Nvidia chief says company wasn't duped in 3dfx buy

[apoppin]

kinda slow in Video ... and i always 'wondered'


http://www.siliconvalley.com/mld/siliconvalley/16974103.htm

Jen-Hsun Huang, the chief executive of graphics-chip maker Nvidia, said in court testimony Friday he did not feel duped in his firm's 2001 acquisition of 3dfx, a struggling rival.

Huang testified on the third day of a trial in which Nvidia is being sued by creditors of 3dfx over how much Santa Clara-based Nvidia paid for the now bankrupt company.

Nvidia purchased 3dfx, the developer of the popular Voodoo graphics boards, for $70 million in cash and a promise of 1 million in stock if 3dfx met certain financial conditions, which it did not.

Creditors of 3dfx now claim the company was worth about $150 million. But Nvidia contends it overpaid for 3dfx, which it now estimates was worth about $15 million.

Lawyers for the creditors said Nvidia was in a bidding war for San Jose-based 3dfx with another chip maker, Via Technologies. Peter Bertrand, attorney for the creditors' trustee, said Nvidia did not make an offer to buy 3dfx but instead offered a strategic investment. Huang said he did not know how the competitive bid by Via was structured.

``I don't think it was in 3dfx management's best interest to tell me what Via was offering,'' Huang said. When asked if he felt he was ``duped'' by 3dfx management, Huang said no.

`I don't consider that we were duped. We offered a fair deal. And they accepted our deal and they seemed happy with it.''

When Bertrand said that at the time of the acquisition engineering talent was scarce, Huang responded, ``Good engineering talent is always scarce.'' But he also agreed with Bertrand's assertion that, at the time of the acquisition, it was hard to attract good engineers because of the strong economy in Silicon Valley.

The question of whether the 3dfx employees were transferred to Nvidia as part of the acquisition, or whether Nvidia had to rehire them has become an important point in the case because of how they were accounted for in the company's financial statements.

The creditors contend that if Nvidia is now putting a lower value on the deal, it must take a charge in its financial statements to reflect that.

Earlier Friday, an expert witness for Nvidia backed the company's accounting of its 3dfx purchase.

Roman Weil, an accounting professor at the University of Chicago, said Nvidia properly accounted for the goodwill associated with the acquisition. Weil explained how he came up with the same numbers the company did in its government filings. Goodwill refers to the difference between the price a company pays for assets and their actual value.

Huang is expected to resume testimony Monday.

Posted on Sun, Mar. 25, 2007

 

[Gstanfor]

I was more fascinated by Baumann's B3D speculation about the trial http://forum.beyond3d.com/showpost.php?p=953638&postcount=4

I wonder if this actually centers on the multitexturing lawsuit that 3dfx had ongoing before they had to fold.

Oh, our friend Mr Baumann isn't biased... not at all... He never quits.

 

[apoppin]

notice i didn't make *any* comment




i wouldn't dare ... besides ... the trial has a ways to go ...

i am just surprised i am first to post about it here
:Q

do i just like abuse?

 

[Gstanfor]

Its just a sour-grapes shareholder/creditors case, which will end up benifitting no-one but the lawyers.

The shareholders are already better off than they would have been under VIA (nvidia paid more for 3dfx's IP than VIA was willing to for the entire company).

If the shareholders want to harrass people, they could try 3dfx's former management -- the people that got the shareholders into the fine mess they are in, in the first place!

 

[Wreckage]

The bigger question is, does AMD feel duped into buying ATI?

AMD: Can you guys get the R600 out soon?
ATI: Sure, just cut us a check.

Actually $70 million seems cheap in comparison.

Yeah, news has been really slow lately. I bet the page hits at the major tech sites are way down.

 

[thilanliyan]

Originally posted by: Wreckage
The bigger question is, does AMD feel duped into buying ATI?

AMD: Can you guys get the R600 out soon?
ATI: Sure, just cut us a check.

What exactly did this thread have to do with what you wrote?? :disgust:

You're a perfect fit....

On topic:
Wouldn't the goodwill have been in their statements originally? What exactly is the creditor's beef?

 

[rise]

YAUAT

 

[Schadenfroh]

While I would like for there to have been a third major player (which could have been if VIA had bought 3dfx), I really doubt via would be around today if they had bought the entire company.

 

[IEC]

All I know is that Glide was awesome, and playing games super-smooth on my Celeron 300A @ 450MHz with a 3dfx Voodoo Banshee-based vid card was the stuff back in the day

 

[PingSpike]

I always kind of lament the loss of 3dfx. But they just plain failed to capitalize on their position, and made some poor business moves. While I wasn't really to deep into the details of video cards at the time, I remember thinking the voodoo3 was cool...but seemed to be just the same old voodoo processors glued together. Meanwhile nvidia was quietly racheting up the features and gaining performance. Raw performance was important...but one could really only use that as a trump card for maybe one generation or so. 3dfx tried to stretch it for to long.

And snubbing their board partners with the STB deal always seemed like a bad idea. That company was to young, inexperienced and not even doing well enough to expand into that business right then. I wonder if nvidia hasn't expanded into that business because they saw how badly it hit 3dfx.

 

[apoppin]

Chief Nvidian Huang admits coveting 3dfx engineers

Nvidia Chief Executive Jen-Hsun Huang told a San Jose court that he had to play a sneaky game in order not to annoy the engineers from the company that he wanted to hire.

"The two companies had been in competition for so long, the animosity would be so significant that forcing their engineers to come to Nvidia would be impossible," he said.

Huang is having to defend himself in federal bankruptcy court against a bunch of investors who claim Nvidia bought 3Dfx on the cheap.

He said he'd been very interested in snaffling up the engineering expertise. "That was my primary interest all along," he confessed.

To this end he said he decided to ensure 3Dfx paid off its creditors so that those involved in the graphics chip maker could, "wind down their company in a graceful way."

He hoped such goodwill would help persuade the engineers he had his eye on that Nvidia was a nice place to work.

"We came across as a company that was not taking advantage of them," he said. "All of that contributed to our ability to recruit engineers."

In the end Nvidia hired some 100 of the 120 engineers at 3Dfx.

< A central sticking point in the wrangle is a line in a report that Nvidia's former chief financial officer, Christine Hoberg prepared at the time. A list of assets mentions "75 engineers at $1 million per..."

Per what? You may ask. As did the prosecution. Huang says the reckoning was that the engineers could potentially generate around a million dollars in revenue per year. "She never implied the engineers were valued at $1 million each," claimed Huang.

The investors feel they got shafted in the deal because Nvidia didn't include the engineers when it bought the company. Instead, it wooed them separately.

Beancouter Hoberg got in trouble with the Securities and Exchange Commission over a completely separate issue in 2003, when she was accused of overstating Nvidia's earnings. She coughed up close to $672,000 to settle the matter without ever admitting any responsibility. The firm later had to re-state nearly three years of financial numbers.

if you hate theInq ... read about it here:

http://www.mercurynews.com/ci_5526587?source=rss