Post of the Day
June 23, 1998

From our
3Dfx Board

Subject: Middle of a good novel...
Author: devilirium

Today's Banshee press release, the articles linked on the TDFX board today, and the mostly insightful comments of those here providing analysis remind me of why I'm a long-term investor. Every stock and every company has a story and with this stock we're just in the middle of the book.

I, for one, am not altogether surprised that the stock failed to post a multi-point gain after today's release. Besides the fact that the information was largely known already, it is likely that long-term appreciation will be driven by how the chip is received and how that ultimately translates to the bottom line.

"Ultimately, we will need to see real losers in the market battle."  

Oxybeles is right when he suggests that TDFX's ability to become an OEM standard is critical, although my view is that ultimately more will be required for all of us longs to see the phenominal appreciation in share price for which we hope.

Ultimately, we will need to see real losers in the market battle. Whether those losers prove to be Matrox, ATI, or Intel, the market will likely wait to see that TDFX is going to emerge as a winner before the company receives the kind of multiple it likely deserves. Think of the company's story as a good whodunnit--right now, there are still too many suspects and not enough clues for some.

I like TDFX's chances: the best technology, reliability, a company that keeps its promises, and excellent management. That having been said, quarterly earnings, OEM deals, and new products are just new chapters in the story. That's why I am often mystified by all the sweating that goes on day to day about the price of the stock. In the long run, the success of TDFX as a competitor will become exceptionally clear.

  "I can stand a few quarters of poor stock price performance (if that proves to be in the offing) to achieve long-term, market-beating returns."

This view is another reason why I disagree with those who advocate TDFX management departing from its strategy and speaking more candidly about future products. As Greg Ballard stated in his interview with TMF, this market will shake out over the next several quarters. Some of the Company's competitors have really fallen behind or are showing signs of losing their way technologically and in their business strategies. Why help them find it?

I can stand a few quarters of poor stock price performance (if that proves to be in the offing) to achieve long-term, market-beating returns. And I wouldn't trade a positive bump in the stock price for a tip to the Company's competitors on where the industry is headed. If you can't take some short-term underperformance, then you should rethink whether this stock best suits your investment horizon...or whether you're really just a trader, not an investor. (Not that there's anything wrong with that...:)).


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