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Technology Stocks : Diamond Multimedia -- Ignore unavailable to you. Want to Upgrade?

To: Matt Kaarlela who wrote (4531)	7/1/1999 10:02:00 AM
From: Ram Seetharaman	Read Replies (2) \| Respond to of 4679

DIMD Up strongly on S3 (SIII) news as below! July 1, 8:49 am Eastern Time S3 expects to beat Wall St estimates for Q2 '99 SANTA CLARA, Calif., July 1 (Reuters) - S3 Inc. (Nasdaq:SIII - news), a developer of PC graphics chips, on Thursday said it expects to beat analysts second quarter earnings per share estimates by $0.15 to $0.20, meaning the Silicon Valley firm could break even. Wall Street analysts have been less optimistic, expecting the company to report a loss of $0.20 per share, according to First Call Corp., a company that tracks earnings data. S3 said the positive turn of events was fueled by design agreements it has with a number of big computer maker and that it expects revenues to top $50 million when it reports its second quarter results on July 15 after the market closes. Looking ahead, the company also said it could reach $1 billion in revenues in its next fiscal year based on combined performance with Diamond Multimedia Systems Inc. (Nasdaq:DIMD - news), which S3 plans to acquire in an $180 million stock deal. ''Our anticipated financial performance in Q2 puts us ahead of our plan to achieve profitability by the end of the year,'' Ken Potashner, president and chief executive of S3, said in a statement. ''While profitability depends on the financial effects of the Diamond acquisition among other things, we look forward to the challenges and opportunities ahead of us,'' he added. In June, Santa Clara-based S3 said it would buy Diamond, the maker of the popular Rio MP3 digital music player, for $180 million in stock. The acquisition represents a major strategic shift to enter the Internet appliance and home networking markets. Diamond, which had $600 million in sales in 1998, also develops home networking products and is the biggest maker of graphics accelerator boards, which are used for two- and three-dimensional graphics in personal computers. Potashner said the second quarter was successful primarily due to its design agreements with Compaq Computer Corp.(NYSE:CPQ - news), IBM Corp. (NYSE:IBM - news), and Packard Bell NEC, as well as its patent license agreement with United Microelectronics Corp., in which it plans to receive UMC stock worth about $500 million. Potashner also said based on these second quarter developments, he thinks S3 could potentially reach $1 billion in revenues in the next fiscal year once the Diamond acquisition is complete and depending on combined execution and financial performance. Shares of S3 closed at $9.19 on Wednesday on the Nasdaq stock market. Diamond shares closed at $4.125.