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

To: stock talk who wrote (7364)	11/5/1997 12:02:00 AM
From: Sep K.	Respond to of 14577

Recent News: ********************************* Nasdaq Resumption - S3 Inc (NASDAQ:SIII) no first sale Reuters, Monday, November 03, 1997 at 17:59 REUTERS ******************************* S3 (NASDAQ:SIII) to restate prior quarters results Reuters, Monday, November 03, 1997 at 17:28 SANTA CLARA, Calif., Nov 3 (Reuters) - S3 Inc said on Monday it will restate prior quarters revenues and earnings downwards due to errors in its accounting. The company said in a statement that some products shipped to international distributors had been counted as sales before the product had been sold to users. It said the cumulative effect of the restatement would reduce revenues by between $40 million and $70 million and net income by $0.14 a share to $0.29 a share. The company said it believes its sales policy of only recognizing sales when the product is sold by the distributor to the end user was not fully adhered to. "We are currently implementing measures to ensure that this type of error will not recur," said President and Chief Executive Gary Johnson. "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," he said. S3 said it expects to release more definitive information when it files its third quarter results. ********************************************

To: stock talk who wrote (7364)	11/5/1997 12:03:00 AM
From: Sep K.	Respond to of 14577

More Recent News Posts: S3 Expects to Restate Revenues From Prior Quarters; Discovers Errors in its Timing of Revenue Recognition 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. About S3 Incorporated S3 Incorporated, founded in 1989 with headquarters in Santa Clara, California, is the world's largest supplier of multimedia acceleration hardware and its associated software. S3 is committed to applying its expertise in audio, video and graphics acceleration to create innovative and affordable products for the home, desktop and mobile markets. The company's vision for the future is to also bring a rich, consumer electronics-type experience to PC users _- integrating the best available consumer multimedia technologies into the mainstream PC platform. Except for historical information contained herein, the matters set forth in this press release, such as statements relating to the extent of, and periods subject to, the company's possible restatement and the rates at which existing inventory will move through the channel, are forward-looking statements that are subject to risk and uncertainties, including the impact of competitive products and pricing and of alternative technological advances, market acceptance of the company's and its customers' new products, and other risks detailed from time to time in S3's SEC reports, including its Annual Report on Form 10-K for the year ended December 31, 1996. NOTE: The S3 corporate logo is a trademark of S3 Incorporated. Other marks referenced herein are the property of their respective owners. All third party quotes and product information are furnished by the respective companies. Source: Mercury Research (Scottsdale, AZ)

To: stock talk who wrote (7364)	11/5/1997 1:04:00 AM
From: mph	Read Replies (1) \| Respond to of 14577

Hi S.T. Don't you think it's more likely that Walt discovered the problem, most likely caused by the co. being rudderless from a CFO standpoint for so long, and that he urged prompt corrective action once he found out. The press releases have not suggested that S3 was changing its accounting method, but rather that an error had been made in complying with that accounting method. Consequently, Walt could not really suggest a "change" in accounting method. I do think that there is some validity to your suggestion that Walt urged GJ to lay their cards on the table now, while the co. was down, so to speak, so that they would have a shot at a clean slate in '98. The more fundamental problem, as I see it (which I don't think is inconsistent with many of your posts during your "shareholder value" period), is that the investment community is likely to have lost confidence in this management. This would be true whether the Street thought that management was dishonest or simply incompetent. At this point, it would seem that they would have to pull some pretty good rabbits out of hats during at least the next 6 months. With the overall volatility of this market and the continual whine of "flights to quality", S3 has many competitors for investment dollars that have not a thing to do with high tech. (I've never done such a long post, sorry) All of this, of course, is IMHO, as an inexperienced investor, but one who likes to see my money grow with an horizon of somewhat less than 3 years. mph

To: stock talk who wrote (7364)	11/5/1997 2:16:00 AM
From: Parker Benchley	Read Replies (1) \| Respond to of 14577

Frankie... I'm with you on the Long Term and like your idea about the meeting. There sure are alot of new negative people showing up here lately. Shorts I presume. Onward, George

To: stock talk who wrote (7364)	11/5/1997 2:10:00 PM
From: Ken Muller	Read Replies (2) \| Respond to of 14577

Frank, George, and All Now that the hysteria has started to subside, perhaps its a good thing to look at the "Long Term Perspective". Some items to consider: 1. Until we get a further explanation of how (why?) the accounting screwup happened, there is additional risk for downside movement (It might just turn out to be a simple error, but you never know). It would be prudent to wait for further statements (or 10K). However, statements might not be forthcoming because of... 2. Expectations of a shareholder class action. (This is a dream case for the attorneys. Company freely admits wrongdoing.) 3. SEC will have to investigate. Should be short and sweet. Previous acting CFO has to explain. He will probably not be talkative until that investigation ends. I expect a fine to be levied. 4. With litigation and SEC hanging around, chances dim for a buyout/takeover in 98. 5. If board sees fit to shake up management team (probable), then the inclusion of a new high profile CEO could boost stock in 98. (The business conditions really haven't changed.) Lots of potential gain along with lots of potential risk. So what are my plans? I cashed out. I am waiting to see what happens next. Based on previous history, something will happen. Ken