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

To: Hamid MArandi who wrote (9189)	2/3/1998 2:11:00 PM
From: Bill Lin	Respond to of 14577

Hamid, re: your question whether S3 might buy Opti Maybe not. S3 must utilize its current assets to produce the GX3 and Vortex products. Uncertainty with performance criteria of these products may require they purchase another graphics manufacturer. As it stands there are too many graphics chip manufacturers in the industry today: TDFX, THDO, ATI.Y, matrox, S3, TRID, OAK, INTC, and some japanese companies like NEC...not including private companies like nVidia. Consolidation in the graphics industry will eventually provide profits or greater profits to allow reinvestment. The best part of OPTI is its design bureau. However, for S3 to obtain a private design bureau (which competes with Cadence who is doing really well) on top of the 95mm they spent in R&D last year, is a bit much to manage. OPTI has 72mm in cash, but 13.7mm shares out (up from 13mm in previous qtr), which is $5.25. If it continues to generate $1mm per quarter, Then by q4, it will be worth $5.50. At 6+ right now, it will be hard to justify this price. Easier to buy the design equipment and dangle a signing bonus in front of the desired design engineers, than to spend $84mm to buy the company. (granted it will only cost $12mm) So, although the price looks good now, i hope S3 does not pursue this direction. BL