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

To: Sun Tzu who wrote (11265)	3/19/1999 1:49:00 PM
From: Sun Tzu	Read Replies (1) \| Respond to of 16960

OT -- Funny and I agree with the approach 100% <G> #reply-8409165 ST

To: Sun Tzu who wrote (11265)	3/19/1999 2:17:00 PM
From: Sun Tzu	Read Replies (1) \| Respond to of 16960

Attention 3dfx! This is how Wall Street values a stock. One of the stocks I am short, NETA, has been beating estimates every quarter and yet it's been going nowhere. Recently it's been falling like a rock and according to official reports, has become a trading stock (just like TDFX is). Here is some portions of a research report that assesses the company. Heed the wrods! Sun Tzu A NIGHTMARE OF A STOCK Despite hitting their numbers each quarter over the past four years, investors can't seem to make money in this stock. Here's why: - Investors are less comfortable with the market sizing, competitive environment, and underlying product strategy. - Lack of segment detail: The company plays in several discrete product segments that each have their own product cycles and competitive dynamics. The product cycles and market shifts in each segment potentially have material implications for NETA's results yet investors get no detail on which segments are performing well or on their relative sizes. Without that info, it's difficult to forecast the mix shift in revenues by product segment, which feeds, into a consolidated growth rate. Management presents a black box to investors and the market abhors a black box story in a high risk business. - Non-investor friendly user interface: NETA doesn't spare a lot of cycles on investor relations in general. The senior investor relations executive left the company about two months ago and has not been replaced; but even before that, the company has never exactly burned the keypad returning investor calls. Top management feels it hasn't been rewarded for past efforts in this area so the focus is on running the business. NETA's top management team all worked together at Sun and have their own Navy SEAL like focus. Marching to one's own drummer is fine but their music doesn't always play well with the Street. The combination of the lack of detail, a complex business model, and minimal investor relations strategy translates to higher risk for investors and high risk always means a lower multiple for any stock in any industry. The Street usually wins these battles. - Easy target: The company sticks to its quiet period religiously and usually doesn't return calls to investors and analysts during the last two weeks of the quarter. The normal cycle is that (1) the shorts call around to analysts late in the quarter and say business is in coming light, (2) the analysts call the company and get no return call, and then (3) the analysts lower ratings and estimates. Given the high-risk strategy, lack of segment detail, and lack of hand holding, no one will walk the plank on this one. To be fair, the quarters are somewhat backend loaded and management doesn't have the degree of visibility investors would like to believe. Investors wonder if the limited contact with top management stems from - management's laser focus on the business with little time for anyone not writing a check, - concerns over the quiet period, or - management's desire to not show the world how the sausage is being made because a few people might lose their appetites.