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Technology Stocks : S3 (A LONGER TERM PERSPECTIVE) -- Ignore unavailable to you. Want to Upgrade?

To: Daniel Simon who wrote (12550)	1/11/1999 9:00:00 PM
From: Don Earl	Read Replies (1) \| Respond to of 14577

Hi Daniel, Profit from the joint venture (USC) averages about $3.5 million per quarter. It might start showing up on the books a bit higher going forward as I understand they aren't going to be taking taxes off until they become profitable. IF (note the capital IF) USC goes public, you can probably figure a minimum $3 increase in book value. S3 currently carries their 15.75% interest in USC at cost (about $70 million). S3 sold an 8% interest in USC early last year for $69 million cash with an additional payment estimated at $40 million due if USC goes public. That would make S3's remaining interest worth about $220 million plus the $40 million still owing or $260 million vs. $70 million "IF" an IPO reflected a similar value to what S3 sold USC stock for last year. I assume USC stock would have to be carried at fair market value "IF" a market value were established. The "estimated" $40 million (less taxes) would probably be treated as investment income for that quarter "IF" an IPO took place. I believe USMC is the majority share holder in USC, so I assume there would have to be a compelling reason for them to vote to take USC public. In terms of instant gratification it isn't much of a factor, but is did make SIII easier to hang on to in October. Regards, Don PS: I believe the above to be a fair evaluation of the joint venture investment, but all figures are quoted from memory of past research I've done, and my memory is sometimes somewhat unreliable. Anyone reading this should double check my figures. There were quite a few Tech Web articles during Q1 98 and most of the numbers are in the quarterly filings. Some of the above is in the nature of the "forward looking" variety and as we all know "actual results may vary".