ATI Technologies Inc.
on Thursday reported second quarter FY2005 revenue of US$608 million and net income of $57 million, or $0.22 per share — a 31 percent increase in revenues and 20 percent increase in net income for the same quarter a year ago. (Although ATI is based in Ontario, Canada, it reports its financial results in US dollars.) ATI attributes its positive Q2 results to strong sales in its PC and digital consumer segments.
ATI manufactures graphics chips and cards used in personal computers, handheld devices and other products. The company counts among its customers Apple, which uses its graphics products across its line of desktop and laptop computers. ATI also manufactures a line of retail graphics cards for the Macintosh under its own brand name.
ATI’s PC business segment accounts for all of ATI’s 3D graphics chips, video and multimedia products developed for computers like Apple’s. The company’s consumer segment includes products developed for use in cell phones, digital televisions and other consumer electronics, including game consoles.
ATI CEO David Orton lauded his company’s performance in what he described as a seasonally down quarter. “Strong sales of discrete PC products helped to offset the anticipated seasonal weakness in our digital consumer business, which we expect will rebound nicely in the second half,” said Orton.
ATI expects the PC business to rebound during the fourth quarter and to “nearly double revenues” in its consumer business.
ATI has had several big design wins for its consumer business, including a contract with Microsoft for its next-generation Xbox video game console, which is expected to make its public debut in May at the Electronic Entertainment Expo (E3) in Los Angeles, Calif., an annual worldwide gathering of video game developers, publishers and retailers.
ATI said that it will hold the line with its gross margin percentage, though it expects a 5 percent sequential increase in operating expenses party due to investments in R&D. ATI anticipates an increase in consumer business revenue for the current quarter, along with a seasonal dip in its PC business — the company is predicting revenues of $560 – $600 million.
That number is below Wall Street analysts’ forecast of about $618 million. ATI stock (ATYT) was down 0.37, or 2.20 percent, to 16.45 in pre-market trading on Thursday.
In related news, ATI issued notice that it plans to buy back up to 24.7 million shares of its own common shares — about 10 percent of the “public float.”