S3 kills off Diamond Multimedia

S3 kills off Diamond Multimedia

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

Announcing its second quarter results, S3 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 $US135.8 million Net 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.

The company claims it looked at offers to sell the Diamond business, but decided to re-deploy the division's resources to develop its Internet appliance products.

The company had been in joint venture talks 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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