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ATI: Sales, earnings to fall short

Blaming the sluggish PC market, the graphics chipmaker reworks its estimates for the fiscal fourth quarter, which ended Aug. 31.

Blaming the sluggish PC market, graphics chipmaker ATI Technologies warned Monday that revenue for the just-ended quarter will miss prior estimates.

The Canadian company said it now expects revenue for the quarter ended Aug. 31 to be between US$235 million to US$240 million, with earnings anywhere from breakeven and 2 cents per share.

ATI said the results were below its original estimates provided in June because of a weak PC market, and, in particular, a weak notebook market. In June, ATI said to expect earnings of between 5 cents per share and 7 cents per share for the fiscal fourth quarter.

Rival Nvidia has also had its troubles of late; it reported a narrower profit in August, after earlier warning that sales would fall short of estimates.

Meanwhile, ATI also said Monday that it expects sequential, double-digit growth in the current quarter due to "broad acceptance" of its new Radeon 9700 line of graphics chips.

"Despite continued weakness in the PC market we are pleased with the strong demand for our new products," ATI President David Orton said in a statement. "We continue to gain momentum with design wins in all of our business segments, and we believe this momentum will translate into market share gains."

ATI is in the midst of its most serious bid in years to retake the market lead from Nvidia. The company claims its new Radeon 9000 and Radeon 9700 chips produce significantly faster performance than competing Nvidia products, and it is also working to a grab a chunk of the integrated chipset market.

Orton said ATI is "very well positioned to outperform the PC market in 2003."

News.com's David Becker contributed to this report.