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Technology Stocks : S3 (A LONGER TERM PERSPECTIVE) -- Ignore unavailable to you. Want to Upgrade?

To: steve goldman who wrote (7152)	11/3/1997 5:27:00 PM
From: Gravitar	Respond to of 14577

Here is the Bad news: PR Newswire, Monday, November 03, 1997 at 17:12 SANTA CLARA, Calif., Nov. 3 /PRNewswire/ -- S3 Incorporated (NASDAQ:SIII) said today that the Company has uncovered material errors in the timing of its recognition of sales to several international distributors and consequently expects to restate its revenues downward for prior quarters by a cumulative total of between $40 million and $70 million. The Company currently expects the resulting net income effect for those quarters to be a cumulative decrease of 14 cents to 29 cents per share. According to S3's accounting policies, which S3 does not believe have been fully adhered to, the company defers recognition of revenue on all sales to distributors until the product is actually sold by each distributor to its end customers. "We are currently implementing measures to ensure that this type of error will not recur," said Gary Johnson, S3's president and CEO. "The inventory at our distributors' locations today consists largely of S3's 2D and 3D mainstream products. Based on the rates at which this existing inventory is expected to move through the channel, we expect the bulk of the revenue from that existing inventory to be recognized during the fourth quarter of 1997. Any new shipments into the channel during, and subsequent to, the fourth quarter of 1997 will be recognized during the quarter in which those products move off the distributors shelves in line with company policy." Walt Amaral, S3's recently appointed chief financial officer and senior vice president of finance said, "We have initiated tighter monitoring and control procedures to ensure strict compliance with our revenue recognition policy moving forward." The audit committee of the Company's board of directors, which consists entirely of outside directors, and the company's management and independent auditors, are in the process of reviewing and resolving the revenue recognition matters raised by the Company's review, to date. The company expects the release of additional and more definitive information concurrent with the filing of its third quarter Form 10Q.