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Tech Industry

STOCKS TO WATCH: eToys, Solectron and 3dfx Interactive

    Expect the following technology stocks to be among Monday’s most actively traded issues: eToys, Solectron and 3dfx Interactive.

  • eToys (Nasdaq: ETYS)

    It just keeps getting worse and worse for the online toy retailer. On Friday, it warned that its third-quarter sales would fall short of expectations due to weaker-than-expected holiday buying and said it was exploring a merger, asset sale or other restructuring.

    The company, which said it plans to announce layoffs in January, has hired investment banking firm Goldman Sachs to find a way to keep its doors open. At present, eToys has enough money to continue operations through the end of March.

    ``We are disappointed that sales have not materialized to the degree we had expected,'' eToys President and Chief Executive Toby Lenk, said in a statement.

    eToys cut this quarter’s sales forecast by almost one-half to $120-130 million, from its previous estimate of $210-240 million.

    The company also said its operating loss for the quarter will be 55-65 percent of revenue, rather than the 22-28 percent previously projected.

    Wall Street analysts, on average, had expected the company to lose 40 cents a share in the quarter, according to First Call/Thomson Financial. eToys said it lost 59 cents a share in the comparable 1999 quarter.

    The stock closed off 3 cents to $1.03 Friday.

  • Solectron (NYSE: SLR)

    Solectron will be active ahead of its first-quarter results Monday.

    Earlier this quarter, the contract electronics manufacturer tempered its outlook after posting strong sales and earnings last time around.

    First Call Corp. consensus expects it to earn 28 cents a share in the quarter.

    Last quarter, it earned 27 cents a share on sales of $4.7 billion.

  • 3dfx Interactive (Nasdaq: TDFX)

    It’s not going to be pretty for 3dfx Interactive Monday after the graphics chipmaker said it had agreed to dissolve the company and sell most of its assets to NVIDIA Corp. (Nasdaq: NVDA) in a cash and stock deal valued at $112 million.

    The deal also removes pending patent litigation between the two companies once a final sale has been completed.

    Under a definitive agreement signed on Friday, NVIDIA has agreed to pay $70 million in cash and one million shares of its common stock to acquire 3dfx. NVIDIA has agreed to loan to 3dfx $15 million, which will be credited to the cash portion of the price when the deal is finalized.

    ``We strongly believe that to reduce expenses, sell our assets and dissolve the company provides the highest return to our creditors, shareholders, and employees,'' Alex Leupp, chief executive, said in a statement.

    3dfx also said it will ``substantially reduce'' its workforce by ``early next year to conserve cash in advance of the sale's completion.''

    Founded in 1994 by Silicon Valley venture capitalist Gordon Campbell, 3dfx went held its initial public offering in 1997 and is the maker of the popular Voodoo Graphics accelerator chip used in video games.

    Reuters contributed to this report. >