Graphics chipmaker ATI Technologies Inc. today knocked $50 million off its Q4 revenue projection, as it reported results for what it termed a challenging fiscal Q3.

The Markham, Canada-based company posted revenue of $530 million and a net loss of $400,000, for Q3, in line with its updated guidance early this month. Gross margin was 29.1 percent. In its fiscal Q2 report in March, the company had originally guided for revenues of $560 million to $600 million

Revenues were up 8 percent year over year, although in the year ago period ATI posted net income of $49 million, or 19 cents per share. In fiscal Q2 the company posted revenue of $608 million and net income of $66.2 million, or 25 cents per share.

In its fiscal Q3 guidance update earlier this month, the company also guided fiscal Q4 revenues to be about $600 million; it lowered that guidance today to a range of $550 million to $580 million.

"It was a challenging quarter for ATI, particularly within our PC business where we came in well below our expectations for both revenue and gross margin," David Orton, CEO, said in a statement. "Yet, during the quarter, we also achieved important milestones in our core GPU business. In addition, we have a renewed focus on improving our operational consistency in ramping new technologies. Looking forward, we expect continued growth in our core markets as well as the new markets of chipsets and consumer."

PC revenues were up about 6 percent compared to the same quarter last year primarily on stronger sales of discrete desktop products to the add-in board channel, as well as from PCI Express design wins with PC OEMs, ATI said.

In terms of units, those PCI Express design wins led to year-over-year unit growth of approximately 22 percent. A large number of these design wins were concentrated at the lower end of the market, however, leading to the more modest increase in revenue, according to the chipmaker.

On a sequential quarter basis, overall PC unit volumes increased despite the typical seasonal weakness usually seen in fiscal Q3, ATI said. However, a product mix shift led to a higher concentration of sales in the mainstream and value segments, which generally carry lower average selling prices than products in the performance segment. The percentage of revenue derived from the enthusiast segment of the market remained unchanged from the prior quarter, the company said.

Consumer revenues, meanwhile, grew 20 percent year over year. Handheld unit volumes rose 45 percent year-over-year and revenues grew 12 percent, as the company's Imageon product line for handheld devices spenetrated the mainstream mobile phone market, according to ATI.

Revenues from digital television products grew by 83 percent year over year, thanks to ATI's Xilleon and NxtWave products, driven by the accelerating market transition from analog television to DTV in the U.S, the company said.

By: DocMemory
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