3dfx stock drops on ongoing losses

One-time 3D graphics wunderkind 3dfx yesterday saw its stock fall 27 per cent as Wall Street reacted to the company's announcement that posted a Q2 2000 loss of $11.5 million. 3dfx reported revenues of $104.8 million for the quarter, ended 31 July, an increase of 175 per cent on last year's $59.8 million. However, that growth failed to cover the company's loss -- itself a marked turnaround from the $9 million profit it posted for the same period last year. For the explanation for that massive shortfall, look no further than 3dfx's acquisition of board maker STB and the ongoing costs of the merger -- expect it to hit the company's Q3 results and possibly Q4. The company also blamed recent price cuts, which kicked in its dealer price protection scheme covering the six to eight weeks' inventory of kit held by 3dfx's resellers. Last quarter, 3dfx lost $12.8 million on revenues of $40.4 million, no great surprise for a post-Christmas quarter and one which bore the brunt of the STB purchase. Once the STB acquisition is done and dusted, however, the access to wider markets it has given to 3dfx should turn the company quickly back to profit -- the quarter's increased year-on-year revenue shows that. Given 3dfx's Voodoo 3 has some significant technological inferiorities compared to rival products -- its lack of 32-bit colour support, for example -- the product line's sales are still strong, which bodes well for the Voodoo 4 (or whatever it's going to be called), due later this year. Voodoo 4 will host 3dfx's T-buffer technology, which the company claims will bring movie-standard special effects to PC game graphics. ® Related Stories 3dfx revives Velocity brand for corporate push nVidia Q2 revenue rockets up 543 per cent ATI Q3 sales up 65 per cent S3 delivers profits boast