S3 wraps up Diamond Multimedia

S3 wraps up Diamond Multimedia

Less than a fortnight after S3 executives pledged the company would maintain its Diamond Multimedia business, the company has announced it will shut down its graphics board operations.

Announcing its second-quarter results, S3's chief executive officer and chairman, Ken Potashner, said the company would focus on positioning itself in the consumer electronics and home networking market.

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 cards, but will cease the development of follow-on products, the company said in a statement.

The company reported $135.8 million net in revenue for the second quarter of 2000, but posted losses of $12.1 million, or $0.13 per share. Year to date net income was $465 million compared with a net loss of $12.8 million for the first six months of 1999.

"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.

This flies in the face of comments made to ARN by S3 country manager Kenny Kua [see ARN, August 9, page 26], who promised continued support for Diamond products despite a "refocus".

"It is back to the old Diamiond days," Kua said at the time. "We are keeping that part of the business but it will not be our main focus."The company claims it looked at offers to sell the Diamond business, but decided to redeploy the division's resources to the development of its Internet appliance products.

The company had been in talks for a joint venture with VIA Technologies.

Potashner said the Taiwanese Government initially denied the application, but the two companies were working on an alternative arrangement.

"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."

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