News coverage for ATI win... from today's Globe and Mail Report on Business..
UPDATED AT 9:50 AM EDT Thursday, Aug. 14, 2003
ATI snares Xbox contract
Globe and Mail Update
ATI Technologies Inc. stock shot up 10 per cent Thursday after the firm said it will develop graphic technologies for Microsoft Corp.'s future Xbox game console, taking key business away from rival Nvidia Corp.
No financial details were disclosed.
Shortly after the start of trading, ATI shares were up $1.73 or 10.22 per cent to $18.65 in Toronto. Nvidia, which is Microsoft's current Xbox graphics chip supplier, saw its shares fall almost 3 per cent on the Nasdaq just before 10 a.m. EDT.
Toronto-based ATI already supplies graphics chips for Nintendo Co.'s GameCube, an Xbox competitor.
"We selected ATI after reviewing the top graphics technologies in development and determining that ATI's technical vision fits perfectly with the future direction of Xbox," Robbie Bach, senior vice-president of Microsoft's home and entertainment division, said.
In June, a report said ATI would supplant Nvidia as the graphics chip supplier for the Xbox 2 console.
The Register, a British-based Web site, cited the difficult relationship between Microsoft and Nvidia as one reason for the rumoured switch. The two companies entered arbitration last year to settle a pricing dispute
"Microsoft shares our passion for cutting-edge innovation," K.Y. Ho, ATI chairman and chief executive officer, said in a statement.
"Our success working with Microsoft in the past gives us great confidence as we move forward, and our broad experience and wealth of engineering resources will ensure that we deliver. This agreement cements ATI's position as the prime graphics supplier for the future of the games industry."
In a research report issued Tuesday, First Associates Investment Inc.'s Dennis dos Santos said it has raised its price targets for the company as "evidence mounts evidence that ATI has overtaken Nvidia Corp. for industry leadership."
Mr. dos Santos said First Associates has a "buy" rating with a price target of between $16 and $19.50 for ATI's shares in Toronto.
"We believe that once investors become convinced that the leadership of the industry has changed hands, ATI will be accorded the 'industry leader's' premium multiple."
He also noted that as the next generation of gaming consoles are due for 2005 or 2006, major awards would come this year.
"A win with Microsoft would add between $0.10 and $0.20 per share to EPS, beginning in fiscal 2005," Mr. dos Santos wrote.