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ATI Tech Slashes Outlook

ATI Technologies (ATYT) warned Monday that fiscal fourth-quarter revenue -- and potentially profits -- will fall far short of its previous prediction as a result of slower-than-expected sales of its chips for desktop computers and a huge inventory writedown. In reaction, investors hammered the stock. In after-hours trading, shares of ATI were off $1.62, or 14%, to $9.72. The move marked the second time in three months that ATI has slashed its fourth-quarter outlook. During closed trading times the stock rebounded and is currently trading at $11.04 per share. I bet ATI is itching to get the R520 launched!

The graphics-chip maker now expects to post sales of $465 million to $480 million in the current quarter, down from a previous range of $550 million to $580 million. Meanwhile, the company expect to post gross margins in the single digits as a percentage of sales, due to the write-off of $60 million to $70 million in inventory. Previously, the company had predicted that its gross margins would come in at about 29% to 30% of sales. ATI didn't give the impact of the lowered guidance on its bottom line. However, the company said operating expenses should come in as expected at about $143 million to $148 million, excluding stock-based compensation costs, implying that it will post an operating loss of about $100 million or more for the quarter.

Yahoo

Posted by | Tue, Aug 30, 2005 - 07:55 AM