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ATI Q3 sales up 65 per cent

Watch out though, ATI -- S3 and 3dfx are on your case

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The world's biggest graphics accelerator company, ATI, yesterday posted profits of $18.6 million on revenues of $302 million for its third fiscal quarter, ended 31 May. That represents an increase in sales of 65 per cent over the same period last year, in line with the increases recorded in the company's previous quarters. However, profits were down: for Q3 98, ATI made $26.5 million. But since ATI had already said the cost of its November 1998 $70.9 million acquisition of system-on-a-chip developer Chromatic Research would be spread over coming quarters, the Q3 shortfall was no great surprise. Had ATI assigned $17.3 million of the quarter's profit on paying for Chromatic, it would have posted income of $35.9 million, an increase of 36 per cent on the previous year. Still, ATI can't afford to rest on the laurels of its good run of results over the last three quarters. While it commands the dominant share of the graphics accelerator market, selling not only its own line of add-in cards but flogging chipsets to PC manufacturers, rival vendors, most notably 3dfx and S3 have their eyes on the same markets. 3dfx's purchase of STB Microelectronics has put it into the add-in board market, allowing the chip developer to target OEMs more aggressively. Meanwhile, S3, now on something of a rebound -- actually any move away from a near total collapse is a rebound -- wants to take the fight to its old arch-rival, and so is busying winning OEM deals and recently announced its intention to buy Diamond Multimedia to give it board-building expertise too. All these moves have reshaped both 3dfx and S3 to resemble ATI more closely. Still, by being there already, ATI can spend its efforts diversifying further, which is exactly what its interest in set-top boxes based on Chromatic system-on-a-chip products is all about. And it is currently working hard to flog its set-top reference design to companies looking to break into the Internet Appliance and games console arenas. ®

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