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

To: Synapsid who wrote (11590)	7/23/1998 9:25:00 PM
From: Bill Lin	Read Replies (1) \| Respond to of 14577

I'd expect a sales gap in Q3. Q2's sales of $53 mm was really good considering the lousy sales environment for Virge. But now with i740 out there, S3 will be lucky to get $40mm in sales in Q3. Remember its the slow period. $1mm in sales of a $25 chip means 40,000 units. So even $40mm is 1.6 million chips. Expect a very bad margin number like Q2. But Q4 is the one to bet on. It should be much stronger in revenues and higher gross margin (20%?). The question will be can the gross margin over come the $27mm in SGA&R&D expense that it racks up quarterly? Walt Amaral seems to be doing a good job so far, but Q3 will be his fire test. If he can stay Cash neutral in Q3, then he will be executing GREAT. job cuts a reflection of poor Q3 outlook. Its gonna be very back end loaded. DIMD is also in financial trouble so don't expect them to load up on inventory before retail sales channel tells them how well the S3D will sell. Your best hope is to get people to go buy this board when it comes out. BL