3DFX Message Board - Msg: 7009106

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Technology Stocks : 3DFX

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To: Patrick Grinsell who wrote (9924)	12/29/1998 7:00:00 AM
From: Michael G. Potter	Read Replies (2) of 16960

I've started to try and build a 1999 3Dfx/STB earnings model. So far I've noted that the breakup fee that STB would have to pay is very low ($5 million) and the price currently being paid for STB is very close to book value. Of course, STB has a HUGE amount of inventory (they have almost $48 million with an average quarter's sales of about $60 million or about 90 days of supply - this may be partially offset by the fact that the Q4 inventory was at the end of October and November/December sales may be larger and need more inventory). Looking at STB's balance sheet, they have very little except for short-term assets and short-term liabilities. They also stated in their current quarterly releae that their Q4 sales volume (about $54 million) was too low to fully absorb their overhead. With 3Dfx selling their chip to other board sellers and Banshee grabbing a big chunk of Gateway from STB (went to Creative), I can see STB's problem. I'll work away at it today. My problem is that I have time during the Christmas break, but most it isn't the best time to try and get ahold of people to ask questions to. Michael

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