Feeds

ATI says expect Q3 loss

Margins plummet on global component shortage

  • alert
  • submit to reddit

Internet Security Threat Report 2014

ATI yesterday said it expects to make a loss for its third fiscal quarter, due to end next week on 31 May.

The market-leading 3D graphics company blamed the loss - which it anticipates to be in the region of 6-7 cents - on a global shortage of components. It also expects to see a $56 million inventory write-down and as yet unknown one-off charges. That should push the total loss to around 13-14 cents a share.

ATI said it expects the quarter's revenue to be in the region of $300 million.

All of which is surprising, given ATI's massive strength in the OEM graphics market. Previous (profitable) quarters have been led by strong sales of the company's Rage 128 family of graphics chips and cards. The loss warning suggests that demand may have begun to fall as PC vendors have turned to more advanced products like Nvidia's GeForce 256.

With margins falling from 33.2 per cent to 21 per cent, clearly the price war in this highly competitive market is hitting ATI hard too. It's that fight that's largely been responsible for the collapse of graphics vendor Number Nine, NeoMagic's withdrawal from the market, and the acquisition of many smaller graphics companies by the big guns.

And there's probably an effect here of the money ATI is pouring into set-top box system development, and into its next-generation 3D graphics chip, Radeon. Radeon isn't due to ship until the summer, and even then will face strong competition from the already shipping 3dfx's Voodoo 4 and 5, and Nvidia's GeForce 2. Then again, the component shortage is as likely to effect these companies too - 3dfx because it builds its own boards, Nvidia because the shortage will hit the board vendors it sells chips too. Nvidia is likely to have an easier time of it, though. ®

Providing a secure and efficient Helpdesk

More from The Register

next story
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
'Cowardly, venomous trolls' threatened with TWO-YEAR sentences for menacing posts
UK government: 'Taking a stand against a baying cyber-mob'
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Ex-US Navy fighter pilot MIT prof: Drones beat humans - I should know
'Missy' Cummings on UAVs, smartcars and dying from boredom
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
Zippy one-liners, broken promises: Doctor Who on the Orient Express
Series finally hits stride, but Clara's U-turn is baffling
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.