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

To: timbur who wrote (10398)	1/29/1999 6:44:00 PM
From: VincentTH	Respond to of 16960

Re: Here's question for ya: If you had to write the arcade conversion for it, which movie starring Bruce Willis would require 6 Quantum X24 SLI V2 cards? The 12 monkeys in "Year of the Monkeys"? Chip, what is my rank now, having deserted TDFX for STBI? (doubling my position in the process, and lower my B/E point from 20 to 15.

To: timbur who wrote (10398)	1/29/1999 8:17:00 PM
From: Xpiderman	Respond to of 16960

3Dfx's report card by Fools: C+ fool.com Comments: With 3Dfx we have a truly mixed bag of results. Sales have exploded to over $60 million versus $22 million last year, but EPS actually declined to $.13 against the $.15 reported last year. Sure the profits were far above estimates, but the company really disappointed on this accord last quarter. Be sure to take those forward profit estimates with a pinch of salt. Like we did with Amazon, let's see where the margins are headed. Q4 1998 Q4 1997 Gross Margin 36.7% 48.9% R&D exp. 16.3% 21.8% Selling & Admin. exp. 17.8% 19.5% Inventory/Sales (quarterly) 39.5% 17.2% Receivables/Sales (quarterly) 59.8% 60.0% Q4 1998 Q3 1998 Gross Margin 36.7% 24.8% R&D exp. 16.3% 30.2% Selling & Admin. exp. 17.8% 21.0% Inventory/Sales (quarterly) 39.5% 76.7% Receivables/Sales (quarterly) 59.8% 80.0% Yet again, a mixed bag. Notice that compared to last year's fourth quarter margins show a slight improvement, but quite a drastic upward swing compared to the third quarter. Christmas has something to do with this, as does the extremely short product cycles the company is faced with. Needs Improvement: We'd like to see margins get back up near the level they were when the portfolio first bought the stock -- near 50%. We'd also like to see inventory and receivables as a percentage of sales continue to decline. What we're hoping for next time: We are questioning whether or not 3Dfx really is a Rule Breaker or not, so there may not be a next time here. Is the company's branding strategy enough of a "sustainable advantage" for the years ahead? Are there viable alternatives to the company's products? These are the questions we are asking and discussing on the Rule Breaker message board. If the stock is still a member of the Rule Breaker portfolio in three months we can only hope for increasing sales, better margins, and forward movement concerning the company's next generation of accelerators, Voodoo 3.