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

To: Norrin Radd who wrote (9037)	1/28/1998 8:32:00 AM
From: JAG	Read Replies (4) \| Respond to of 14577

2,954,655 shares short as reported by todays Wall Street Journal. At some point these guys are going to get scared and cover big time. At these levels, I would watch for news of a S3 buyout or merger. With Intel entering the industry, it is ripe for consolidation. S3 could be purchased at current price for $252 million. A strong player could use $117 million of S3's cash to finance the acquistion, leaving $135 million to be financed from other sources. Borrow 75% on receivables and you have another $45 million, borrow 50% on inventory and you have another $35 million. The value of the fab has been established and selling another 1/3 would raise the cash to complete the purchase price. You do not find these situations very often in the marketplace, especially since S3 is still cash flow positive excluding the write-off of intangibles. The operating profit before the write-off for the quarter was $3.1 million (before tax) and depreciation is running at $4-5M per quarter. This comes at a time when sales were off 30% because of Asia. Company is cutting overhead 30%. No real cuts in R&D per the conference call. The cuts were in corporate fat. A takeover candidate if I ever have seen one in all of my years in the finance business.

To: Norrin Radd who wrote (9037)	2/5/1998 1:21:00 PM
From: Jim Goodman	Read Replies (2) \| Respond to of 14577

another winner for both of us, VG timing again....just wanted you to know, SIII. has overhanging resistance in the 7 1/4 to 7 3/4 area, technically, but obviously has some "thrust" on recent predicted rise...which means, often, after a rest, a potential "measured move" of equal length/tambor to the initial move up, thereafter....hope this helps, will watch for this possibility, best wishes, p.s. just like my "PSYCLE sm" teaches, lots of people kicking themselves for not having bought any depressed techs/semis/comp. issues "into the recent bad Asian news exhaustion bottoms"....neat, huh....hey, as we agreed, most people never learn the "pattern" enjoy, p.s. S.I. seems to have added a "spell checker"....cool....helpful....