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3dfx ‘frustrated’ by revenue shortfall

Margins hammered by component shortages - and Voodoo 4/5 delays...

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A frustrated Alex Leupp, CEO of 3dfx, has been forced to admit that his company isn't going to meet revenue expectations when it posts its Q2 fiscal 2001 results shortly.

The company blames a shortage of components, though we'd add the degree to which it has been cutting the prices of its Voodoo 2 and 3 boards, and the fact it has taken so darned long to get the long-awaited Voodoo 4 and 5 models to market.

"It is unfortunate that the availability of components has undermined the prospects for improved earnings in the second quarter [which ends 31 July], but we believe it has not affected the longer term outlook for achieving profitability," Leupp said in a statement.

Problems getting components plus the 3D graphics business' latest price war have both hit 3dfx's rival, ATI, hard too. It expects to record a loss when it announces its next set of quarterly results. 3dfx is already making a loss, so there's clearly not going to be a change there.

Getting back into the black is Leupp's chief goal, stated baldly when he joined 3dfx some six months ago after his predecessor, 3dfx founder Greg Ballard bailed out over the ongoing delays to the Voodoo 4 chip, now known as the VSA-100.

"This shortfall is extremely frustrating, as the company has been on course for returning to operating profitability," said Leupp. "We believe this temporary component shortfall will result in deferred rather than lost revenues, and, therefore, we remain confident about our third quarter."

Q3 could, of course, see the arrival of the successor to the VSA-100, and certainly needs to if 3dfx is to regain its ability to churn out major upgrades on a regular, six-monthly basis, something its arch-rival, Nvidia, has managed to maintain, which probably explains its current health.

Unlike 3dfx, Nvidia has sternly remained a chip-only company, which has kept it largely free of the component supply problems that have hit those of its rivals who not only churn out graphics chips but the add-in cards that contain them. Unlike 3dfx, Nvidia doesn't have to care a jot for the price of SDRAMs. ®

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