The volume does not suggest that this is a major sell off. The Intel 801 chip is not new news. I believe that this chip will allow the power of 2D and 3D chips to really sing. I do not believe it is a direct competitor, but I could be wrong. As far as the more traditional competition, they are gearing up for a couter attack to last week's tdfx onslaught. So, that could be telling. Then, there are those oem wins, and to date tdfx has not been all that impressive. I still think the retail end is where tdfx must dominate to stand a chance at future oem wins. Otherwise, they will not have the branding necessary to distinguish itself from others.
The price action could also be last minute arbitrage, as we get closer to Friday's vote. If the shorts are increasing their position, it is because they believe that the merger will unravel. That is hard for me to believe, but both companies are doomed if the merger does not go through, so that spells some vulnerabilty.
As far as a healthy pull back is concerned, we are at the point where a lower price becomes unhealthy. The month started at 12 and change and got to 21. A typical 50% pullback would have the stock at around 16.5. At that price we should see some buyers come back in.
Dan Dwyer |
