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

To: Medisco who wrote (5133)	7/8/1998 12:58:00 PM
From: Bob Howarth	Respond to of 16960

No analyst pushing the stock = no price increase. I also bring up question once again: where will company be a year from now? What is growth strategy? TDFX needs to do something with all the cash it has that will show that its earnings can be projected out a bit in a rational manner.

To: Medisco who wrote (5133)	7/8/1998 1:52:00 PM
From: Hal Rubel	Read Replies (1) \| Respond to of 16960

News vs. Movement RE: " Why the stock has not made a move? The news only on Yahoo, Is that the reason? " Medisco, I got the press release through my broker, E-Trade. While checking prices on their system, issues with current news have a very noticeable asterisk (*) following the symbol. I am sure that other brokers have a similar system. Therefore, we must conclude that the news is has been fairly distributed at this point. My Analysis: At least the shares did not go down. The news article may have set a positive tone for the stock's direction for the day. I am reminded that, like the most recently preceding press release, this is actually a boardmaker win converted into a TDFX win by the heavenly art of the strategic press release. TDFX reps certainly did not visit the boxmaker on behalf of the boardmaker. That would have hurt relations with TDFX's other board making customers. (Besides, there is likely to be some degree of board-level feature customization going on in negotiations.) So, are there advantages to TDFX that might have affected the share price? 1) Increased Sales -For the boardmaker -Yes. For TDFX -Marginal. Other boardmakers -No. However this boardmaker win does give TDFX another good customer with a solid demand base. Helps to mitigate bullying by TDFX's major customers, which is a plus for maintaining margins. However, there should be no immediate effect on earnings for TDFX. 2) Increased Recognition - For TDFX -Yes. Inclusion of a product in the boxmaker's market offering mix is basically neutral from a boxmaker's point of view because it is to them simple recognition of an on ongoing fact. However it does implicitly confirm that consideration of a 3D card is a significant computer purchasing issue. Thats new and in our favor. Additionally, the featuring of a smaller company's product by a larger company with broader national name recognition constitutes an independent confirmation of the smaller firm's significance. In this case the significance being confirmed is not that of the obscure boardmaker and his line, it is clearly 3dfx technology -which is also good for us. But, there is no direct connection to the bottom line. 3) Major Endorsement -For TDFX -Yes, but by the back door. The boxmaker thinks that it will sell more computers by offering the public what it already wants. So in effect, the boxmaker thinks that it is getting a 3dfx endorsement of its product as a game platform. That is very flattering to us. The boxmaker may think that it is not actually endorsing 3dfx but in fact it is. Having featured 3dfx technology to customers, the boxmaker is now inextricably committed to defending its expressed word. The boxmaker's sales force and literature can do us no harm and a world of good. Once again, however, there is no direct connection to our bottom line. So, what good is the press release? Well, I think it is just a small plus to build a long term foundation with. Clearly, the shares are not currently upwardly-elastic to boardmaker related press releases. I reluctantly accept this fact, knowing that the market can change at any moment. What the market may be willing to react to, assuming that the market is willing to react to anything at all, is news of direct TDFX-to-OEM Banshee progress at the boxmaker level. Hal PS: On the bright side, a plus here and a plus there will eventually run to substance.