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

To: Sun Tzu who wrote (5836)	7/28/1998 1:06:00 PM
From: Sun Tzu	Read Replies (4) \| Respond to of 16960

Slow day, so let's chat about... RE Direct Sales from 3Dfx I think 3Dfx is trying to do the direct sales but not for V2 or Banshee, rather for Rampage. The problem for doing it for V2 or Banshee (i.e the ATI model) is that it will make 3Dfx a competetitor of its clients (i.e DIMD and CREAF). This will cause some tensions between them and at best 2 or 3 rough quarters (though perhaps much smoother sailing after that) and a the worst cause an alliance against 3Dfx which may prove too tough for a company of size and history of 3Dfx. I'm open to hear on these issues. Is there anyone with a retail background here? How difficult would it be for 3Dfx to sign up CompUSA and others as clients and what kind of customer and retailer services will 3Dfx have to provide? ================ On a different note, Does anyone know how option strike prices are set? I see TDFX options starting at 15 and going up to 25 in 2.5 increments as well as 30 and 35 strike prices. Does anyone know why there are no 10 and 12.5 strike prices? Who would have to offer them and why would they (or wouldn't they)? ================ I remember someone asking about SGI (there is another company that never understood how to market itself to Wall St.). Yes it is true that the PCs are powerful enough to do the job of SGI boxes these days, but the PC software is still lagging way behind (my info may be somewhat dated). I remember when Disny wanted to make Beauti & the Beast, they did a comprehensive study of all the systems around, including some in use by the Pentagon for flight simulations. In their words they could only find the software that they needed for the project on SGI. Of course, Discrete Logic (DSLGF) has been porting its applications from SGI to NT platform, so this may be changing. ================== Finally, I think you may find this useful. It is the analyst recommendations and assorted research that I did on TDFX over the weekend. Firm------------Rating--Recommendation---------12/98E----------12/99E Fahnestock------1.5------Buy--------------------2.04------------2.03 Buckingham------3--------Nutral-----------------1.93------------2.40 Nat.B Mont.-----3--------Hold-------------------1.75------------2.00 B.A Rob. Step---1--------Strong Buy-------------1.89------------2.15 ZACK's all broker Mean of 5 Brokers-------------1.92------------1.98 I've already given you the IBES estimates. Also, Fahnestock issued a 'BUY' research report on TDFX on Jul 16 which I'd like to know what it said if anyone here knows it. As well Arcadia Investments issued a report on Jul 20 (I don't know their rating, but would like to) and Preception International issued a report on June 26 titled Chipping Away in which it said 3D chips are the key to the future computer applications. And that they believe a basket of NMGC, TDFX, NVID, and TDDDF is a winner. Does anyone have access to any of these reports? I'm all ears. Sun Tzu PS it is a real pain to make table here as the tabs seem to disappear. Does anyone know how I can do a tabulated post?

To: Sun Tzu who wrote (5836)	7/28/1998 3:39:00 PM
From: Patrick Grinsell	Respond to of 16960

Sun Tzu, Why are you trying to spin this? <<So how much earnings could we have expected from this optimistic revenue forecast? Well, the company reported 43.5 cents per share operating income on 15M shares for revenues of 50M. So keeping all things the same, the best estimate for earnings would have been (87/50 43.5) = 75.7 cents and not* 80 cents. But wait there's more :D>> By plugging in the your 87M into 2Q actuals (using tax and cost of goods sold at the same %, everything else fixed $) you get $1.10. Do the same thing with Q1 and it hits the stratosphere. Your model is way too simple and does not reflect economies of scale. My original model was based on the 5 million and came out to 97 cents. Not too bad had it been factual. And yes I did call and found out the truth about the 5 million and the CFO replied that it was too high. So you can see now, that even if they didn't make exactly 5 million, it still left the lingering feeling that they were probably pretty close. Tony seemed very sure in the interview. You seem to think that this stock is going down because of unrealistic expectations. I would like to make the argument that anything under $1 would have caused the stock to sink. The runnup from 16 happened a mere 3 days prior to earnings. Exactly how many of those people do you think still own their shares? These people planned on dumping for a quick profit no matter what the results were. When the stock started heading south on good news, despair set in and many long holders got pretty pissed and fired off the sell button. Fortunately, this quarter should be different. Nobody out there is thinking that this quarter will be an easy one for 3dfx. If they actually make it, it will be a true surprise. Making earnings combined with the holiday season right around the corner has all the earmarks of a significant rebound. I don't see any reason for strong movement before then though. Pat