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S3 to exit operations from India

The $320 million S3 Inc, one of the pioneers in multimedia and graphics acceleration software, is pulling out of India.

T O D A Y

• The future is unwired • Xerox may up stake • IBM to double centres • S3 quits India

The Santa Clara, California-based corporation that had set up a wholly owned software development subsidiary in Bangalore early in 1996, has struck a unique total management sellout deal with local entrepreneurs.

The entire assets and liabilities, including the human resources, will be transferred to a new company that is to be christened ThinkIT.

Confirming the sellout, Sridhar Manthani, who will take over as managing director, ThinkIT by January 15, said, "S3 has decided to consolidate its Asian business. As the corporation is not performing well globally, they have decided to exit from India."

However, Manthani declined to quantify the deal saying "We are still working on it and will be ready to announce the same only by end of January." Incidentally, S3's design centre in Bangalore was the only second such unit outside its headquarters in the US.

Sunil Nanda who is also involved in S3's operations in the country is expected to be on the ThinkIT board. The decision to pull out, according to industry analysts, may be the direct fallout of S3's worldwide restructuring programme announced early this year.

The corporation had announced that the restructuring would be undertaken to reduce operating expenses and would pare its global workforce by 15 per cent.

The India operations employed around 30 professionals. Stock options are expected to continue with minor modifications.

S3 had initially invested a couple of million dollars in the local operations and had furthered its investments marginally during its short two-year presence.

The centre was involved in front-end designing of chips for multimedia system on PC platforms.

The domestic arm was also exploring possibilities of designing next generation multimedia chips for S3.

ThinkIT will be involved in networking related chip design.

S3 Inc's poor showing is reflected in its net revenues that declined sharply to $47.3 million for the third quarter of 1998 as compared with $119.6 million for the corresponding period the year before.

Net loss was $35.4 million for the quarter. "During the third quarter, we continued to be severely impacted by the softening of the Asia market. While we commenced shipments of our Savage3D product, its ramp was offset by the lower than expected demand of our older 2D and 3D products," the company stated as the reason for its declining revenues.

S3 was started in 1989 to improve the performance of personal computers by relieving the bottleneck of their graphics subsystems. It pioneered the graphics acceleration by introducing the world's first single chip graphics accelerator.

It is currently involved in multimedia acceleration hardware and its associated software and is "committed to applying its expertise in video, graphics and multimedia acceleration to create innovative and affordable products for the home, desktops and mobile markets."

- Compiled from the Indian media

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