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3dfx says component shortage will water down 2Q sales

3dfx Interactive said late Thursday its second quarter sales will fall below analysts' expectations due to what it called a temporary component shortfall.

3dfx (Nasdaq: TDFX) shares closed off 1/8 to 8 13/16 ahead of the warning.

The component supply shortage couldn't have come at a worse time for the maker of video graphic chips and accelerator boards considering it recently topped Street estimates in its first quarter and appeared to be on the road to profitability.

"This shortfall is extremely frustrating, as the company has been on course for returning to operating profitability," CEO Alex Leupp in a prepared release. "We believe this temporary component shortfall will result in deferred rather than lost revenues, and, therefore, we remain confident about our third quarter."

A survey of analysts by First Call Corp. predicted 3dfx would post a loss of 4 cents a share in the second quarter.

"We feel very positive about our overall progress to date and believe additional improvements are on the horizon," Leupp said. "It is unfortunate that the availability of components has undermined the prospects for improved earnings in the second quarter, but we believe it has not affected the longer term outlook for achieving profitability."

Last quarter, 3dfx posted a loss of $12.4 million, or 51 cents a share, on sales of $108.6 million.

Its shares raced up to a 52-week high of 16 11/16 in July before falling to a low of 6 5/8 earlier this month.

Two of the three analysts following the stock rate it a "hold."