ATI Announces Significant Fourth Quarter Loss

Officials from Canadian graphics technology firm ATI have released financial details for the company’s fourth quarter, ended August 31st, which show a loss of $103.5 million. The company has attributed the losses to the delayed introduction of new products, and reduced prices on older models. The company’s net loss compared unfavorably to a net profit of $61.2 million at the same time last year. Sales in the fourth quarter fell 18 percent to $470.2 million, although this was in line with analysts’ reduced estimates. In fact, over the whole year, revenues rose by 11 percent to $2.22 billion, with a profit of $17 million, leaving the company still in the black over the entire period. Apart from reduced profit on older models, the main reason for the poor fourth quarter results were delays in the introduction of new Radeon branded PC graphics cards, which allowed competitor NVidia to release its own equivalent rivals cards before ATI. However, ATI is also producing the graphics technology for both the new Xbox 360 console and the Nintendo Revolution – the former following a high-profile move away from rival NVidia. The release of these new consoles is expected to coincide with an upturn in ATI’s fortunes, with the company predicting an increase in first quarter fiscal results for 2006 of 15 percent, relative to the current fourth quarter. The gross margin percentage is expected to recover to 29 percent (from 23.3 percent this quarter), while operating expenses are predicted to increase 2 to 3 percent. However, the company has not given any specific profit forecast. "We are entering fiscal 2006 with new products and an intense focus on operational and financial performance," said David Orton, ATI's Chief Executive Officer. "We've delivered top-to-bottom technology and performance leadership with the 90 nm Radeon X1000 series. We are aggressively implementing concrete programs in the areas of delivery performance, product cost improvements and operational efficiencies. Our new products and operational programs position us well for the future."