Pat: three bucks a share?
Seems like a lot doesn't it? To be honest though, it isn't. The Voodoo3 launch has proven that it is the technology and not the board vendor that pulls the demand. I find it unimaginable that the Voodoo3 launch has actually surpassed Voodoo2 and 3dfx still hasn't shipped to all their channels yet...including the majority of OEMs. Ten OEMs with multiple Tier1 deals...for starters? Banshee had 4 or 5 OEMs with 1 tier1. This should yield double to triple the OEM unit volume of 4Q98 of 300K units, right? 3dfx says Voodoo3 launch is more successful than Voodoo2 and yet Voodoo2 sold 500K chipsets per month during its launch (2Q98). Given these tidbits, 2Q99 has the potential for 1.5 to 2 million chipsets sold. 1.5 million boards multiplied times $110 (the reseller cost for Voodoo3 2000) is 220 million dollars. With 30% GM, 35M operating exp.,35% tax rate, 1.5 million in interest income, 24M shares outstanding...2Q99 yields a hefty 88 cents per share.
Now imagine if:
1) I use ATI's gross margin of 35%
2) I assume 2 million boards instead of 1.5 million (actually this is exactly what 3dfx did during 4Q99 with the aging Voodoo2 and a gimpy Banshee product)
3) I include other STB products in the revenue stream
3) I assume that something other than the Voodoo2 2000 is being sold for revenue estimation purposes(ie. 3500 and 3000)
4) 3dfx actually launches another product in 2Q99.
Clearly we are approaching and probably surpassing the maximum capacity for Juarez at its current state. Dave Zacarias did mention to me that getting rid of the legacy part production should relieve some of this burden. I have been saying it for quite a while now: 3dfx's greatest enemy is supply, not demand.
This is just one sample for 2Q99 and right now I don't think it terribly out of line. As you can see, the majority of my assumptions are rather conservative given the information available. In my opinion, Voodoo3 is the just the tip of the iceberg.
Pat
P.S. I don't plan to be that impressed by Q1 given that 3dfx just started shipping at the end of March, but like Potter I'm hoping for a combined financial statement to make some more assessments. |
