Business Wire reports S3 Enters Internet Appliance and Home Networking Markets Through Acquisition of Diamond Multimedia Systems Inc. announcing S3's intent to acquire Diamond Multimedia. Here's a bit from the release:

SANTA CLARA, Calif.--(BUSINESS WIRE)--June 22, 1999---S3(R) Incorporated (Nasdaq:SIII) today announced that it has entered into a definitive agreement to acquire Diamond Multimedia Systems, Inc. (Nasdaq:DIMD), a leading supplier of PC Multimedia and Internet connectivity solutions. In a strategic move to capitalize on high-growth areas, S3 expects to emerge as a key player in the Internet appliance and home networking markets. S3 also plans to maximize the two companies' multimedia strengths to become a total solutions provider (silicon, software and PC boards) for its graphics business.
    "Today's announcement represents a significant strategic shift for S3, which was focused solely on the PC graphics market," said Ken Potashner, president and CEO of S3 Incorporated. "By merging the strengths of both companies, we intend to create a major force in the industry for Internet appliances, broadband communications, home networking and complete graphics solutions."
    Added Potashner, "The acquisition is part of our ongoing strategic plan to return S3 to profitability and diversify into related high-growth areas. We are extremely pleased with the execution of our plan, which has included the successful launch of our Savage4 and Savage MX graphics products resulting in design wins with volume OEMs including Compaq, IBM, NEC/Packard Bell and Micron. We also are pleased with the company's financial improvements and expect these to accelerate based on our volume shipments."
    "We are excited about the opportunity that we see in combining S3's highly tuned graphics engine and substantial financial resources with our strong graphics brand and channels and our Internet appliance, Internet connectivity and home networking growth businesses," said William J. Schroeder, president and CEO of Diamond Multimedia.
    The company recently announced that it is scheduled to receive 252 million shares of United Microelectronic Corporation (UMC) stock, which is valued today at approximately $600 million based on current NT value and UMC trading price. This combined, with S3's current cash position of approximately $130 million, has the prospective combined company positioned to aggressively invest in new product opportunities.
    Target product market growth areas include Internet appliances, where Diamond Multimedia is an industry leader with its well-known Rio MP3 music player, and home networking, where Diamond is a leader with its wireless and phoneline HomeFree product line. In addition, S3 and Diamond Multimedia intend to continue to aggressively invest in Diamond's DSL and cable modem programs.