Video card and graphics chipmaker
ATI Technologies Inc.
today announced an adjusted net lost of US$26.1 million for its second financial quarter, which ended Feb. 28. The loss was reported on sales of more than $232 million. The company said that its losses were in line with guidance issued at the beginning of this month.
ATI president and COO David Orton blames the slowing economy, among other things. Orton said that his company’s profitability was affected by lower revenue and a reduction in selling prices for ATI’s board products. ATI makes both cards and the graphics chips that power those cards.
ATI saw second quarter sale drop almost 39 percent year-to-year “as a result of a well documented slowdown in the global PC market,” according to the company. Gross margins also dropped 15.2 percent, which ATI suggested were the results of lower board prices forced by falling memory costs.
Orton said that the company is optimistic about its business in the third and fourth quarters as the company transitions to shipping the Mobility Radeon and Radeon VE graphics processors. Many Mac systems including the iMac, iBook and PowerBook continue to use ATI graphics processors, but Apple has introduced no Mac models that use the new Mobility Radeon or Radeon VE chips. Apple has, however, made inroads with ATI rival Nvidia — Apple-made cards based on the Nvidia GeForce2 MX chip are standard equipment in several Power Mac configurations, and Apple expects to begin shipping a card based on Nvidia’s flagship GeForce3 chip soon.
ATI CFO and Vice President of Finance Terry Nickerson suggested that the company’s shortfall is a temporary problem. ATI expects “modest revenue growth” for the current quarter, along with gross margin improvement and a continued emphasis on expense reductions. Nickerson said that ATI expects to break even again in the fourth quarter, “assuming flat to modest sales growth.”