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S3 slump continues despite new deals

The graphics chip company reports a loss of 27 cents per share, despite releasing new products and securing design wins with major manufacturers.

S3 continued its losing streak by reporting a loss of 27 cents per share for the first quarter, although it released new products and secured design wins with major manufacturers.

The graphics chip vendor reported net losses of $13.9 million for the first quarter on revenues of $44.3 million. Last quarter, the company reported losses of $70.3 million, or $1.36 in losses per share, on revenues of $41.5 million.

In 1998, the company recorded an overall loss of $113.2 million. S3 reported a profit of $4.1 million in the same quarter a year before, but the figure included extraordinary one-time gains of approximately $26 million.

S3 was once a dominant power in 3D graphics, but a weak product lineup in 1997 and 1998 sent the company's fortunes south. Getting back to form has been difficult because of increased competition and lower margins in graphics processors.

Despite the negative financial results, CEO Ken Potasher said the company continues to firm up operations and is continuing to increase revenue. The product picture at S3 also began to turn around with the release of the Savage4, the company's latest graphics chip. To date, the chip has been selected for designs from at least three of the top five computer vendors.

"We believe this growth demonstrates a significant turnaround occurring at S3 and we look to accelerate this growth as we begin realizing the revenue from Savage4 and Savage M/X throughout the remainder of this year," he said in a released statement."

Toward the second half, the company will release a chipset with integrated 3D graphics in cooperation with Via Technologies.