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Technology Stocks : 3DFX -- Ignore unavailable to you. Want to Upgrade?

To: Joon Song who wrote (2254)	4/17/1998 11:46:00 PM
From: Tunica Albuginea	Read Replies (1) \| Respond to of 16960

<<Keep in mind that the Matrox is running at 70% clock speed.>> Matrox Voodoo2 Riva128 i740 ForsakenMark (D3D) 640x480 93.59fps 108.20fps 71.67fps 64.63fps 800x600 55.89fps 57.93fps 54.24fps 41.98fps X (D3D) 640x480 79.83fps 92.54fps 69.82fps 66.63fps Turok (D3D) 640x480 48.90fps 62.80fps 50.60fps 39.40fps 800x600 33.70fps 44.90fps 34.20fps 26.30fps Does anyone here think that it is a reasonable assumption to say that because at 70% clock speed, the Matrox card is running Forsaken at 93 fps, that at 100%, the card will be running at (93/.7) 133 fps? However, this isn't the first time I've seen some outrageous numbers... This is the same situation as voodoo 1 all over again. 3DFX produces a superior chip, and before you know, promises of "better than voodoo" performance are being made by the usual companies (ie NEC) The most important thing however, is whether or not they produced. Does anyone here believe the Power VR did? The hype for that chip looks REMARKABLY similar to the hype currently surrounding the PVRSG. That's just my opinion though. TA

To: Joon Song who wrote (2254)	4/18/1998 12:09:00 AM
From: Eric Hautemont	Read Replies (2) \| Respond to of 16960

Actually, the Oppenheimer analyst, according to what he actually wrote as comments in his report, isn't so much thinking the competition is going to reduce the sales of 3dfx in Q3/Q4 but simply believing that by then 3dfx will pretty much have sold a board to everyone that wants one, hence saturating the market. Remember when IBM predicted the total mkt for computers to be about 12 mainframes? and when DEC's Ken Olson made the same kind of off the mark assumptions re PCs. What is amazing is that given his initial earnings prediction, 3dfx has in this quarter alone sold more chips than he originally thought the entire market over the full year could consume. Yet, undeterred, he keeps the same view, only changing the numbers. This indicates one of three things: 1. He's clueless about the market, the end-users, the products and 3dfx position in the competitive landscape; 2. He holds a grudge against 3dfx or its management, for whatever reason (maybe for not getting a banking deal, or simply because he was made feel he was clueless); or 3. both 1 & 2. Like in every profession, there are some truly exceptional people on Wall Street, and a lot of others... The 3D mkt has been tough for the Street to understand and perceive as something else than a niche. I should know, having been in it the last 8 years, and selling my former company, Ray Dream, against most people's expectations for over $ 50 million. Of course, the fact that we managed to sell well hundreds of thousands of products where people thought the entire market would buy in the tens of thousands of units did help.

To: Joon Song who wrote (2254)	4/18/1998 12:33:00 AM
From: Eric Hautemont	Read Replies (2) \| Respond to of 16960

So where might that leave us? 1. Anyone that felt comfortable holding the stock at $ 28 when predictable earnings were at $ 1.00 should, w/o assuming any P/E expansion (a worst case scenario) feel as comfortable holding the stock all the way up to $ 50+ based on 3dfx mngt guidance for the rest of the year. Another way to look at it is the downside risk on today's $ 32 price is significantly lower than it was on yesterday's $ 28. 2. Based on yesterday's CC, 1998 should be an outstanding growth year for 3dfx w/o assuming that Banshee is a roaring success right off the gate. Ballard (or his CFO, I don't remember who answered that question) did not build a lot of the revenue (as a % of the total) on Banshee in Q3 & Q4. 3. Based on the above, and 3dfx tremenduous brand and understanding of the market, the company is very likely to deliver on the $ 2.00 +/earnings for 1998, regardless of who ships what in Q3/Q4. The stock price will catch up as people start believing after seeing consistent performance quarter after quarter. So $ 60 / share at some point in the next 12 mos is extremely likely IMO. 4. I think the interesting issue is what happens in 1999 and 2000. Can the company keep growing from $ 250 M to $ 400-500 M to $ 800M+ in revenues (much like Creative did in the early 90s)? Well, maybe I am just reading too much in Ballard's comments on the conference calls, but it looks like 3dfx secret hope and long term focus is on having its technology+branding combination truly establish a platform of its own (the same way Nintendo and Sega have). Given PCs pricing direction, 3dfx marketing and engineering prowess, I think this might just happen, though it is still a long shot. Here's why: Say you are a game developer. 3dfx gives you a consistent API/platform to develop on that allows you to sell to PC users and deploy the games on LBE machines as well. Simultaneously, PC prices fall to $ 400 by early 99, and you have a chip (Banshee) that cost $ 20 - $30 giving you vastly superior 2D/3D performance than a Sony or Nintendo. The following year you are down another $ 100 in cost, suddenly you now have a platform that will seriously play against consoles. That has not happened in the past, but the price ration between PCs and consoles was 10/1 not 2/1 or 3/2. What do you all think of the above scenario? It sounds crazy, but not more than Autodesk's business plan circa 1983 or Adobe's circa 1985. Granted, this is a long one, but if it does come true, even partially, then all longs have a potential ten bagger on their hands today. Now if the Oppenheimer guy could just short this stock and hold his position for the next three years :-). Eric

To: Joon Song who wrote (2254)	4/18/1998 12:28:00 PM
From: Andrew Fenic	Respond to of 16960

Joon, We should all hope those earnings estimates come in low. Analysts have historically been idiots regarding TDFX. For two quarters in a row now the consensus estimate has been way, way below the real figures. Can you imagine if Microsoft was going through a major product upgrade cycle on a new and awesome version of Windows? Do you think analysts would predict earnings to go down in 3Q98 and 4Q98? H*ll no. But for TDFX who are in as strong a leadership position in their niche AND who just introduced a product that is receiving better reviews in its niche than any version of Windows ever did analysts are projecting the earnings will go down. Those estimates won't put a cap on upside movement because they are DEAD WRONG and everyone knows it. I fired my broker sometime back and went all electronic because those people are all morons. Let's hope the rest of the world all does the same.