that overnight in '99, 3Dfx will have revenues equal to 75% of ATI's (allowing for currency effect). Somehow I don't think going from a niche player to a very strong number two contender in the industry in 9 months is likely.
I think we should look at it this way: how many graphics cards did STB sell last year? Assume that all those cards will be 3Dfx cards and allow some extra percentage for the benefit of not having to compete with others for the 3Dfx brand and selling to the public. Then allow for the boards to be sold for $80~$100 and allow for "profits" of ~$20 per board and then allow for R&D, taxes, and whatever else that applies and we should be having a relatively close number (as close as one can be given that anything we derive this early is just a guess). So do we know how many graphics cards STB did sell last year?
Sun Tzu
P.S. The more I think about it, the better on-line sales to the public looks. |
