3dfx calls it quits
Troubled graphics card manufacturer announces "a plan to dissolve the company"
For some time now we have been saying that graphics card manufacturer 3dfx were a ripe target for a take-over, but that didn't make the shock any less when a press release optimistically titled "3DFX Announces Three Major Initiatives to Protect Creditors and Maximize Shareholder Value" turned out to be an announcement of the company's demise.
The three major initiatives in question turned out to be the sacking of most of the company's work force over the next few months, the sale of most of the company's assets to arch-rivals NVIDIA, and finally the dissolution of what is left of 3dfx some time next year. According to CEO Alex Leupp, "after aggressively pursuing a wide range of options that take into consideration the interests of our creditors, our shareholders, our employees and our customers, we strongly believe that to reduce expenses, sell our assets and dissolve the company provides the highest return to our creditors, shareholders, and employees."
The press release goes on to explain that the company's demise was a result of focusing on the risky retail add-in market, and that despite dominating that market the company has failed to turn in a profit in recent years. "The segment represents approximately 10 percent of the overall graphics market, and is subject to extreme volatility and unpredictability", the press release states. "Specifically, high inventory expenses, decreasing margins, and slowing demand have done irreparable harm to 3dfx. While the company had recently announced plans to expand its business into additional markets, it has been unable to invest in its expansion under current business and financial market conditions."
The real body blow though comes with the announcement that the company is being sold to NVIDIA, the upstarts who took on 3dfx when they dominated the 3D graphics card market, and have since grown to become the industry's technological and market leaders. "The Board of Directors, with the assistance of the company's advisors, has undergone exhaustive efforts to explore many alternatives including raising new financing to continue its operations and exploring various strategic alliances and business combinations. It has concluded that the best interests of the creditors and shareholders will be served by selling its assets to NVIDIA Corporation, as outlined in a definitive agreement between the companies signed today, and also to approve the plan for dissolution. Under the terms of the agreement signed today, NVIDIA has agreed to pay a value of $112 million ($70 million cash and one million shares of registered NVIDIA common stock)."
And so ends 3dfx, the company that practically invented consumer 3D graphics acceleration and helped to bring about a gaming revolution.