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Technology Stocks : S3 (Multimedia semi's place 2be)
SIII 0.00010000.0%May 12 5:00 PM EST
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To: Marshall who wrote (7377)1/23/1997 10:00:00 AM
From: Matthew Rome   of 9477
 
Marshall, Unfortunately the surprise was tuesdays market reaction to S3's announcements.

I agree that the company has tried hard with their recent PR campaign and the conf call was well executed, but at this point its not the traders or MMs, its fear of the great unknown - 2nd half 97 - 1st half 98 that has obviously spooked the institutions with S3.

Desperation talk of an Intel take-over is ludicrous, their collaboration with CHPS and Lockheed is well known. If anything SIII has defied INTC by not including a set-up engine in the current Virge product plans as INTC had requested for Klamath.

It seems from the conf call, we should not expect any major audio, DVD or other design wins in this Q1, but obviously will have continued strong Trio/Virge orders/revune/profit.

What other "surprise" might you expect in Q1 that would get this thing "back to reality". And where exactly is share price "reality" in your opinion.

I still believe that upside reality will continue to be (20 * trailing EPS) = 18.5, until the potentail growth prospects out weigh the potential risk prospects for S3. I also fear the negative reaction of analyst downgrades if the share price lags thru Q1, especially in a booming Nasdaq.

Seems only way for S3 longs to mitigate their exposure is to write out of the money, covered calls.

Thoughts?
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