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

To: Sun Tzu who wrote (7339)	9/17/1998 1:22:00 PM
From: Patrick Grinsell	Read Replies (1) \| Respond to of 16960

Share Buyback... I was vehemently opposed to this option initially as there are plenty of better things a small company can do with the cash. I think we all must admit that there is a price for everything, however. At a certain point the stock price will reach a level that will constitute the best of all available options. It's just plain economics. The Sega deal has been batted around at about 32 million. Let's say that 3dfx has about 135M in cash right now. By spending 75M of that, 3dfx would be able to buy half the number of shares outstanding and permanently double the EPS. Now imagine that 3dfx decides to blow all their cash and buy 90% of the shares outstanding. Do you realize that that would put our trailing 6 month earnings at over $10 per share and probably be at least $15 for FY98? (This wouldn't happen but is just to illustrate a point.) No amount of R&D could get this kind of return. Even in a 3 year timeframe. A PE of 10 would be $150 per share. Get my drift? The question shouldn't be "Will 3dfx do a buyback?", the question should be "At what price do we start?" At some point it becomes silly not to and the profit potential for remaining shareholders becomes huge. We can probably all agree that $1 is a definite yes, and $30 is a definite no. Right? So what is your price? I'm thinking 3dfx should put limit orders in at 8 and let it rip. Pat

To: Sun Tzu who wrote (7339)	9/17/1998 4:17:00 PM
From: Waldeen	Read Replies (1) \| Respond to of 16960

Sun, Right now you seem to be deciding whether to dump 3Dfx or not??? Don't sell! It seems you are looking for a lot of 'rational' reasons for selling this stock. I enjoy reading your posts because your investment style and mine are similar. But one of the best investment concepts is from your 'Art' of investing forum: "From 3dfx I learned that it is not enough to know which stocks to buy; I also need to know what kind of share holders are in control." Rational reasons for buying and selling a stock are important, but the perception or even irrational forces involved drive stock prices higher and lower. Good example would be AMZN etc. On the other hand 3dfx has more solid fundamentals, and yet is probably my worst investment to date (in over 14 years). A lot of the reasons have to do with the shareholders of 3dfx destroying their own investment! Too many weak hands in this stock, and it all started with the in-explicable fall after blow out earnings. I don't know why, but believe one possibility is close to the general consensus that too many people were in love with this stock because they like 3dfx products and not because they researched it for an investment. Unfortunately, I used to read posts on this forum that "I bought this stock because my son says their products are cool..." Now I see none of those posters surviving the last few months and would bet they have bailed on us. Good riddance! And anyone else who doesn't think we are at the bottom I encourage you to sell now! I am holding on long term: price target - $40. Bottom line: this company made money this year. A lot of the index stocks made a lot less per share. This company has little or no exposure to declining overseas markets, much less Russia. This company has a growing brand awareness and is backed by strong products. This company is carving out a niche market for itself, and has the potential to dominate it. Declining cost of PCs will help this company, not hurt it. Been a lot of gut-wrenching in this stock. You get a lot of credit for asking people to call in their shares. My belief is that helped us this week, or we would now be < $7. People tried to short when the news was announced, couldn't get shares. A lot of weak hands are now out. It does make a difference: now is the time to buy. Interesting how much attention 3dfx has gotten lately such as WSJ. Did anyone else catch the analyst coverage on CNBC yesterday morning? Waldeen