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3dfx ‘disappointed’ by Q2 revenue fall

Would have been in profit otherwise

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Graphics accelerator maker 3dfx pronounced itself "very disappointed" with its financial performance when it posted its latest business figures yesterday.

For 3dfx's second quarter of fiscal 2001, the company recorded reduced revenues of $67 million, down from the $104.8 million it received for the same period last year and the $108.6 million it picked up in Q1.

Back in June, the company admitted it wasn't going to make its Q2 2001 revenue targets, a fact is described as "frustrating". Indeed, had 3dfx achieved last year's revenue, it would have made an operating profit this quarter.

The company's profits on sales reached $10.2 million, but that was knocked into a $25.5 million operating loss (97 cents a share) from $19.2 million of R&D costs and $16.5 in other expenses.

One-off charges, primarily from 3dfx's acquisition of Gigapixel, knocked the company's loss right down to $100.5 million (381 cents a share), compared to Q2 2000's loss of $11.6 million (50 cents a share).

3dfx blamed the poor figures on component supply issues, seasonal demand levels and the transition from its ageing Voodoo 3 line to the long-awaited Voodoo 4 and 5 families, many members of which where not available to buy until very late in the quarter, if at all.

Still, as US market researcher PC Data reported last week, 3dfx's new boards are picking up sales in retail, with the Voodoo 5 5500 AGP card outselling its nearest rival two to one.

The prospects for the immediate future, then, look good, but 3dfx will have to work hard to catch up with its highly profitable arch-rival Nvidia. That means aggressively targeting the PC OEM market and non-PC arenas. 3dfx says that's exactly what it wants to do, but success isn't certain.

"This coming quarter we will be shipping a full line of new Voodoo products across a variety of different price points," said 3dfx president and CEO Alex Leupp. Good. 3dfx needs to clarify its product line-up and refine its roadmap if the return to profitability it so desires is to take place. ®

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