ATI revenues and profits surge

[Stunt]

Source

Graphics firm ATI Technologies' Q2 profit rises to US$57M; stock buyback planned
By STEVE ERWIN
2005-03-24 13:00:00

TORONTO (CP) - Shares in ATI Technologies Inc. rose Thursday after the computer and digital graphics company met expectations with a $57-million US profit for its second quarter and forecast bullish revenue increases for later this year.

ATI said sales in its consumer business - graphics and multimedia products for handheld communication devices, digital TVs, cellphones and game consoles - will increase slightly in the third quarter before doubling in the fourth quarter.

"The consumer market is a very important market for us and we're anticipating very strong growth in that over the next couple of quarters," chief financial officer Patrick Crowley said in an interview from California, where he was attending business meetings for the Markham, Ont.-based firm.

Crowley noted that consumer interest in digital TVs is ramping up significantly. At the same time, ATI is working to expand its business with telecommunications companies as demand for cellphones equipped with cameras and for improved digital images on handheld devices soars.

"For virtually any handheld product that you have out in the marketplace, our objective is to get our chip into each of those products, whether it's a cellphone, a (personal digital assistant) or any of these types of products," Crowley said.

Shares in ATI (TSX:ATY) shot up 31 cents to $20.78 Cdn in Thursday trading on the Toronto Stock Exchange on its latest quarterly results, which showed that profits rose to $57 million US for its second quarter ended Feb. 28, up from $50 million US a year earlier.

Net income for the quarter amounted to 22 cents a share, compared with 20 cents per share a year ago. Analysts were expecting a profit of 24 to 25 cents per share before stock-based compensation costs are taken into account, and ATI matched or beat those expectations.

Quarterly revenue grew $145 million to $608 million US as a result of strong sales in both the personal computer and digital consumer segments.

"Strong sales of discrete PC products helped to offset the anticipated seasonal weakness in our digital consumer business, which we expect will rebound nicely in the second half," ATI CEO David Orton said in a release.

The PC market currently represents about 90 per cent of ATI's annual sales, indicating revenues on the consumer products side should surge from roughly $60 million in the current quarter to more than $120 million in the fourth quarter ending Sept. 30, as TV and digital communications manufacturers pump out products ahead of the holiday season.

ATI's reliance on the PC market should be significantly reduced "over the next five to six years," said Crowley, who estimated that the split between PC and consumer market revenue will change from 90-10 to 60-40.

ATI has had to face some distractions on the legal front. Hearings begin next week into Ontario Securities Commission allegations of illegal insider trading by ATI chairman K.Y. Ho, his wife Betty, two other ATI employees and their two spouses.

The OSC also alleges ATI was too slow in announcing to the public, in May 2000, that its financial results for the fiscal third-quarter of that year would fail to meet expectations.

Crowley, who joined ATI in January, wouldn't comment on when a settlement with the provincial securities regulator might be reached before the potentially month-long hearings begin.

"At this point in time, the only thing I can say is the hearing is scheduled (to start) Tuesday of next week and we're certainly going to be pleased to have this behind us," he said.

Also Thursday, announced a plan to buy back up to 24.7 million of its shares - about 10 per cent of its public float.

By buying back its shares, a company reduces its equity base, spreading profits over fewer shares. That increases its return on equity and earnings per share, two key ratios used to determine a company's financial health and investment rating. In addition, most share buybacks lead to higher share prices as fewer shares circulate in the market.

Orton said the repurchase plan "reflects the confidence of the board and management team in ATI's long-term growth potential."

So i decided to post an article that relates to the orientation of anandtech itself.

ATI is doing nothing but stellar, and are now becoming the leader in their industry. It looks like we could have another airbus/boeing debate on our hands...depends how patriotic people are with their graphics cards.

ATI has already overtaken Nvidia in revenues, and it's looking like they will be setting the bar even higher with these results and forcasts.

ATI: $221mil net on $2.1bil revenues.
Nvidia: $100mil net on $2.0bil revenues.

I think this will be an interesting battle fo years to come, maybe you guys can give some insight as to what we can expect from these companies, who will come out on top, and what you think of their respected business models/ideas.

PS. why is it called ATI technologies inc? does that mean it is: Advanced Technologies Inc technologies inc?

 

[raildogg]

It all started about 2 years ago or so when Nvidia had a Geforce 4600 ti and ATI released a bombshell graphics card, the ATI Radeon 9700 Pro. John Carmack chose the Radeon 9700 Pro to show Doom 3 during E3 in LA. This was seen as a major victory for ATI and ever since then, ATI has been cruising. I was really excited when the Radeon 9700 Pro came out, it was a breakthrough card that was a major step up from anything offered by ATI or even NVIDIA at the time.

Years ago, NVIDIA was the dominant company, especially when it aquired 3dfx. But now it's basically neck and neck. I bought a ATI Radeon 9800 Pro about a year ago and plan on keeping it for a while. The current generation of cards are pretty equal. Lets keep in mind that ATI powers the graphics chips in the current Nintendo Gamecubes.

Also, ATI has a huge deal with Dell to supply them with cards. Dell even markets the ATI brand. NVIDIA has signed deals with game developers while ATI is signing deals with hardware manufacturers, such as Intel and others. Microsoft has chosen ATI to power the XBOX 2 and I believe ATI will be the chip used in the next Nintendo console. It'll get plenty of royalties from the XBOX deal. ATI is also a player in the pc tv tuner market. You can record tv shows with the ATI TV Wonder. It costs about $125, but it's just an awesome product and comes with a great remote. It is also now making chips for cellphones, I believe called the Imageon's.

 

[Insomniak]

What the hell is this doing in P&N?

 

[Stunt]

nvidia fiscal data

For the second quarter of fiscal 2005, revenue was $456.1 million, compared to $459.8 million for the second quarter of fiscal 2004. Net income for the second quarter of fiscal 2005 was $5.1 million, or $0.03 per diluted share, compared to net income of $24.2 million, or $0.14 per diluted share, for the second quarter of fiscal 2004.

comparison: (Q2 data)
revenues -> ATI: $608 vs. Nvidia: $456
profits -> ATI: $57 vs. Nvidia: $5

I'm sorry, but Nvidia seems to be horribly run.

Raildogg: I'm surprised with the support of ATI products, you were a staunch advocate of boycotting airbus in those discussions. Why the double standard?

 

[Stunt]

Originally posted by: Insomniak
What the hell is this doing in P&N?

N=news.
If dave can start a thread on GM's financials and economic outlook, I can make one on this.

A little balance if you will, a company with massive growth in today's strong economy.

 

[raildogg]

Originally posted by: Stunt
nvidia fiscal data

For the second quarter of fiscal 2005, revenue was $456.1 million, compared to $459.8 million for the second quarter of fiscal 2004. Net income for the second quarter of fiscal 2005 was $5.1 million, or $0.03 per diluted share, compared to net income of $24.2 million, or $0.14 per diluted share, for the second quarter of fiscal 2004.

comparison: (Q2 data)
revenues -> ATI: $608 vs. Nvidia: $456
profits -> ATI: $57 vs. Nvidia: $5

I'm sorry, but Nvidia seems to be horribly run.

Raildogg: I'm surprised with the support of ATI products, you were a staunch advocate of boycotting airbus in those discussions. Why the double standard?

I can't buy a airplane, thats why. But I can certainly buy a graphics card. There is a difference. And I didn't say boycott Airbus. I support freedom of choice, and I support a market economy. Success should go to the company with the better product. Also, there are many reasons why I support Boeing.

 

[nutxo]

Originally posted by: Insomniak
What the hell is this doing in P&N?

Its called news. Some news isnt political.

 

[Ferocious]

Chalk one up for the Canadians. Not bad for a "red" state.

I never liked Nvidia anyways.

 

[Insomniak]

Originally posted by: nutxo

Originally posted by: Insomniak
What the hell is this doing in P&N?

Its called news. Some news isnt political.

Yeah, but this would be more at home in video. If ATi/NV's CEO gets caught building a nuke, then post it here.

 

[3chordcharlie]

Originally posted by: Insomniak

Originally posted by: nutxo

Originally posted by: Insomniak
What the hell is this doing in P&N?

Its called news. Some news isnt political.

Yeah, but this would be more at home in video. If ATi/NV's CEO gets caught building a nuke, then post it here.

This is perfectly valid business/economy news.

 

[dmcowen674]

Originally posted by: 3chordcharlie

Originally posted by: Insomniak

Originally posted by: nutxo

Originally posted by: Insomniak
What the hell is this doing in P&N?

Its called news. Some news isnt political.

Yeah, but this would be more at home in video. If ATi/NV's CEO gets caught building a nuke, then post it here.

This is perfectly valid business/economy news.

Originally posted by: Stunt

Originally posted by: Insomniak
What the hell is this doing in P&N?

N=news.
If dave can start a thread on GM's financials and economic outlook, I can make one on this.

A little balance if you will, a company with massive growth in today's strong economy.

ATI is an important Tech Compnay for Canada as GM is as an Auto Compnay in the U.S.

They are big cogs in the overall Economy of each Country.

 

[ViRGE]

Originally posted by: raildogg
Years ago, NVIDIA was the dominant company, especially when it aquired 3dfx. But now it's basically neck and neck. I bought a ATI Radeon 9800 Pro about a year ago and plan on keeping it for a while. The current generation of cards are pretty equal.

Yes and no. ATI doesn't have anything solid to compete with in the mid-range or low-end markets(<=$200) due to the poor performance of the X700/X300 parts and the failure of the X700XT to materialize, and the high-end market found the X800 Pro losing more often than not to the 6800GT(though the X800XL has helped ATI deal with this). ATI and Nvidia are pulling equal more or less for the top spot with the X850 and 6800U(if we throw out SLI) so they are a viable contender for the crown, but I wouldn't consider them equals with Nvidia below that point(rather Nvidia edges them out). Overall, ATI isn't nearly as competitive with Nvidia as they were back in Q1 '04, which is why I'm so surprised to see they posted such good numbers(by all means Nvidia's return to true competitiveness should have pushed ATI's revenue down). Their growth seems to be largely due to smart deal-making on their part, not necessarily superior technology, which I'm not sure is a good thing in this case.

PS 3chordcharlie, I don't think you get what Insomniak is saying. This is real, meaningful news that deserves a better place than in the black hole of P&N

 

[dmcowen674]

Originally posted by: Stunt

I think this will be an interesting battle fo years to come, maybe you guys can give some insight as to what we can expect from these companies, who will come out on top, and what you think of their respected business models/ideas.

PS. why is it called ATI technologies inc? does that mean it is: Advanced Technologies Inc technologies inc?

On a personal note, I actually visted ATI back in the mid 80's when their primary business was Sound Cards. I don't think they even had a Video card at the time yet.

I was into early PC development on many fronts.

There was another Company into sound I visited back then called Covox, they made an external PC to Voice synth.

I got away from sound development and went more into overall hardware towards 1990 (IBM and Microchannel which quickly faded) and then finally worked at Hayes Modems and designed the new 28.8, 33.6 , first 56K (I had a working demo before 3COM but they dragged their feet not realizing what a big deal it was) and finally the DSL Modem.

Graphics has really taken off now with the PCI Express bus.

I hope to land a decent job (contract job has 2 weeks left tops, probably less) with decent pay that I could afford to put together a new system with this Bus and a PC card that costs more than the rest of the PC.

 

[3chordcharlie]

Originally posted by: ViRGE
PS 3chordcharlie, I don't think you get what Insomniak is saying. This is real, meaningful news that deserves a better place than in the black hole of P&N

Hey, I like this black hole!

 

[dmcowen674]

Originally posted by: ViRGE
PS 3chordcharlie, I don't think you get what Insomniak is saying. This is real, meaningful news that deserves a better place than in the black hole of P&N

Hey, Black Holes have a lot of pull :laugh:

 

[CycloWizard]

ATI lost my business several years ago and I doubt I'll ever buy from them again. The ATI Rage Pro that came with a comp I had to buy when enrolling at my undergrad institution would freeze up the entire system after every hour or so of use. The computer wouldn't simply reboot after this, oh no - I would have to physically remove the card and replace it for it to work (and no, I still have no idea how this could happen, nor did any of my roommates, who were all computer engineers ). Stupid me, I bought another ATI product (Rage Maxx 128 or something), only to find that features listed on the box weren't made available for two years after I bought it, since they didn't include them in the drivers until that point. I then got a pair of 3DFX Voodoo2's SLI'd (for $26 total ), which was very nice at the time, then a GF2MX (best investment I ever made) and now a GF6800GT. I've only had problems with NVIDIA drivers one time, and a fix was available the next day.

That said, I'm glad there's some real competition going on. Hopefully the prices nosedive as a result, though demand is still very high for the newer cards.

 

[ntdz]

Originally posted by: Stunt
nvidia fiscal data

For the second quarter of fiscal 2005, revenue was $456.1 million, compared to $459.8 million for the second quarter of fiscal 2004. Net income for the second quarter of fiscal 2005 was $5.1 million, or $0.03 per diluted share, compared to net income of $24.2 million, or $0.14 per diluted share, for the second quarter of fiscal 2004.

comparison: (Q2 data)
revenues -> ATI: $608 vs. Nvidia: $456
profits -> ATI: $57 vs. Nvidia: $5

I'm sorry, but Nvidia seems to be horribly run.

Raildogg: I'm surprised with the support of ATI products, you were a staunch advocate of boycotting airbus in those discussions. Why the double standard?

ATI is kicking Nvidia's ass right now, even though the 6800 is a better product that x800 IMO. Good for them, I doubt it'll last all that long though, Nvidia is a much larger and richer company.

Edit: What the hell are those numbers? Second quarter 2005 has barely even started, how do they have numbers for it? Nvidia must have a weird accounting schedule or something, who knows. Those numbers look like they are from July of 2004, or 9 months old. How about the numbers for the 4th Quarter 2004?

 

[Stunt]

Ntdz, larger in what respect?
ATI has a larger revenue and drastically more profits.

And it says on nvidia's financial site that FY's end in sept before christmas.
So they are in their Q2 results, both have posted for Q2 FY2005.

 

[ntdz]

Originally posted by: Stunt
Ntdz, larger in what respect?
ATI has a larger revenue and drastically more profits.

And it says on nvidia's financial site that FY's end in sept before christmas.
So they are in their Q2 results, both have posted for Q2 FY2005.

I'm pretty sure Nvidia has more cash reserves than ATI, and has more businesses besides graphics cards (Chipsets, etc). ATI is coming on strong lately though, the 9000 series slaughtered Nvidia in the last graphics round. This round is more of a wash, with a slight edge to nvidia imo. As we all know though, that doesn't always translate to more revenue or sales.

P.S.: ATI hadn't posted a profit for a looong time before they did last year I think.

 

[Stunt]

ntdz, if you look at the financial sites i posted above, you will see that in the last 3 years (2003-2005) both ATI and nvidia have had one un-profitable quarter.
ATI has a 21.3% return on equity, whereas Nvidia has 9.1%.
ATI also has a higher return on assets, and return on capital.
These will all contribute to the company's ability to invest and attract investors.

One thing i did find interseting is that under the management section, ATI gives an average of $82,000 per employee and gets a revenue return of $800,000 per employee. Nvidia spends $55,000 per employee and gets a revenue return of $1,000,000 per employee.

 

[kylebisme]

Yeah, I'm pretty sure ATI is the bigger company, though Nvidia is defenatly the bigger talker.

 

[raildogg]

Originally posted by: ViRGE

Originally posted by: raildogg
Years ago, NVIDIA was the dominant company, especially when it aquired 3dfx. But now it's basically neck and neck. I bought a ATI Radeon 9800 Pro about a year ago and plan on keeping it for a while. The current generation of cards are pretty equal.

Yes and no. ATI doesn't have anything solid to compete with in the mid-range or low-end markets(<=$200) due to the poor performance of the X700/X300 parts and the failure of the X700XT to materialize, and the high-end market found the X800 Pro losing more often than not to the 6800GT(though the X800XL has helped ATI deal with this). ATI and Nvidia are pulling equal more or less for the top spot with the X850 and 6800U(if we throw out SLI) so they are a viable contender for the crown, but I wouldn't consider them equals with Nvidia below that point(rather Nvidia edges them out). Overall, ATI isn't nearly as competitive with Nvidia as they were back in Q1 '04, which is why I'm so surprised to see they posted such good numbers(by all means Nvidia's return to true competitiveness should have pushed ATI's revenue down). Their growth seems to be largely due to smart deal-making on their part, not necessarily superior technology, which I'm not sure is a good thing in this case.

PS 3chordcharlie, I don't think you get what Insomniak is saying. This is real, meaningful news that deserves a better place than in the black hole of P&N

The Radeon X800XL is pretty close to the Geforce 6800GT in terms of performance. It blows the 6800 away in Half Life 2, while the 6800GT blows the X800XL away in Doom 3. In other games it's a tight race. Keep in mind the X800XL is a $100 cheaper than the 6800GT. The low end market belongs to NVIDIA at the moment. But remember, the Radeon 9800 Pro is around $150, while the 6600 is about $200 or so. So ATI does have a card out there at the bottom.

The Radeon X850XL is generally a bit faster than the non-overclocked Geforce 6800 Ultra. That's assuming we're talking about non-SLI here. NVIDIA certainly is far ahead in that field. But again, not many people will shell out $400 or $500 for 2 graphics cards. In Q1 '04, ATI was dominant in the budget, mid-range and top of the line categories. The Radeon 9200, 9600 and 9800 Pro were all ahead of their NVIDIA counterparts at that time. As of right now, roles are a bit reversed. I was also surprised at how well ATI did. But that may have to do with their contracts with Dell and other companies. IBM uses ATI cards in many of its laptops. The problem with ATI is that many of its cards don't make it to store shelves on time and by the time they get there, they are a generation behind. Can you find the X700XT in widespread markets? Not likely. But again, the Gefoce 6600GT is ahead. NVIDIA also benefits from using its own chipsets.