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

To: Chip Anderson who wrote (5822)	7/27/1998 4:33:00 PM
From: David R. Parker	Respond to of 16960

Chip....any response from thestreet.com to your letter about their poorly researched earnings article about 3DFX? I've checked the "letters" section on their site, and nothing has been published there... David

To: Chip Anderson who wrote (5822)	7/27/1998 4:57:00 PM
From: Yakov Lurye	Respond to of 16960

[Somewhat off topic]. But there's a big difference between low-tech dynamic random-access memory chips and the super high-end chips from PMC Sierra. Even the managers of funds specializing in high tech issues do not necessarily appreciate the technology. Landis had expressed his views several times - he likes stocks that could in his opinion benefit from Internet growth, thus he likes semis that are selling into communications markets like PMCS. This may be a valid approach - demand/supply equation for PMCS products may be much more favorable than for DRAM manufacturers. Yet to say that PMCS technology is somehow "super high end" compared to DRAM production is really misleading. DRAM manufacturers historically employ the top-of-the-line manufacturing equipment. Look at the list of companies that buy the newest and the best technology (e.g. DUV lithography, advanced testing tools, etc.) - you will see a lot of DRAM producers, not PMCS. As a sidebar, TDFX technology may indirectly benefit some ATE equipment makers like LTXX. Y.

To: Chip Anderson who wrote (5822)	7/27/1998 6:59:00 PM
From: Jeff Lins	Read Replies (1) \| Respond to of 16960

Hello, all...If you read nothing else from this post, please read the bottom part about a topic for discussion. ----------- RE: advertising, am waiting for call back from TDFX... To Sun Tzu, regarding the overly optimistic earnings report, let me explain. You said: >>>>>>>>>> Q2 earning expectations of $0.80+/share. How could have this been possible? The only twisted reasoning behind this was that since 3Dfx was expected to earn $0.25/share in the prior quarter and instead it reported $0.50/share (actually it reported operating earnings of $0.43 the 50 number included a tax gain), so by resons of extrapolation, now that analysts expect $0.48 (a) number that was significantly increased after Q1) then the company should earn (extrapolating) at least $0.80 a share. This was unreasonable because (a) the company had explicitly said that it would earn under $0.53/share and possibly as low as $0.48/share. (b) the reason for the wide margin of analyst errors in the previous quarter had been an "ahead of schedule release of V2" and not only there were no new products released this quarter, a more reasonable assumption would have been that the previous quarter would eaten away some of the Q2 sales. (c) the number of shares had increased (and is still increasing until it levels off at 17.5M) and (d) the analysts had bumped their estimates significantly so the extrapolation shouldn't have worked.<<<<<<<<<< ------- On the All Games Network, which runs a streamed video "TV show" about gaming, Tony Tomasi, who works for TDFX, stated that TDFX "should ship its 5Millionth chip this quarter" (not an exact quote). This was in June, Q2. Doing some quick math, this would have resulted in about 2M chips shipped in Q2. This would have blown away earnings, and even the .80 estimate. The fact that a TDFX rep. said this, coupled with the fact that TDFX's estimate of 15-20% growth prediction held little weight based on past history, made eighty cents look reasonable to many. Unfortunately, TDFX did not correct this error until very near July 15th. Tomasi meant Q3... I was quite upset and found this error to be inexcusable. TDFX is usually quite tight lipped about any kind of numbers, so when they go on the record I, and many others, give it credibility. Not happy...BTW, whats with "a more reasonable assumption would have been that the previous quarter would eaten away some of the Q2 sales"??? In which quarter will sales NOT eat into the following quarters sales? ---------- Now a topic for discussion: Does anyone know if Matrox or ATI ever shipped chips to third party board makers? The reason I ask is that now that TDFX has great name recognition and is in great demand I wonder if they are considering producing their own boards and leaving out the third party board makers. On the positive side of the case, TDFX would make LOTS of money. If they sell a chip for $45 and it costs $23, then the whole board with memory couldn't cost $50. Distribution wouldn't be that difficult, since they would work direct with the top dozen accounts and go through wholesalers/distributors for the rest. The product is stocked not because it is a Diamond Monster, but because it is a Voodoo Board, and that is what people want. Without competition, they could control the pricing. And since they are looking to get OEM deals with a great product, why not do it themselves? They would cut out the middle-man, offering a more cost effective product. And since ASP would go from $45 to, say, $150 for a V2, Revenues would go through the roof. On the negative side, if it didn't work out, there would be many bridges burnt. Part of the beauty of the current business model is that the third parties pay for a lot of advertising, which TDFX would either absorb or lose out on. And since there is a new board out every other week, the reviews in mags keep the product in consumers minds. Also, the other boardmakers may jump on someone elses ship. And since third parties generally have better OEM ties, failure to penetrate that market could be trouble. No one can doubt the success Matrox and ATI have had using this model. Could it work for TDFX???? I am very interested to hear comments! ----- COuld somebody explain just what the hell happened today? Down better than 40 on the Naz, closed up 2?