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

To: Michael G. Potter who wrote (10528)	2/5/1999 4:04:00 PM
From: Sun Tzu	Respond to of 16960

Thanks. I don't see this as excessive given the number of the options. I find it a bit excessive (and somewhat strange) that D.Z. got 100,000 options repriced. I also find it note worthy (and honorable) that Ballard did not get any of the repriced options. On Another note, Barron's online Weekday Extra had a piece on TDFX on Feb second (which was probably the cause of the run up as Barron's is very influential). Here is the portion of the article that concerns 3Dfx. BTW, they also liked Galileo Technologies which was a staple of STIA <G>. Cheers, Sun Tzu P.S. Sorry if this is a repost. ====================================================================== Another promising small-cap specialty chip maker is 3DFX, which sells graphics cards at retail for the computer games kids love. True, the stock has been hurt by the lack of pricing power in those commodity products. But 3DFX's recent acquisition of STB Systems Inc., which has strong relationships with major PC makers, has opened up a new market among major computer manufacturers: Just last month it signed a contract to supply graphics cards for Gateway Inc. computers. That trend should continue. Adults, too, want full graphics on demand for the Web and other multimedia content. That's why Michael Kim, an analyst at Wedbush Morgan Securities, is bullish on the stock. "They will maintain their dominant position in high-end games and have made significant inroads into the large [computer manufacturing business]," he says. It seems to be paying off. Last week, 3DFX reported earnings for its fourth quarter of 13 cents, beating Street estimates of a nickel a share by a long shot. And at its current price of 11 3/4, it's just above its 52-week low and trades at 17 times 1999's estimated earnings of 68 cents -- a nice discount to its 26% long-term growth rate. Like many niche companies in technology businesses, these specialty chip manufacturers do face challenges. Low barriers to entry, instant obsolescence, commoditization, bumpy product transitions -- all could hurt these stocks in different ways at different times. But as long as demand for cutting-edge technologies keeps growing, the chips that power them will be hot products -- and the manufacturers' stock prices will ultimately reflect that. That's why some pros are snapping up these values while they can.