News coverage of earnings...
...nothing but great news from ATI lately, and the stock hardly moves!...hard to believe..maybe they shouldn't have raised the guidance a few weeks ago, and today's numbers would have blown everyone away!
UPDATE 3-ATI profit surges, revenues to beat Wall St view 11:05 am ET
(Adds COO interview and detail. In U.S. dollars unless noted)
By Luke McCann
TORONTO, Dec 19 (Reuters) - ATI Technologies Inc. , which makes graphics chips for computers, phones and computer games, reported sharply higher profits on Friday on a 40 percent rise in revenue, and said sales in the current quarter would come in above Wall Street estimates.
The Markham, Ontario-based based company, whose chips are used in products ranging from computers and mobile phones to Nintendo's GameCube, reported net income of $47.4 million, or 19 cents a share, in the first quarter ended Nov. 30, up from $7.3 million, or 4 cents a share, a year earlier.
ATI shares rose about 3 percent on the news, climbing 38 cents to $15.08 on Nasdaq and 69 Canadian cents to C$20.15 in Toronto.
The stock is up almost 200 percent since the start of the year.
"A really good quarter.. The company reported at the high end of the revised range they gave in November, and guidance for the next quarter looks pretty good," said National Bank Financial analyst Deepak Chopra. He added that he believes the company is continuing to gain market share.
"The biggest area of focus is always gross margins, and this quarter they were very strong."
ATI said revenue jumped to $469.7 million, from $335.4 million in the year-ago quarter, on strong demand for desktop computers.
Closely watched gross margins were 35.9 percent of revenue, up slightly from 35.6 in the fourth quarter.
Analysts surveyed by Reuters Research expected, on average, earnings per share of 18 cents, and revenues of $457 million -- in line with last month's forecasts.
ATI said it expects second-quarter revenues between $430 million and $470 million, above the average Wall Street estimate of $423.9 million, due largely to continued strength in the personal computer market.
It expects gross margins to be in the upper half of its target range of 32-35 percent of revenues.
Chief Operating Officer and President David Orton told Reuters ATI could increase its gross margin target range soon. "We're not quite there yet, but it's on the horizon," he said.
ATI said operating expenses rose to $106.7 million from $79.9 million a year ago, partly due to the sharp rise in the Canadian dollar as well as costs related to a new plan to scale back on stock options.
NOT JUST COMPUTERS
ATI competes with Nvidia Corp. and Intel Corp. to supply computer graphics chips.
About four years ago it began expanding outside its traditional personal computer market to design chips for cable set-top boxes, personal digital assistants, video game consoles and mobile phones.
ATI said between 5 and 10 percent of its revenue came from the nonpersonal computer market this quarter, but it expects that to rise to 10 to 20 percent by fiscal year-end. In the next few years, about one third of its revenue could come from the nonpersonal computer market.
The personal computer market is notoriously volatile, and corporate spending for desktops and notebooks has dropped heavily since 2000.
But there is evidence of a turnaround. Personal computer sales grew around 15 percent in the third quarter of this year, according to iSuppli, a market research firm based in El Segundo, California.
ATI still has an nonoperational issue to deal with. The Ontario Securities Commission, Canada's main market regulator, has set a hearing for February 2004 for insider trading allegations against ATI's founder and chief executive K.Y. Ho.
Chinese born Ho founded the company in 1985 and was named by Business Week magazine in 1998 as one of the world's top 25 executives. He and his wife have been accused of dealing ahead of an ATI profit warning in May 2000.
($1=$1.33 Canadian)