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Bad News for ATI

I

imported_X

Senior member
Sounds like despite great success with the X800XL, ATI is hurting due to lower profit margins on these mid-range cards. I wonder if they will try to jack up the cost of R520 to get back into higher margins?

GRAPHICS FIRM ATI (tick: ATYT)turned in a net loss of $9.4 million for its third financial quarter, compared with a net profit of $49 million in the same period last year.

Revenues grew by $39 million to $530 million, compared to the same quarter last year.

David Orton, ATI's CEO, said the quarter was "challenging", particularly in its PC business division. He said that delivered results well below ATI's expectations for both revenue and gross margin.

The PC division includes 3D graphics, video and multimedia products for notebooks and desktops. The consumer division includes mobile phone products, digital TVs and consumer electronics.

The company said that a shift in product mix led to a higher percentage of sales in the mainstream and value segments, with consequently lower average selling prices. Orton said, however, that ATI expects continued growth in its core markets as well as in its chipset and consumer business.

However, ATI said that desktop integrated business revenues quadrupled year on year, particularly so for the Radeon Xpress 200 for AMD and Intel, which won significant OEM business. Desktop products accounted for 60 per cent of total PC revenues with notebook products representing the rest of revenues for this sector.

Revenues for the fourth quarter are expected to be in the range of $550 million to $580 million, an range that has been adjusted down because of a "conservative expectation" on a range of new products.
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How are they still in business, losing so much money?! Man imagine if they left the market to Nvidia, wow that would suck.

I'm thankful for the competition!
 
jacking up the cost of cards that will already be priced out of most peoples budgets is not a way to regain profits
 
I'm not surprised. The X800XL may have been a good success, but its still more expensive than almost anybody building a computer would want to spend. Pretty much all of Nvidia's products at every price point below that are better than the ATI counterparts. ATI wins at the very top, where only a very small percentage of the people are buying.
 
Originally posted by: ryanv12
I'm not surprised. The X800XL may have been a good success, but its still more expensive than almost anybody building a computer would want to spend. Pretty much all of Nvidia's products at every price point below that are better than the ATI counterparts. ATI wins at the very top, where only a very small percentage of the people are buying.
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Um...i'd say it's pretty even through and through. They're both very good at competing with each other 🙂
 
I agree, Ryan, lets just hope that they can regain some footing. We will see the best products when both Nvidia and ATI are doing well financially...

 
ATi has been expanding. So they have to spend a lot more money and they have to gain a lot more gross now to make a profit. People need a reason to buy these very expensive pieces of hardware. The Sims 2 isn't one of them.
 
Well, that's what they get for providing no availability, a shtty mid-range lineup and very crappy agp support. Freakin losers.
 
Originally posted by: VIAN
Well, that's what they get for providing no availability, a shtty mid-range lineup and very crappy agp support. Freakin losers.
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:roll::disgust: where's that anti-fanboi squad?
 
And why would the truth get flamed? There is no reason to buy the under $200 offerings that ATI has right now. AGP is covered by the 6200, the6600, the 6600GT, and the 6800. What does ATI have? Realy old-school x300 and the flavors of x700 that can't stand up performance wise to the 6xxx line. Same goes for PCIe, but you can't get the 6800 (which is a shame). I would love it if the X800's would drop to about $175 where they belong, I would have bought one no problem.

Like I said, no flaming should happen here unless you really believe that the x700 > 6600. Heck the 9800 Pro is probably better than the x700 in a lot of cases...

ATI did rule the high end roost above $400 or so, but now longer! And they are competitive in the above $200 and below $300 PCIe side, but competitive is all...

🙂
 
I think any reasonably objective person will agree that the X800XL is a great mid-range card. In any case, sounds like ATI needs to pull an R520 rabbit out of the hat if they want to get back into the green this quarter.
 
x300 and x700, forgot about those cards. On purpose i think. I automatically dismissed them from this discussion, my bad 🙂
 
ATI did not lose very much money. If you read the reports, the results were break-even on a per share basis.


The product shift to lower-end was not to the X800XL parts. Higher sales of X300 video cards to OEMs as base-level PCI-E graphics were a factor. Also a factor was that ATI is still relatively new to the chipset business and has been spending money to develop this area. The integrated chipsets they do sell carry lower gross margins.


Revenue in the consumer segment (cellphone and HDTV) grew 20% and this segment carries lower margins.


R520 and R500 product development has also caused pain:
Quote from ATI press release:
"investment included higher prototyping costs incurred in the design and development of future products on 90 nanometer process technology, as well as an increase in technical staff to support new product lines."
 
I believe ATI has also bought up some companies that may have affected their bottom line as well. A nine million dollar loss for the quarter is pretty iinsignificant for ATI after all their profitable ones. If they start stacking their losses though. Remember how many quaters AMD was in the red and they have come out still in pretty good shape.
 
I would love to have an X800XL in box right now, or a 6800GT... anybody moving up to 7800 want to give me a good deal? 😛

ATI needs to get their chipset business up and going, then I am sure that they will get back into the black...

Nat
 
Originally posted by: Pressure
Originally posted by: VIAN
Well, that's what they get for providing no availability, a shtty mid-range lineup and very crappy agp support. Freakin losers.
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Get ready to duck and cover.
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Maybe VIAN is stretching reality a bit, but I agree with him in general. I owned a 9800 up to a month or two ago. I would have liked upgrade to prior to that but:

-6600GT and especially the X700 didn't offer enough performance increase over the 9800, leaving only the topshelf. I think alot of 9800 users fall in my thinking on this. Maybe the 9800 was a little to good for long term profits for ATI? In my case it was.

-Since I've convinced myself topshelf or no upgrade at this point, I looked at the rest of my setup. I was going PCI-e eventually, so I figured I'd wait it out on Venice, the mobos, and see how SLI faired. Plus running at 12x10 was hard to warrant $300-$500 for and AGP topshelf card. If either manufacturer offered 6800GT or X800XL at the $250 price point, they would have gotten my cash for eye candy. X800XL was too late to grab a lionshare of the market.

I really think nVidia marketed very well last round and ATI was all over the place. X800Pro competing against 6800GT. No availability on the flagship model. X700 didn't do anything to stand out against the 6600GT. nVidia's PVP and SM3.0 I'm sure garnered quite a few sales, whether working, not working, or useful. All in all, I don't think ATI did too much to make their lineup stand out and nVidia did, ie: not nearly the same interest and excitement as the 9700/9500 releases did.

 
Originally posted by: TStep
Maybe the 9800 was a little to good for long term profits for ATI?
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Ya, they would have made more money if they'd reduced the performance...ahh capitalism 😉
 
Originally posted by: blckgrffn
And why would the truth get flamed? There is no reason to buy the under $200 offerings that ATI has right now. AGP is covered by the 6200, the6600, the 6600GT, and the 6800. What does ATI have? Realy old-school x300 and the flavors of x700 that can't stand up performance wise to the 6xxx line. Same goes for PCIe, but you can't get the 6800 (which is a shame). I would love it if the X800's would drop to about $175 where they belong, I would have bought one no problem.

Like I said, no flaming should happen here unless you really believe that the x700 > 6600. Heck the 9800 Pro is probably better than the x700 in a lot of cases...

ATI did rule the high end roost above $400 or so, but now longer! And they are competitive in the above $200 and below $300 PCIe side, but competitive is all...

🙂
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Frankly, this is 100% right.

Look at ATi last year: Non-existent high end availability, disappointingly second place midrange, and the 6200 TurboCache cards destroyed the X300s.

They're still having availability problems it seems, with their CrossFire cards nowhere to be seen, and the reported yield problems on R520.

I like having ATi around for competition, but lets face it - in the past twelve months, they haven't been putting up any kind of strong resistance to Nvidia - the NV4x walked all over them in terms of high end and midrange sales, and the strongest seller in the budget sector was still the GF4 MX4000 (hehehehe).

I'm sure ATi will be fine - they're doing graphics chips for two upcoming consoles, if nothing else - but right now they are, as far as I'm concerned, playing second fiddle once again. That may change when R520 GETS TO RETAIL (I refuse to say launch, as God knows how long it is between that and buying one), but until then, all bets are off.
 
Originally posted by: Todd33
Xbox 360 anyone? They will be fine thanks to MS.
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I don't think anyone here is fooled into thinking the company is dying. They have nothing to worry about at the moment.
 
With the Xbox 360 on the verge of release and Nintendo coming out a bit after Ati has anything but to worry about. They may or may not beat Nvidia in this round the next or maybe never or sometime who knows, but the fact remains, at this moment Ati is in a very strong position.
 
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