S3 (A LONGER TERM PERSPECTIVE) Message Board

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Technology Stocks : S3 (A LONGER TERM PERSPECTIVE)

SIII 0.0001000

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May 12 5:00 PM EST

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To: Honor First who wrote (12533)	1/8/1999 5:23:00 PM
From: Don Earl	Read Replies (2) of 14577

Hi Honor, Here's what I come up with for estimates: I figure about $44 million in sales as there haven't been any new products introduced this Q, the new drivers are still in beta testing and I expect pricing pressure on older products to continue. $25 million in cost of sales per last Q's conference call Research and Development to my knowledge is mostly salary based and doesn't seem to change much from quarter to quarter, so about $20 million. Selling, Marketing and Administration dropped to about $10 million last quarter from an average of around $13 million which I assume to be the result of cost cutting measures. I'll assume that $10 million will remain fairly constant going forward. $44 million - $25 million - $20 million - $10 million would give an operating loss of -$11 million. Income from the joint venture runs around $3.5 million per quarter. They took some tax adjustments last quarter that brought that figure up to around $8 million but that was a one time adjustment and I expect the number to go back to around $4 million. Interest expense of 5 3/4% on the $103 million in convertible notes is due this quarter, should be about $3 million. -$11 million + $4 million - $3 million = -$10 million divided by 52 million shares would be about -.19 EPS. Without top secret inside information, that's about as close as I can get. IMO the only way they could come up with -.04 would be if they had Savage II ready to ship at the end of the quarter and a major OEM willing to accept shipment pending the official release of the new drivers. Although possible, I'd treat that as a long shot. My personal opinion is that going forward, revenue will have more of an impact on the stock price then EPS. I think flat to lower sales with lower expenses is about what is expected. I expect earnings to be more or less a non event this quarter. Any big moves in the stock price will probably come from news items that point to more sales; like major OEM wins or the introduction of new products. Regards, Don PS to Mark: Thanks for the analysis. I was kind of speculating on "what if" Apple were to start making a serious dent in the Wintel monopoly. Also kind of curious why I've never seen a review showing Mac vs. IBM compatible.

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