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Technology Stocks : Diamond Multimedia -- Ignore unavailable to you. Want to Upgrade?

To: PaperChase who wrote (3720)	10/11/1998 12:09:00 AM
From: Jonathan Quick	Respond to of 4679

PC, I think that the starting point for any discussion concerning Diamond's future direction should revolve around the sort of technologies that we don't expect to be integrated into PC's on a chip ala National Semiconductor and Intel. The problem with the upgrade market is that more and more of the additional functionality that Diamond was able to deliver in the past is now being integrated onto the motherboard or the microprocessor. Combine this trend with sharp price reductions year over year as well as reduced PC life cycles and the outlook looks bleak for Diamond as the company is presently constituted. Although I believe that Diamond's MP3 decoder was ill-conceived, I also believe that there continue to be all sorts of opportunities in the market for PC peripherals. New technologies abound, the potential for growth is promising, and the competition is much more fragmented in a number of areas. USB has opened whole new vistas of opportunity. From a philosophical point of view, Diamond Multimedia needs to quit thinking of itself solely as a player in "multimedia" equipment. Current system and processor design trends strengthen the analogy between "multimedia" upgrade boards and buggy whips with each passing year. Diamond needs to become more of a PC equipment maker. Returning to reality for just a moment, I just don't think that the present management team is capable of creating anything like a turnaround. It is worth remembering that Diamond Multimedia was once a much larger company. Under Schroeder and the rest of the present management team we have seen the company shrink dramatically. Financial performance has been inconsistent and trending down. Tactical errors abound. Management has neither seemed overly concerned with creating shareholder value nor have they seen fit to make end-user support a top priority. Most importantly, this company continues to rely on an outmoded strategy that is increasingly out of step with the dictates of the marketplace. Frankly, management is the only stakeholder in the entire process that has benefited under Schroeder's leadership. Any board of directors with a shred of self-respect would deliver a simple message: perform or leave. Diamond apparently lacks this luxury. Jonathan