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CompUSA To Acquire Computer City

CompUSA has announced it will acquire Tandy Corp.'s Computer City stores in a deal worth $275 million. The sale fulfills Tandy's intentions to divest its Computer City unit in the wake of flagging performance and decreased profit margins in the PC market. The sale is subject to regulatory approval, and both companies estimate the deal will close in less than three months. "Recent trends in the PC industry decreased the value of Computer City below our previous expectation," Tandy Chairman and CEO John V. Roach said in a press release. "The sale will permit Tandy management to focus on the exciting growth opportunities at RadioShack." Even as Computer City sales figures were limp, Tandy reports that sales and profits at the company's 6,900 RadioShack stores continue to show excellent gains. "With the divestment of Computer City we couldn't be more optimistic of Tandy's future," Tandy Corp. CEO-elect Leonard Roberts said. Tandy will record an after-tax charge of $38 million to $43 million as a result of the divestment. CompUSA, already one of the nation's largest resellers of personal computers, indicated in an earlier statement that the company was not interested in acquiring its competitor. A spokesman said the current arrangement is the result of an entirely new negotiation. The company said in a statement to the press that while Computer City stores will retain that name at stores in Canada, the fate of the name and format of U.S.-based Computer City stores is still undecided. The company also would not comment on the fate of Computer City stores located in close proximity to existing CompUSA locations. The companies have not said whether there will be layoffs or whether some Computer City stores will be converted to the CompUSA format. CompUSA operates 160 stores across the United States and offers its own build-to-order line of personal computers. The Computer City chain has 96 stores. 3Dfx Introduces New 2-D/3-D Graphics Chip 3Dfx Interactive, a maker of popular 3-D graphics add-on cards for PCs, has introduced a new chip the company hopes will land its products a much coveted slot in OEM computers. The new chip, called Voodoo Banshee, will offer 2-D and 3-D graphics on a single processor. Banshee combines a newly designed 2-D engine with the core of 3Dfx's powerful 3-D Voodoo2 chipset. The 2-D portion of the chipset offers a number of features and advancements that the company says exceed anything currently on the market, improving performance in graphics, video and Web applications, 2-D game play and overall Windows performance. Voodoo Banshee is the first graphics chip to offer a full 128-bit video graphics adapter (VGA) architecture to boast the performance of legacy DOS games and applications, offering broad levels of VGA compatibility. Voodoo Banshee and Voodoo2 are the first graphics chips that directly can accept and execute the out-of-order graphics commands from an Intel Pentium II CPU, offering a performance advantage of up to 20 percent to 25 percent over current hardware. This technology is the foundation of Voodoo Banshee's system-independent 2-D and 3-D interface that performs in both PCI/AGP 1X and AGP 2X versions of the product. "3Dfx has seen incredible success in the retail market with Voodoo Graphics and Voodoo2," said Greg Ballard, president and chief executive officer of 3Dfx Interactive. "With Voodoo Banshee, PC users no longer have to compromise their choice of integrated graphics for gaming. Voodoo Banshee gives consumers the best of both worlds in an integrated OEM product-uncompromising 3-D gaming performance and Voodoo compatibility along with outstanding desktop productivity performance through a new, highly innovative 2-D architecture." "We expect the market demand for high-performance enthusiast-level game controllers to approach 10 million units," said graphics market analyst Dr. Jon Peddie, in Tiburon, Calif. "3Dfx has enjoyed leading brand recognition at the retail-level and with Voodoo Banshee is well positioned to take on the OEM market."

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