***Out-of-Home Entertainment
Magic Edge LBE Location Shuttered
(February 27)
Marking the effective end of the Location Based
Entertainment (LBE) era Magic Edge, run by Namco, shuttered
its flagship location in Mountain View on 27 February. Once
seen as the dawn of a new venue for high technology
entertainment, both, LBE as the entertainment category, and
Magic Edge have collapsed from their inability to generate
sustainable profits. As Dave and Busters have shown being
profitable in the long run is much more complex than just
having the hottest games or rides on the floor. As Gameworks
is finding out out-of-home entertainment is a tough
business.
804.7 Conferences
Windows CE Conference Coming Soon
(March 19)
Reflecting increasing interest in Microsoft Windows CE as
the operating system for digital appliances and embedded
systems, more than 1,500 software developers are expected to
arrive in San Jose, Calif., April 6-8 for the third annual
Windows CE Developers Conference at the San Jose Convention
Center.
The Windows CE Developers Conference is the forum for
independent software developers and corporate technology
professionals to receive the latest technical and marketing
support information on the Windows CE operating system.
Attendance has doubled at each successive Developers
Conference, as the number of digital devices using Windows
CE continues to expand.
Microsoft Corp. executives, including Paul Maritz, group
vice president of platforms and applications, and Harel
Kodesh, general manager of Windows CE, will discuss the
market opportunities created by Windows CE, as well as major
strategic initiatives for the operating system.
More than 40 technical sessions will cover such topics as
developing embedded systems with Windows CE, developing
state-of-the-art applications for PC Companion devices using
Windows CE, and an in-depth look at Windows CE itself.
All attendees will receive a free Casio Cassiopeia E-10, the
software development kit (SDK) for the Auto PC, and the
Windows CE Toolkit for the Visual C++(R) development system
version 5.0.
More than 40 hardware and software companies will
demonstrate their Windows CE-based products in a trade fair
during the conference. A variety of after-hours
entertainment is also planned, including a Welcome Reception
for early arrivals on Sunday, April 5, as well as special
events on Monday and Tuesday nights.
The Windows CE Developers Conference is sponsored by
Advanced Micro Devices Inc. (AMD); Auctor Corp.; Casio
Computer Co.; Everex Systems Inc.; Hitachi Ltd.; Intrinsyc
Software Inc.; NEC Electronics Inc.; Philips Mobile
Computing Group; Queues Enforth Development Inc. (QED);
Silicon Graphics Inc.; Sybase Inc., a division of Powersoft
Corp.; and Toshiba.
Developers interested in attending the Windows CE Developers
Conference can register by calling 800-509-8199 between 6:30
a.m. and 5:30 p.m. Pacific standard time, or via the Web at
www.microsoft.com/events/windowsce/.
International developers may register by calling 303-813-
4245.
www.microsoft.com
www.microsoft.com/events/windowsce/
www.microsoft.com/presspass/
804.8 Software
Kinetix Announces 3D Studio MAX R2.5
(March 23)
Kinetix has unveiled 3D Studio MAX R2.5 which has numerous
new features targeted specifically at entertainment content
creators for film and video, broadcast television, and
interactive games. The updated release incorporates several
advanced features including full-featured NURBS
capabilities, genuine Displacement Mapping, 3D Motion
Tracking, and a powerful Zoom feature for film animators and
special effects artists. The updated version also includes
enhanced support for leading video and film formats,
including the Apple QuickTime 3.0 standard, and Kodak Cineon
and RGB film formats.
3D Studio MAX R2.5 will be available in May. Upgrades from
MAX R2 are U.S. list priced at $95. New licenses of 3D
Studio MAX R2.5 are U.S. list priced at $3,495.
Kinetix Character Studio R2 Brings Motion Capture To
Animators
(March 23)
The technology behind creating the Dancing Baby phenomenon,
Character Studio R2 combines motion capture, editing, and
blending technology with traditional key frame animation,
comprehensive new skin deformation tools, and Character
Studio's patented footstep-driven technique.
The first solution ever to offer true motion capture
capabilities, Character Studio R2 ships with more than 150
motion capture files, helping animators and production
artists to create incredibly realistic character animations
on Windows NT 4.0 or Windows 95 PCs. This upgrade features
enhancements to its two components: Biped, a hybrid
footstep-driven/motion capture/keyframe animation system,
and Physique, an interactive skinning system. Together,
these two components provide a high-quality and cost-
effective way to create characters who walk, sprint, jump,
and even dance with incredible realism.
Character Studio R2 will be available in May as a plug-in
application for 3D Studio MAX, and is U.S. list priced at
$1,495
804.9 Companies
STB Systems, Inc. Announces Commencement of Secondary
Offering
(March 20)
STB Systems, Inc. (Nasdaq: STBI), announced the commencement
of the secondary offering of 3,000,000 shares of its Common
Stock at a price of $22.00 per share through CIBC
Oppenheimer Corp., Hambrecht & Quist LLC, Hoak Breedlove
Wesneski & Co. and The Buckingham Research Group,
Incorporated.
Of the 3,000,000 shares of Common Stock, 2,775,000 are being
offered by the Company and 225,000 are being offered by
certain selling shareholders. The Company and the selling
shareholders have granted to the underwriters an option to
purchase as aggregate of up to 450,000 additional shares to
cover over-allotments, if any.
Net proceeds to the Company from the offering will be used
to reduce indebtedness and for general corporate purposes.
STB Systems, Inc. designs, manufactures and sells multimedia
subsystems and specialized technology products, primarily
for use in desktop PCs. These products supplement a PC's
central processing unit to enhance multimedia performance
and accelerate the computationally intensive operations and
processing requirements necessary to perform advanced
multimedia applications. The Company focuses primarily on
the sale of its products to major OEMs, and works closely
with its component suppliers and OEM customers to develop
products that are responsive to technological trends and
consumer demand. STB manufactures substantially all of its
products at its ISO 9002 certified facility in Juarez,
Mexico.
Copies of the prospectus may be obtained from CIBC
Oppenheimer Corp., CIBC Oppenheimer Tower, World Financial
Center, 200 Liberty Street, New York, New York 10281 (212-
667-7000); Hambrecht & Quist LLC, One Bush Street, San
Francisco, California, 94104 (415-439-3300); Hoak Breedlove
Wesneski & Co., One Galleria Tower, 13355 Noel Road, Suite
1650, Dallas, Texas, 75240 (972-960-4898); and The
Buckingham Research Group, Incorporated, 630 Third Avenue,
Sixth Floor, New York, New York, 10017 (212-922-5500).
Gems From the NVIDIA Registration Statement
(March 6)
NVIDIA is getting ready to go public and its recently filed
registration statement has a number of good tidbits. Below
are our extracts.
The Company primarily sells its products to add-in board
manufacturers, which incorporate graphics products in the
boards they sell to PC OEMs. Sales to STB and Diamond
accounted for 63% and 31%, respectively, of the Company's
total revenue in 1997. Sales to add-in board manufacturers
primarily are dependent on achieving design wins with
leading PC OEMs, and the Company believes that the large
majority of its revenue in the last two quarters was
attributable to products that ultimately were incorporated
into PCs sold by Compaq, Dell, Gateway 2000, Micron and
Packard Bell NEC.
The ST Agreement also grants ST a worldwide license to sell
the RIVA128 and RIVA128ZX graphics processors. Royalty
revenue from sales of the RIVA128 graphics processor by ST
represented 6% of the Company's total revenue in 1997.
The Company is in the process of qualifying Anam
Semiconductor ("Anam"), which is located in Korea, to
assemble and test the Company's RIVA128ZX graphics
processor.
The Company has 11 patents issued and 16 patent applications
pending in the United States.
The Company expects to spend approximately $10.0 million for
capital expenditures in 1998.
Diamond accounted for 86% and 82% of the Company's total
revenue in 1995 and 1996, respectively.
The Company developed the NV2 under contract with a third
party and recorded a credit to research and development of
$2.0 million in 1995 and $3.0 million in 1996. Also, as part
of a strategic collaboration agreement with ST, the Company
received contract funding in support of research and
development and marketing efforts for the RIVA128 and
RIVA128ZX graphics processors. Accordingly, the Company
recorded $2.0 million in 1996 and approximately $2.3 million
in 1997 as a reduction primarily to research and
development, and, to a lesser extent to sales, general and
administrative expenses. The Company is obligated to provide
continued development and support to ST through the end of
1998 and expects to record contract funding of approximately
$2.5 million in 1998.
Product revenue increased from less than $100,000 in the
first two quarters of 1997 to $5.2 million and $22.1 million
in the third and fourth quarters of 1997, respectively. This
increase was due to sales from the RIVA128 graphics
processor, which was introduced in August 1997. Unit
shipments increased in the fourth quarter compared to the
third quarter due to the shipment of product over an entire
quarter as well as increased market acceptance of the
RIVA128 graphics processor, while average selling prices
declined slightly in the fourth quarter. In December 1997,
the Company's sales of the RIVA128 graphics processor were
negatively affected due to low manufacturing yields at ST,
the Company's sole manufacturer.
The Company has granted ST a license to sell the RIVA128 and
the RIVA128ZX graphics processors. Royalty revenue from ST's
sales of the RIVA128 graphics processor was $312,000 and
$1.5 million in the third and fourth quarters of 1997,
respectively.
Introduction in August 1997 and subsequent sales of the
RIVA128 graphics processor contributed to gross profit in
the third quarter of 1997. Gross profit increased in the
fourth quarter of 1997 due primarily to increased sales of
the RIVA128 graphics processor, which were partially offset
by lower average selling prices. Gross profit also increased
in the third and fourth quarters of 1997 due to increases in
royalty revenue from ST's sales of the RIVA128 graphics
processor. Excluding royalty revenue, gross margin on
product revenue was 11.8% and 26.0% in the third and fourth
quarters of 1997, respectively. The increase in gross margin
on product revenue in the fourth quarter of 1997 was
primarily due to lower per unit production costs. The
Company has been capacity constrained since the introduction
of the RIVA128 graphics processor and has not experienced
any material inventory build up. Gross profit and gross
margin could be affected in the future by various factors,
including changes in the volume of the Company's products,
competitive pressures resulting in lower than expected ASPs,
reduction in the amount of royalty revenue received from ST
and inventory write-downs.
Research and development expenses before adjustments for
contract funding were $1.4 million, $1.7 million, $2.3
million and $3.2 million in the first, second, third and
fourth quarters, respectively. Research and development
expenses generally increased during the period, primarily
due to additional personnel and related costs. The Company
anticipates that it will continue to devote substantial
resources to research and development and that these
expenses will increase in absolute dollars in 1998.
The RIVA128ZX graphics processor is produced using a .35
micron manufacturing process and is scheduled for shipment
in 1998.
A critical component of the Company's product development
effort is its partnerships with leaders in the CAD industry.
The Company has invested significant resources to develop
relationships with industry leaders, including Avant!
Corporation, Cadence Design Systems, Inc. and Synopsys, Inc.
The Company believes that by forming these relationships,
and utilizing next- generation development tools to design,
simulate and verify its products, NVIDIA will be able to
remain at the forefront of the 3D graphics market and to
continue to develop products on a rapid basis that utilize
leading-edge technology. The Company has substantially
increased its engineering and technical resources and has
over 60 full-time employees engaged in research and
development. Expenditures for research and development
before adjustments for contract funding were $2.4 million,
$1.2 million and $6.6 million in 1995, 1996 and 1997,
respectively.
Sega is an investor in the company.
WAVE Comments
The NVIDIA registration statement is less forthcoming than
the one filed by 3Dfx. For example, there is no disclosure
of the future product roadmap. Although the registration
statement does not disclose it we believe that Sega paid for
the development of NV2, as a home video game console chip,
which was a flop and never made it to market.
As the company launches new products it cannot be
constrained by the limitations of SGS Thompson. NVIDIA’s
desire to free itself from SGS Thompson is only reinforced
by the decision to go to TSMC for fab and indications that a
deal may also be cut with Anam Semiconductor in Korea.
Wave Issue 9802 3/23/98 Article 6-01