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ATI earnings up, taps giant PC makers

The leading PC graphics chipmaker reports solid earnings, despite continuing to take charges for its purchase of Chromatic Research.

ATI, the leading PC graphics chipmaker, reported solid earnings as it consistently puts its processors inside the largest PC makers' computers, but continues to take charges for its purchase of Chromatic Research.

The company also announced today that it will develop graphics products for "flat-panel" liquid crystal displays (LCDs) based on Intel's digital interface technology.

ATI Technologies said sales increased 63 percent to $297.2 million, from $182 million for the same period last year.

Adjusted net income for the second quarter rose 45 percent to $39 million or 18 cents per share compared with $27 million or 13 cents per share for the same period last year, the company said.

In November of last year, ATI purchased Chromatic Research, a developer of system-on-a-chip technology for about $71 million. As a result, the company took a charge of $17.3 million or 8 cents per share on an after-tax basis during the second quarter, according to a company statement.

Actual net income for the second quarter was $21.7 million or 10 cents per share, compared with $27 million or 13 cents per share for the same period last year.

"We are pleased to be on track to meet our fiscal 1999 objectives, including increasing total market share," K.Y. Ho, ATI's president and CEO, said in a statement.

Despite the strong year-to-year financials, sales and adjusted net income were down from the first quarter of this year when the company reported $327.4 million in sales and adjusted net income of $52 million.

ATI is the largest supplier of graphics chips to the PC industry. In the second quarter, ATI picked up design wins in new Compaq notebook PCs and continues to supply chips to companies such as Dell Computer and Hewlett-Packard.

But graphics is a topsy-turvy industry and players rise and fall seemingly overnight. ATI will continue to face strong competition from companies such as NeoMagic, Matrox, and a more aggressive S3.

In related news, ATI said today that it will develop graphics products for the digital flat panel (DFP) market based on the Digital Visual Interface (DVI) standard developed by the Intel-led Digital Display Working Group. DDWG today announced the release of Revision 1.0 of the DVI specification.

This technology is typically used with LCD monitors. The Digital Visual Interface was introduced by Intel and the DDWG in August 1998, and the first specification of the new interface presented in February 1999.

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