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

To: Sun Tzu who wrote (7975)	10/7/1998 5:24:00 PM
From: Sun Tzu	Read Replies (2) \| Respond to of 16960

I am looking for a good charting site. I like the CBS MarketWatch very much. But it does not have logarithmic graphs. I know of some that do have log scale graphs (like bigcharts) but they do not have the same functionality as CBS'. Any ideas? Thanks, Sun Tzu

To: Sun Tzu who wrote (7975)	10/7/1998 6:39:00 PM
From: Sun Tzu	Read Replies (6) \| Respond to of 16960

Ok, here are the answers to all the questions you've been looking for along with minor commentary from me. I've decided not to write the article I told you about since I don't have enough time for it. For your part, I ask that you do your best to analyse this information and provide answers to the few questions that I've asked. ====================================================================== How much of your revenue comes from Europe and what are your expectations for it? Europe is about 50% of our business and we expect this ratio to hold. Is coin-op arcades a significant portion of your business? In terms of revenue it is not significant; its value is mostly as a marketing tool. There has been a considerable price decline in the graphics cards. Is this effecting your margins and revenue? The price decline is mostly due to the falling memory prices. Our gross margins are decreasing in accordance to the previous guidelines and have not experienced a substantial decrease beyond that. What caused the inventory glut and what can you do to prevent such surprises? The glut was at the card-maker level. We are going to more carefully monitor their sell through to achieve better visibility. How many OEM deals have you signed on (i.e. it is a done deal and you are only waiting for the OEM to do the announcement)? We have signed a few, including at a top-tier manufacturer and several others with recognizable names. Have you been able to get Banshee cards to been able to get Banshee to be WHQL approved yet? It's not appropriate to say where we are in this process. [I am taking this as no] Scott Sellers has recently made some interesting comments on the follow up product to Voodoo 2. Can you elaborate on the cost, availability and the functionality of the product? We now have multiple design teams hard at work on future products and technologies. We will continue to pursue a strategy that provides the highest performing, most extreme products for the avid gamers and other products designed more for the mainstream. A 32 MB card is a possibility, as is inclusion of a geometry processor. When will the follow up to Banshee be available and what possible enhancements will it include? You can probably expect a first look near the beginning of the year with general availability in Q2. Are you going to make other products that allow parallel processing of the graphics, like V2 SLI for example? We will most likely employ parallel processing technology of some sort to be able to implement multiple complex 3D graphics operations in a single pass. What are your expectations for the operating earnings for FY98 and FY99? We will give guidance on Q4 in our confernece call for financial analysts later this month. At that time we may also give general guidance for the next fiscal year. [since then, I've asked them if Monty's EPS revision was based on their guidance. I've recieved no response, but I doubt that they would talk to Monty so close to the earnings announcement.] How big do you think the high end PC gaming market is (a range, even a wide one is good enough)? This market is probably a moving target that is larger than anyone fully realized. It certainly seems to be at least $200M annually. It is probably increasing at a significant rate. [This is not good news since they are already making close to that number. This would indicate that the earnings have peacked for the high end and any incremental growth is comming from Banshee, unless the market continues to grow. My personal opinion is that any home PC sold in these days is an entertainment unit. So I'd rate the unit size for the market in V2 and Banshee class at about 75% of the unit home PC sales. Does anyone have figures for unit size of home PC sales?] How do you think your earnings and revenues will be affected in case of a recession? It is possible that we could be negatively affected by a recession, but we have no real data or experience in that area. I doubt that we are recession proof. [In all likelihood, 3Dfx will experience the same level of revenue decline as ERTS does during a recession. Can someone provide data on the sales and revenue changes (from their previous peak) for ERTS and other game makers during the last recession.] What do you expect to gain from your cooperations with AMD, Electronic Arts, Electronic Boutique, and Babage's? What do each bring to the table? Certainly brand recognition. Our relationship with Electronic Arts ensures the best content for 3Dfx products and further helps us market our unique advantages as a platform and increases our brand recognition. Our relationships with Electronic Boutique and Babbages increases our retail presence. Our relationship with AMD involves technology, brand and new whole product offerings. [This is very significant. It means that you can probably make money by buying 3Dfx and shorting every other 3D chip maker (too bad nvid is not public).] In your law suit against nVidia, are you claiming that 3Dfx has an exclusive right to implementing multiple TMUs or are you claiming that nVidia has infringed on your implementaion in silicon? We are believe nVidia has implemented our patent in silicon. We are not claiming that we have a monopoly on having multiple TMU on a chip. [hate to say it, but I told you so] How long do you expect the lawsuit with nVidia to take? It is too soon to tell right now since we are early in the process. Because we have such a strong case, we would hope to see it resolved early. As a result of the lawsuit, are you seeing some customers backing out of nVidia deals and turning to you. I cannot comment in this area. It certainly is not the intent of the lawsuit. If you win the lawsuit, what effect do you think it will have on other graphics companies such as ATI Technologies? TNT is the only product we know of that is in violation with our patent. When can you tell us more about the Sega settlement? In the conference call on Oct. 15. You have alluded many times to the need for consolidation in the graphics market. Will you be an acquirer or an acquiree? It is more likely that we would be an acquirer. We are always looking for potential acquisitions. What kind of companies will choose to merge with or acquire? Ones that are synergisic to our business--3D graphics. For instance, it is unlikely that we would acquire audio technology, as it is outside our area of focus. Mr. Ballard has alluded that the upside potential for 3Dfx is billions. How do you intend to achieve that and over what time period. Mr. Ballard made that remark as a personal opinion to the Motley Fool. Certainly the market is large, and it is growing. I couldn't say the overall size and at what point it might become several billions dollars. How actively are you pursuing non-PC markets and do you see a future for yourself there (for example in set-top boxes or game consoles). We are actively pursuing other markets and opportunities that are consistent with our busienss model. We are focused on both short-term and long-term market opportunities. [This too is very significant. Success in this area will go a long way to enhance 3Dfx's earning power and visibility.] 3Dfx has been more secretive about their future plans than most. Will you be more open to discuss your road maps? It is unlikely that we will change our strategy here. We are concerned about the effects that such disclosures may have on our competitors and retail consumers. ====================================================================== Remeber, this was not "freeware". The price is a logical and quantitative discussion of the items, earnings expectations (not this quarter's), market share, ... Regards, Sun Tzu