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ATI posts $104M loss

Posted by inet - 2005-10-08

Graphics cad and chip maker ATI Technologies, Inc. has reported its fourth quarter and fiscal year 2005 results. The company reported revenues of US$470 million, and a net loss of $170 million — results in line with guidance the company offered at the end of August, when it warned investors it was cutting its Q4 sales forecasts. ATI makes graphics hardware used across the board in     Macintosh designs.

The gloomy financial results are offset by ATI’s guidance for its Q1 2006 results, where the company expects to post 15 percent revenue improvement, thanks to growth in the desktop discrete, chipset and handset business. The company also anticipates higher gross margins thanks to the introduction of a new desktop product family.

Revenues for FY2005 were $2.22 billion, up 11 percent year-over-year. Gross margin was 27.6 percent. Net income for the year was $17 million, compared to $205 million for FY2004.

ATI attributes the poor fourth quarter showing to lower sales in the PC segment, which accounts for about 80 percent of their quarterly revenues. The company saw lower sales of performance and enthusiast products in its Add-in-Board and retail channels. That, combined with lower selling prices, led to the decline in revenues, they said.

While desktop sales dropped, ATI saw an increase in integrated graphics system sales for notebook computers — a 60 percent increase. ATI said the revenue reflects a continued trend towards notebooks.

ATI CEO David Orton said his company is focusing on operational and financial performance in 2006. “We are aggressively implementing concrete programs in the areas of delivery performance, product cost improvements and operational efficiencies,” said Orton in a statement. “Our new products and operational programs position us well for the future.”

Orton described his company as in “a cost containment mode” for the short term in a Thursday conference call with investors.

ATI’s Radeon graphics hardware is used extensively in Apple’s product line, and its Imageon graphics chip is being used by Motorola in its new Rokr E1 cell phone — the first cell phone to feature built-in support for Apple’s iTunes software. The company’s graphics hardware will also be used in Microsoft’s     Xbox 360 video game console, which is expected to hit store shelves in November.

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