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

To: jttmab who wrote (9410)	12/7/1998 10:47:00 PM
From: Sun Tzu	Read Replies (3) \| Respond to of 16960

I thought you may want to know that last Thursday and Friday I converted my 6,000 TDFX shares into 100 bull spread contracts (i.e. 10,000 shares). While this means that I'm positive on TDFX at least till early February, it also indicates that I have lost faith in the company and am treating it as a "trading stock". I also have some control over two pension funds (one for almost two years and another recently). The subject of TDFX did come up briefly and I voted against it as I do not think there is a place for "trading stocks" in a pension fund. My reasons for this have to do with my loss of faith in 3Dfx's management: (1) For the past 3 weeks, I've been trying to get a hold of anyone at 3Dfx for some answers to no avail. In my experience one should avoid investing in companies that stone-wall investor queries. (2) Calling Banshee2 Voodoo3 was very dumb as there is now no way to differentiate a high-end product from a lower-end one. To me this is yet another example of how 3Dfx still has problems getting its marketing right. (3) Being supply constrained is bad. At the very least it shows how the management is unable to gauge demand and perhaps lacks faith in the viability of their product. Banshee is not a very recent product. It was announced in August and 3Dfx had been gauging it even before that. So to miss the mark by as much as they have is disappointing. (4) I am getting the feeling that 3Dfx thinks it can dictate to people what they do and do not want. Any company that exhibits this trait becomes a trading stock right away. (5) ATI is rapidly moving into the set-top box arena. 3Dfx has identified this market as an important one, and yet has been unable to make any progress there. Realistically there are now only 3 companies left that can help 3Dfx there: SFA, ASND, and COMS (somewhat) as I don't see foreign companies giving 3Dfx the time of the day. I know one of the VPs at SFA pretty well and have been lightly discussing 3Dfx with him, however, given the present attitude of 3Dfx, I am hesitant to push the issue. In any event, ATI's moves seriously limits 3Dfx's potential entry in the set-top market, as once a platform is chosen, it is hard to back out of it. If someone from 3Dfx reads this, perhaps they can pass this along to their management. BTW, Steve Schick at 3Dfx knows that I manage funds and am in touch with several companies. On the plus side, the stock is still highly undervalued. I expect revenues of 60~70 million for this quarter and eps of much above the consensus. Should the stock be valued like its peers, it should trade at double to triple its current price. For these reasons, I'm still in for the ride until next quarterly and so long as the stock goes up. There after, I'll be in the "show me" camp. Sun Tzu P.S. I am not ignoring the emails and private messages that I've gotten, but I'm afraid I don't have much time these days. PPS, For those of you who care, about two weeks ago I created STIA and synchronized it with DJIA at 9159.5. Since then, DJIA has moved down to 9070, and STIA has moved to 9524. The suggested idea of short DJIA long STIA would have been a big winner ;) This will be the strategy for one of the funds in the new year. I'll have to do some more programming before I can do that though. Here is the link to STIA techstocks.com