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ATI posted a Q3 loss of $4.2 million (two cents a share) on sales of $255.9 million today and admitted there is "more work to be done" to bring the company back to profitability.

This past quarter's sales were ten per cent up on the previous quarter, suggesting business is picking up. If it is, don't necessarily expect ATI to profit, as its new strategy of licensing its chips to third-party graphics card makers will, it reckons, result in a decline during Q4.

Taking extra expenses to the tune of $75.3 million into account, ATI's net loss comes to $27 million, a bit better than the $38 million it posted last quarter. The operating loss of $4.2 million was lower than the company had forecast, thanks to improved sales and higher gross margins (27.2 per cent, to be precise).

ATI expects margins to increase through Q4, which will go some way to counter the loss of revenue to third-parties. The company expects to break even during the quarter.

The higher margins are likely to come from boards based on ATI's upcoming R200 chip which may or may not be called the Radeon 2, and which the company has already confirmed with ship later this summer. ®

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