Diamond Multimedia Systems Inc, the San Jose-based maker of PC graphics accelerators, saw revenues jump by over 200% in its second quarter, but the company failed to meet its break even target for the period, leading to disappointments both internally and externally. Second quarter net losses were $8.3m, down substantially from last year’s loses of $44.1m while revenues climbed 225% to $172.3m. William Schroder, Diamond’s CEO, said he was disappointed with the profit result, but the company maintains that this is its slowest quarter; a period when it de- stocks its older technology to make way for new products in the fall. Diamond’s best selling product is the Monster 3D II graphics card, which improves the speed and quality of graphics for PC games that support the hardware. Diamond estimates that around 60% of the top selling PC games now offer support for its latest Monster card which is based around 3Dfx Interactive Inc’s Voodoo2 chipset. And sales of this board were impressive in the period, Schroder said, but still fell short of targets towards the end of the quarter, leaving a $20m revenue deficit. The Monster card, which sells to both PC manufacturers and resellers, is diamond’s highest margin product in a market dominated by falling prices, hence the wider than expected losses. But despite falling margins, the company is determined to hang onto market share in advance of an upswing in prices. The company also completed its drawn out $32m cash tender offer to acquire Micronics Computers Inc, the ailing supplier of system boards for PCs and servers, but the deal closed late in June with only a $1m acquisition charge affecting the quarter’s figures. The results were released after the close of markets.
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