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

To: Chip Anderson who wrote (8014)	10/8/1998 10:45:00 AM
From: JR	Respond to of 16960

"3Deep(TM) Ships on Creative Lab's 3D Blaster Banshee Graphics Accelerator" biz.yahoo.com

To: Chip Anderson who wrote (8014)	10/8/1998 2:01:00 PM
From: Eric Howard	Respond to of 16960

Chip. I think what Patrick and some other people are trying to understand is how 3DFX is going to make their money next year. I do respect the technology and I like the product but several things Ballard said in the last conference call have been proven wrong. I am just trying to get a better picture of where this company stands and where it is going to get its money from. We know that Voodoo2 had margins of 50% and supposedly Banshee has margins of 40%. I do not think Voodoo2 sales will be that significant next year, hopefully I am mistaken. Do people here really think the margins on Banshee will be at 40%? It seems kind of high to me. I dug up some numbers on Nvidia but unfortunately I do not have any info beyond 1st quarter 98. Nvidia (numbers in 1,000s) 1st quarter 98 Revenue product 33,210 royalty 4,452 Total Revenue 37,662 Cost of Revenue 27,559 This gives Nvidia's gross margins being either 27% if you count product and royalty together or 17% if you only count product by itself, right? Given we have a couple of companies fighting for survival in an overcrowded market 40% margin sounds kind of high to me. Chip I respect your "iron stomach" brigade but I am currently looking for a "no surprises" brigade given recent events. Montgomery recently cut their estimates on us from ~1.90 to ~.50. Can someone show me given our current information as to why they are wrong? Eric

To: Chip Anderson who wrote (8014)	10/8/1998 5:13:00 PM
From: Patrick Grinsell	Respond to of 16960

Chip, I don't think we are disagreeing here. By your own admission Ballard is probably blowing smoke. So the follow-on product probably won't be until 3rd quarter next year. Rampage maybe not until 2000. My thinking is not to cap on 3dfx as a company, but to get a good idea of when we can realistically see the next products. Isn't that what we are all shooting for? The above "guesstimate" timetable is unacceptable to me, but like I said before I think they are working on other areas right now too. If I had to go with only the public info though, I'd have to say chances are pretty poor for a technological leap any time soon and Q1 and Q2 will probably have some losses. Pat