Ditchdigger, great article in Businessweek, is that a bad sign? Geez, I don't think I have agreed with them in 10 years. Is that the curse of death, or can even a blind rabbit find a carrot once in a while.
Anyway, here it is and I agree with them.
businessweek.com
BW ONLINE DAILY BRIEFING
STREET WISE by Amey Stone February 26, 1999
Can New Facets Make Diamond's Stock Shine Again?
Its Rio music player and HomeFree consumer networking gear could be the keys to a revival
For ailing modem and graphics-card maker Diamond Multimedia Systems (DIMD), the successful launch of two hot new-product lines late last year was just what the doctor ordered (see Business Week, 2/8/98 Cover Story, "Beyond the PC").
Sales are soaring for its three-month-old Rio, a portable electronic device about the size of a pack of cards that plays CD-quality music downloaded from the Internet. Diamond sold 250,000 units of the trendy $199 gizmo in its first three months and expects to sell 750,000 for all of 1999. That could add $30 million to its revenues (see BW Online, 12/3/98, "Diamond Rio: The Little Music Player That Could").
This is just the first of many digital audio products the company plans to bring out. "You're going to have a whole family of products," says Brian Alger, a senior research analyst at Preferred Capital Markets. "This is not a one-trick pony."
Last November, Diamond also began shipping a product called HomeFree, which allows easy PC networking in the home. The market for home networking equipment is expected to grow steadily over the next few years, along with the number of multiple-PC households. On Jan. 5, in fact, Diamond announced that Compaq Computer (CPQ) will use HomeFree in its line of home-network-ready and custom-built Presario PCs. That legitimizes Diamond's product, says Naohisa Murakami, an analyst with CIBC Oppenheimer.
POINTS OF LIGHT. "This market is going to be slower growing than the Rio's, but it is potentially much, much bigger," Alger says of the HomeFree line. Eventually, he envisions Diamond providing a router for homes that distributes Internet access to a range of digital devices, including PCs, set-top boxes, TV sets, and stereos. That technology might even make it possible to turn on your heating system or your lights remotely via the Net.
The Rio and HomeFree have provided two sorely needed points of light for Diamond Multimedia's future. The company has lost more than $65 million from operations in each of the past two years as its core modem and multimedia products have turned into low-price commodities. Its quarterly earnings (or lack thereof) have disappointed Wall Street repeatedly. Its stock, which climbed above $40 in 1995 when it was one of the hottest tech IPOs that year, has spent the past three years trading in a range between $8 and $15 a share. It fell as low as $2 7/8 on Oct. 9, 1998, the day after the company reported a third-quarter loss of $22 million, of 63 cents a share. Diamond announced a major restructuring in mid-November, and the stock has climbed back to close on Feb. 25 at 7 5/8 on the strength of the company's new products and on hopes for a successful reorganization.
Hiram |
