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

To: Frank Sheridan who wrote (7217)	9/15/1998 1:02:00 PM
From: Don Westermeyer	Respond to of 16960

Well, I read the BB-RS report today after their downgrade. Basically they feel the stock is dead money until about December when the Banshee product will be rolling along full throttle. Still, IMO the stock is significantly undervalued now assuming Banshee pans out, but no doubt the market will focus on the current operating loss on next quarter's earnings report.

To: Frank Sheridan who wrote (7217)	9/15/1998 1:02:00 PM
From: Jeff Lins	Read Replies (1) \| Respond to of 16960

It is entirely possible that V2 can be retail sales leader and TDFX have lousy sales. It is called "too much inventory in the channel". Boardmakers could still be selling them hand over fist. But they would be reducing inventory. And they would wait until it is clear that they NEED more chips before ordering. ---------- OK, I was just named Czar of TDFX. Here we go: First off, let me tell you that we are sitting on around a hundred mil cash. I will keep some as a buffer for hard times, but I am planning on spending a whole bunch of it. For starters, I have used all the boardmakers to get Banshee in the door of OEM's. When they realize the high performance/cost ratio, as well as the reliability of the chips, they will want more. That is when I will hit them with Banshee2, a board made by us, TDFX. The new chip will be faster and better, yet we will sell the boards for less than what they are currently paying 3d party boardmakers. I will set up a sales office with techincal support personnel and hire a few distribution gurus to get things going. I will ensure that the Babbages deal will go through and that similar deals will be struck with other retail outlets. I will work hard to make Glid a platform, so that any retail outfit will have a N64, PSX, PC, and Glide sections. By making our own boards we will enhance revenues and profits. We will be able to avoid the price wars that go along with competing companies V2 boards. We will be able to forecast revenues more reliably since we won't be waiting for boardmakers to commit at the end of the quarter. We will not need to worry about our boardmakers shunning us for the latest hype. We will control our own destiny. In order to ensure TDFX and Glide as a legit platform, we will spend millions to entrench ourselves better than we already have. We will pay key developers to develop for Glide only. We will have a staff that will write the Glide drivers for games for free. We will give the developers the drivers for their games, and in exchange the game will be introduced with Glide support only. This will even give them time to work on D3D optimization. Also, they will be eligible to go on the TDFX shelf at Babbages and other outlets. We will co-op some marketing expenses with them. We will spend millions doing this. But we will make ourselve a legitimate platform, even with backwards compatibility. Consoles change the guard every so often, but by claiming the PC, once we have developed a position of total dominance it will be nearly impossible to unseat us. As the tide changes back from D3D to Glide, we will know that we have succeeded. We will give gamers what they want-first and foremost. We will open our roadmap to the public. We will get them excited. We will deliver on our promises. We will succeed.

To: Frank Sheridan who wrote (7217)	9/15/1998 1:04:00 PM
From: Sun Tzu	Read Replies (1) \| Respond to of 16960

RE: Perhaps we should sell now and buy it (TDFX) back six months from now. This is known as "Market timing". Every time I have tried it in the past I have been burned I beg to differ. This is known as living in the present and not blindly hoping for better days. Rather relying on known fundamentals and acknowledging that future may also get worse. If it sucks now, then we should dump it now. When it shows improving fundamentals and a clear solution to its present short commings, then we can go ahead and buy it back. Why should anyone hold on to a losing position now in the hopes of future improvements? What would you do if that future does not show an improvement? Will you sell then or will you still hope for better times? Where should we draw the line? By just hoping for better days you are market timing the fundamentals; in effect you are saying that this is the bottom is in the business. Book value by itself is not a determinant of stock floor. I know of many larger and more established companies than 3Dfx that are trading at 40% ~ 80% of their book value. This means TDFX could go as low as $3. Likewise, cyclical companies (of which 3Dfx is one) do trade with lagging PEs as low as 4~6 (assuming no one thinks they will go under). This means that if TDFX does close the year with annual earnings of $1.40, they can still be trading ~$7 a year from now. The rule in the market should be not to make leaps of faith that are too long, especially with companies like TDFX (read young, unproven, small, cyclical, high tech companies). Sun Tzu P.S Just to get a feel for how bad things can get, take a look at the long term chart of LRCX, one of the Big Four semicon cap equipment makers. If you had bought them in Feb 1992, today you are breaking even. If you've been a long term holder since after Feb 1992, then you are a loser today. Listening to the market does have its advantages.