Graphics chip maker ATI Technologies Inc just missed analysts expectations for its fourth qaurter last week, despite assurances last month that it was still on target (CI No 3,737), and warned that the Taiwan earthquake could affect supplies of its products over the next quarter. The Canadian company posted income of $32.3m, or $0.15 per share, up 10% from $29.4m in the same period last year. Analysts surveyed by First Call had been predicting $0.16 per share. Revenue was up 49% to $304.7m, compared to $204.7m in the same period last year.
The figures include a $15.5m charge related to the acquisition of Chromatic Research Inc, announced at the end of last year. Including the charge, profits for the fourth quarter were $16.8m. For the year, adjusted net income rose 48% to $159.3m, but including charges remained flat at $107.2m, compared with $107.3m last year. Revenue for the year increased 67% to $1.23bm from $737m last year.
Last month, ATI had to assure investors that the loss of a major contract to supply Dell Computer Corp with chips for its Optiplex line of PCs would not affect its financial outlook. ATI president and CEO K Y Ho said the company had delivered on its commitments and continued to grow faster than the PC industry. ATI saw design wins for its Rage Mobility products from Dell and from Apple Computer Inc, Compaq Computer Corp, Gateway Inc and IBM Corp during the quarter, and said it now had nine oout of the top ten mobile OEMs in its customer list.
But slowing fiscal fourth quarter sales of its two year-old Rage Pro product line moderated overall sales growth. Margins also declined 1% to 36% during the quarter due to higher material costs, a trend ATI expects to see continuing. Operating costs also rose, partly due to the Chromatic acquisition.
ATI has its components fabricated by Taiwan Semiconductor Manufacturing Co Ltd and United Microelectronics Corp, whose Hsinchu Science Park fabs were inoperative for two weeks following the September earthquake in Northern Taiwan. ATI estimated it would have enough inventory to meet most of its requirements, but anticipated shortages in memory, chipsets and motherboards that might delay product shipments.
