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To: Michael Linov who wrote (8055)	10/8/1998 8:09:00 PM
From: Michael Linov	Respond to of 16960

More Q&A from DIMD conference call (my transcript - contd.) Price points for Viper/Fusion... How much investment in NVIDIA, any S3 boards? V550 199 Fusion 149 NVIDIA $3M investment (ed. note: sounds like STB), structured as a loan converted to equity (or cash on Dec. ) Fewer highlight skews means no deal for S3 : ) Unless major OEM wants a Savage3d, they don't intend to release one. They think they have products competing in all areas already. Memory selling below cost. $1 Chip for RAM now! (ed. note: wow!) Sell through in channel WAS STRONGER in July and August (ed. Note: Diamond dried up their inventory (mostly legacy products),unable to meet demand on graphics product(ed. note: Not V2's)). Strength in Mid-low end of graphics market. New router product, no real competition (much higher price), good margin. Chip allocations of NVIDIA, Banshee. No allocation issues. Margins on new products: Margins substantialy improved. reo - control technology, selling on internet, more DIRECT dollars, and margins significantly above the graphics business. Graphics products - viper and fusion all have substantially higher standard gross margin (not unusual for new introduction). Margins will drop over time as products become older. Diamond also controls the A3D (AURL) silicon, can sustain margin longer. Home network product, good opportunity for good margin. Proprietary product margins over 30%. The graphics business - Still in infancy of 3d performance. Dramatic leaps expected. Developers driven by gaming, getting larger textures, more memory on graphics card, DVD support, better video , greater resolution, Digital Output , Flat panel output). Graphics model next year will still be driven by gaming applications. Moving to integrated 2d/3d. Growth in Sub $1000 market, lots of opportunity in low cost system. Only differentiation in OEM's is graphic sub-system. Graphics (80-90% last year) 60-65% (mainly due to added product lines like reo, comm. etc) over revenue next year. Core graphics won't shrink, others will grow. Diamond is planning to move graphics to MB (via new board operation). that's it. Feel free to add/correct any of the above... it's hard to transcribe this stuff in real time.

To: Michael Linov who wrote (8055)	10/9/1998 1:33:00 AM
From: Simon Cardinale	Read Replies (1) \| Respond to of 16960

My DIMD CC notes: [Here are my notes as I wrote them, forgive any typos. I'll put my comments in brackets.] DIMD still has Monster2 inventory, will clear out in Xmas started selling Fusion and Viper in volume in last few weeks of 3Q Substantive portion of current inventory for 4Q is Fusion and Viper viper=high end banshee=consumer enthusiast expect both to do well expect slightly higher volume for TNT (because of OEM design wins) Sampling Fusion with one or more OEMs and hoping for a deal in 4Q (as an option not default) [This will probably miss Xmas, no?] Voodoo2 still viable and it will hold into 4Q until next generation comes out [Do they mean TNT and/or Banshee or a real next generation?] bullshit comments about creative labs and reference board use. still claining dimd can get premium price for v2 because of added value of dimd engineering. [oh boy... if I were a DIMD stockholder I'd bail on account of that statement alone.] backlog at the end of sept triple backlog of beggining july [Did I hear this in reverse or did he say it in reverse? This can't make sense in light of the "buyer's strike"] $3M invest in nVidia, convertible to equity by Dec 31st 98 or at IPO [Did I get this date right? Does this mean nVidia intends to go public before that date?] don't intend to sell savage3d unless major oem drives it. TNT high end, Banshee mid-range, they don't see it as needed. did not have the inventory to meet demand for legacy products. "ran out of runway" [I think they may have been unwilling to buy more V2 until they sold all existing boards, including the 8MB which no one wants. It's sad to see that they screwed themselves and 3Dfx at the same time.] first legacy products declined in price, now in cost -> decent margin right now. won't carry them past thanksgiving, won't be caught with them at end of the quarter [What? I think he meant "carry in inventory" or something, refering to the still existing V2 backlog.] no allocation issues with TNT and Banshee [Allocation of what? I was a bit punchy by this point. I assume he means no chipset or memory shortages like with V2.] Simon