S3 Reports $135.8 Million Net Revenue for the Second Quarter of 2000
Announces Shutdown of Graphics Board Business
Shutdown Provides Additional Core Resources for Expanding Rio Business
SANTA CLARA--(BUSINESS WIRE)--Aug. 3, 2000--S3® Incorporated (Nasdaq:SIII - news) today reported that net revenues for the second quarter of 2000 were $135.8 million compared to $57.3 million for the second quarter of 1999(1).
S3 reported a loss of $12.1 million, or $0.13 per share, before goodwill and excluding after-tax costs of $7.2 million associated with the liquidation of graphics boards and $6.0 million of allocated RioPort.com costs associated with S3's minority position. Net loss for the quarter inclusive of goodwill and all charges was $36.3 million, or $0.40 per share. This compares with a net income of $1.1 million, or $0.02 per share, in the same quarter a year ago.
For the six months ended June 30, 2000, revenues were $297.5 million compared with $101.6 million for the same period in 1999. Year-to-date net income(2) was $456.0 million, or $4.55 per share, compared with a net loss of $12.8 million, or $0.24 per share, for the first six months of 1999.
``While the numbers reflect continued costs and revenues associated with our graphics chip and board businesses, we exited the quarter with continued positive developments for our Rio(TM), home networking and communications products,'' said Ken Potashner, Chief Executive Officer and Chairman of S3 Incorporated. ``Importantly, we continued to position Rio as a long-term consumer electronics platform with the unveiling of a comprehensive roadmap and several new products for home, car and portable applications. We also added significant Rio partners, including Nike, Dell, Boston Acoustics, Musicland, Hollywood Records, TVT, Broadcom and Real Networks, and we brought on high-impact, brand/advertising experts Chiat Day and global public relations experts Porter Novelli. We continued to make significant R&D and other investments during the quarter, which will lead to the delivery of next-generation Rio, Home Networking and Information Appliance products in the coming months.''
S3 today also announced that it has initiated the shutdown of its Diamond Multimedia(TM)-branded graphics add-in board business. Consistent with its declared intention to exit PC graphics, S3 evaluated multiple offers to sell the graphics board business, but it became clear that a redeployment of the existing resources to its high-growth Rio, home networking and information appliance businesses was the right long-term strategy for the company.
S3 will continue to supply and support its OEM customers, channel partners and end-users for the existing line of Diamond Multimedia-branded PC graphics add-in cards, but will cease development of follow-on products. The shutdown does not extend to FGL Graphics(TM), the professional graphics division of S3. Headquartered in Germany, FGL Graphics remains an independent division within S3's business portfolio.
``Shutting down the graphics board business to maintain focus and momentum reflects our commitment to rebuilding S3 as a digital media and Internet appliance company,'' said Potashner.
In regards to completing S3's graphics chip joint venture with VIA Technologies, Potashner added that, ``The Ministry of Economic Affairs of the Government of Taiwan initially denied the application for our joint venture based on VIA's initial application, but indicated a willingness to reconsider its decision upon receipt of revised information. We are working with VIA to try to present a proposal that is acceptable to the Taiwanese government. S3's mobile and integrated chips continue to experience widespread success.''
Potashner concluded his comments for the quarter by saying that, ``S3 has created a dominant brand in the digital media market through our Rio product line and is continuing to add the strategic partners and develop the technology roadmap that can support this brand leadership position. We have taken Diamond Multimedia's unique product concept, the Rio300, and transformed it into a consumer electronics platform enabling portable players, home entertainment systems and automotive solutions. Digital audio today, and digital video tomorrow, is a high-profile, high-growth opportunity that we are positioned to exploit through brand equity, key partnerships, strong technologies and the financial resources we possess.''
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