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

To: MarieS who wrote (11135)	6/9/1998 4:27:00 PM
From: Bill Lin	Read Replies (1) \| Respond to of 14577

This current quarter is a big money loser. Trio 3D is under attack 3 ways. Intel announced a chipset (like S3's discountinued Plato) with graphics 2D circuitry Intel 740 is new $90 AGP graphics standard ATI,TRID,Matrox are discouting their older boards to clear channels, cutting into Trio3D sales Virge MX is still a slow 3D card for portables. NeoMagic 256 bit card may cut into portable sales in Q4. Savage3D is only an average mainstream card, not the killer S3 is trying to pretend it is, so the sales price of chips will be in $20's. TDFX still is leader in segment with VD2 but it may backslide with a 2xAGP Banshee solution later this year. TNT from Invidia sounds fantastic at $200 retail (same as S3D board), and unlike S3d is faster than VD2. Many of these products are in development now, and the graphics area is hotly contested and commodity priced. S3 must show profits. Look at their overhead costs. Very high. Negative operational cash flow (exclusive of USC fab sale). Is it the darkest before the turnaround? I don't know yet. But that's my guess why S3 is stuck in a rut right now. BL ps don't believe company PR.

To: MarieS who wrote (11135)	6/9/1998 4:40:00 PM
From: Ken Muller	Respond to of 14577

MarieS: <<Please advise me as to what is keeping this stock down>> The company falsified its revenue reports for the 96-97 time period. Both the shareholders and the auditing firm got burned. Its unlikely that "good news reports" released from the S3 PR department will have any impact on the stock price. S3's major customers will need to announce design ins for the Savage 3D for the investment community to have the confidence to buy into this company. The good news is that those announcements (if they come) will happen within the next 30-45 days. Happy investing, Ken

To: MarieS who wrote (11135)	6/9/1998 5:07:00 PM
From: R Stevens	Read Replies (2) \| Respond to of 14577

This may have something to do with it... "Intel Creates Turmoil in 3D Market Intel is dumping I-740 chips on the Asian market and the impacts are being felt throughout the 3D industry. The I-740 chip is being sold in Asia in prices from $7 to $26. The lower prices come in bundling deals with Pentium II, a BX core logic chip set and the I-740. The WAVE Report has further confirmed that Pentium buyers are able to get more favorable allocations of Pentium IIs when I-740s are purchased. The large volume of I- 740s in the Asian market has depressed the prices of the chips from virtually every 3D chip vendor. For example, the WAVE Report learned that 3Dlabs Permedia II chips are going for as low as $14. The prices for I-740 cards range from $38 to $55 for an 8MB version. At the Computex show in Taipei, which closes on June 6, there is much resentment against Intel. Some card vendors speak of their complaints to Intel yet many remain silent in fear of not receiving the Intel products they need to sell in conjunction with their motherboard products. In the Intel booth there are 59 I-740 cards from 45 companies. This does not tell the full story as other companies selling I-740 cards are on the show floor. Margins are razor thin and companies have told the WAVE Report they are making from $.50 to $1.00 per card when they can sell them. One result of Intel's actions is a glut of 3D accelerators. When nothing is moving the parts pile up. This ranges from the stock of chips at the 3D accelerator chip companies and extends throughout the distribution chain to the retail level. The channel is stuffed to saturation. The combination of the poor financial condition of the Asian market and the glut of accelerators means that most companies making motherboards and graphics accelerators are not making money. One vendor we spoke with stated that in the last 2 months the situation has worsened and it remains unclear when it will improve. 3Dlabs is the first company to report on the impacts of the Asian market. We expect that more will report on the combination of Intel's actions and a weak overall market. The impact of Intel's presence goes beyond the I-740. Many of the motherboard companies have motherboards which support Slot 1 and the EX chip set. This is targeted to receive the Celeron processor as a Segment 0 all-Intel solution. Yet, when the WAVE Report spoke to companies with these motherboards, not a single one stated that this would be a successful product. The uniform response, when they would respond, was " this is a product to keep Intel 'happy.' " The number of I-740 units moved as a result of this strategy remains unclear. One source indicates that the largest seller of I-740 cards is moving 50,000 units a month while another strongly disputed such a number as being to high. They felt that there are from 3 - 4 companies moving on the order of 30,000 units a month. We estimate that Intel may have moved upwards of 1m units in Asia. This seems small when Intel's run rate for the I-740 is estimated to be 6 million units in 1998 and there are indications its sales goal is 10m units. The core issue is that the I-740 is being seen, especially in light of the newer 3D parts coming to market, as an old stale part. Thus, while Intel fails to gain large OEM orders in the U.S. it is increasingly left holding the bag full of I-740 parts. Now, in Asia, with the channel saturated, it has few options other than to drive the price of the part down further. One wonders - where is the bottom and how much is Intel willing to lose on the I-740? It remains a mystery why Intel would engage in such destructive actions. Clearly Intel is seeking to increase the sales of Pentium processors and the linkage with the I-740 is one way. Yet, we see this as only a near term gain. The I-740 is a transitory part with only a limited lifetime and there is every indication that its end is near. Yet, the feedback we get is that 3D chip buyers are not impressed with the Intel 3D roadmap. Just as S3 faced the consequences of stuffing the channel in Asia with its Virge parts Intel is approaching that same stone wall. The core issue Intel faces is that its lock on the microprocessor market is weakening. The key reason is its lack of competitiveness in price sensitive markets, of which Asia is at the epicenter. At Computex AMD rolled out SuperSocket 7 and IDT announced its WinChip 2. There was no doubt about the warm reception that these announcements received. On the show floor the buzz is about how to reach the $399 PC price point by Christmas. Intel cannot play in this space. When Intel seeks to leverage its presence in this market with I-740 deals it is only one symptom of the larger problem. Its dominance of the market, in Asia, which has been defined by high priced processors is coming to an end. In the process, as its microprocessor market share declines, it is reeking turmoil in the 3D market. Hardly a long term strategy but more one of desperation. Intel is creating its own strategic inflection point in the graphics chip market. " pixel.weezy.com Omid Rahmat's take on the news. Quite curious. jpa.com .