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

To: Michael who wrote (9211)	2/4/1998 12:49:00 PM
From: stock talk	Read Replies (1) \| Respond to of 14577

By Dean Takahashi Staff Reporter of The Wall Street Journal S3 Inc., a small maker of graphics chips, paid an estimated $10 million to $12 million to gain control of what may be strategically important patents in the chip business, the company confirmed. Terrence Holdt, chief executive officer of S3, confirmed that the Santa Clara, Calif., company bought the patents in an auction last summer from a defunct startup, Exponential Technology Inc. The winner wasn't announced at the time. Mr. Holdt said the patents were "strategic in nature," but he declined to comment further. A person familiar with the matter said S3 beat out chip giant Intel Corp. in the bidding. Exponential, a start-up in San Jose, Calif., that shut its doors last May, sought to create PowerPC-compatible chips for the Macintosh market. Founded in 1993 by entrepreneurs Gordon Campbell, George Taylor and James Blomgren, the company raised about $27 millionto design its chips. In 1995, the company promised its chips would be three times as fast as Intel's Pentium chips, reaching speeds of 500 megahertz. But the company's first chip fell short of expectations. Then it got caught in a squeeze as Apple Computer Inc. lost market share, and took actions that eliminated most of its Macintosh clone makers. Exponential sued Apple, alleging that the computer company drove Exponential out of business. That suit is still pending. With no customers to buy its chips, Exponential ran out of cash. Butit had stockpiled dozens of patents, including some that patent experts said would be useful in protecting a company that wanted to reverse-engineer Intel's coming Merced microprocessor. The company held an auction that drew most of the major microprocessor manufacturers. Industry executives said that S3 is on a patent-acquisition binge. Last week, it announced it would pay $40 million to buy graphics-chip patents from Cirrus Logic Inc. However, it isn't clear if S3 will be able to make use of the microprocessor patents. The company has lost its technical lead in the graphics-chip market and laid off 15% of its work force earlier this month. Copyright (c) 1998 Dow Jones & Company, Inc. All Rights Reserved.