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

To: Mark Carson who wrote (3721)	6/4/1998 1:12:00 PM
From: jttmab	Read Replies (1) \| Respond to of 16960

Mark, I think that Ballard's first job and priority is to have a business strategy and see that it is executed. Along the line, the individual investor or the investment community may agree or disagree with the strategy, not understand it or simply may not believe that it is executable. In executing the strategy he may use tactics that we again may agree or disagree with. What I heard in the interview was that his strategy was to place TDFX in the high end graphics (performance) market space and leave the commodity market to Intel and that this market space was large enough to support two to three competitors. From what I've seen on these boards there was a consensus that TDFX was competing directly with Intel allegedly along with the analysts that cover the sector. So from that standpoint the information from Ballard was "new". (We could still argue the validity of competing in a market space separate from Intel). He has three tactics to execution: 1. Produce the best graphics core(s) 2. Branding 3. Technology "secrecy" both individual core and product roadmap. From the near term historical perspective he seems to have met number one. Number three keeps us from having a sense of what the future holds. On branding, it seems that his tactic is working quite well. After all TDFX does seem to be the only graphics core outfit that has the software end advertising and hence building the brand. Someone mentioned earlier (Chip?) that branding can quickly be lost by superior technology. While I wouldn't disagree, is it a reasonable expectation that the branding edge would be lost by this Christmas ...doubtfull. In addition to the graphics core the software would have to be written to be optimized for other possibly better cores, advertising, etc.. If I'm writing a game now for the Christmas season, I need to optimize it for the brand that sells today, to do otherwise it seems would be a risky business decision and it is difficult for me to see the value to be gained at this moment in time. Ballard also made it clear that he doesn't believe the branding issue is completely settled, i.e., he plans to increase the branding identification in the second half of the year. I don't necessarily agree with his third tactic, i.e., secrecy. The arguments for it: "customer confusion" and it gives the competitors targets to shoot at. I translate customer confusion into, will the customer delay a purchase if he knows a better product is going to be out 6 months from know. On the second point, it does seem that the competitors target is Voodoo II. As the competitor, I do know that TDFX is going to put out something better but is it 10% better ... 50% better or 300% better and when? The arguments against it are: The competitors are going to build the best they can the fastest they can irrespective of what TDFX has or will have to offer. On Customers: We're an impatient society, we want what we can get now not six months from now. And I think lastly, if the investment community doesn't know what you are going to do, they aren't going to speculate, they are going to compare what TDFX is doing against what the competitors are going to provide. So even if your strategy is the correct one and is executed perfectly the result is going to be a lot of volatility in share price. Is one of the CEO's job to manage near term share value or long term shareholder value (or both)? On some previous posts regarding Ballard's possible arrogance. The CEO has to balance two public perceptions. First, in the competitive market place ... it's WAR and my competitors are out to steal my business. However, he can't stand up wringing his hands, saying I don't know if we're going to have any sales at the end of the year because company X has a better product due out in August. So he has to do the second, he has to express confidence both publicly and internally that TDFX WILL maintain dominance in the marketplace. Given that he has done the later, the investor is going to have to look for actions that he is taking that will result in dominance. Increased branding activity is one of those. Of course I could be wrong and this company could tank (even more than it already has) but I believe that the prospects look very good; Ballard has a strategy that I like; tactics that I mostly like; and I think he understands the market and the competitive atmosphere. So I'll stay long. Good luck to all, Jim