Shares of 3dfx Interactive Inc. (Nasdaq: TDFX) tumbled 3 5/8, or 25 percent, to 10 3/4 Tuesday, one day after it posted a second-quarter loss of $11.6 million, or 50 cents a share, on sales of $104.8 million.
Excluding a slew of charges related to its mid-May merger with STB Systems Inc., the maker of graphics chips lost 19 cents a share in the quarter, a far cry from the 4-cent-share profit expected by First Call analysts.
"It was pretty nasty this quarter," said Dan Scovel, an analyst at Fahnestock & Co. "3dfx really lost a lot of sales and market share to Nvidia."
On Monday, Nvidia Inc. (Nasdaq: NVD) reported a second-quarter profit of $6.7 million, on sales of $78 million, a 543 percent improvement from the $12.1 million it recorded in the year-ago quarter. Its shares were off 1/2 to 24 3/4 Tuesday afternoon.
"This is an extremely competitive market and 3dfx just got ambushed this quarter," Scovel said.
In the quarter, 3dfx saw its gross profit margins fall from 48 percent in the year-ago quarter to 28 percent.
On Tuesday, BancBoston Robertson Stephens cut the stock from a "buy" recommendation to long-term "attractive" while Wedbush Morgan Securities slashed it from a "strong buy" rating to a "hold."
Since 3dfx changed its fiscal calendar, analysts have been scrambling to accurately estimate the company's sales and earnings. In fact, 3dfx was unable to count millions of dollars in sales of its Voodoo3 boards since its merger with STB Systems didn't close until mid-May.
Last quarter, 3dfx missed analysts' estimates, losing $2.1 million, or 14 cents a share, on sales of $40.4 million.
In the year-ago quarter, it made $9 million, or 54 cents a share, on sales of $58.6 million.
"It is unfortunate that the merger with STB was not consummated until mid-May as opposed to the end of April as planned," said CEO Greg Ballard in a prepared release. "Despite this, we were still able to post record revenues for the quarter."
3dfx shares hit a 52-week high of 23 in April after falling to a low of 8 in September.
Five of the six analysts following the stock maintain either a "buy" or "strong buy" recommendation.