Novice Investing - ATI Turnaround Soon?

Date: Monday 01st 2008f December 2008 04:23:52 PM

ATI Turnaround Soon? - 11/21/2005

By: Novice Investing Staff

We last talked about ATI Technologies Inc. (ATYT) on September 4th 2005. At the time, the company just announced a miss in revenue as well as earning guidance. It missed revenue by 20% while 15% of the inventory was written off. At turnaround for ATI article, we suspected that management was trying to dump the bad news all at once and start fresh for fiscal year 2006.

One of the competitor, Nvidia Corp. (NVDA) has announced decent earnings so far. It has risen 24% since ATI announcement. ATI itself, however, has risen 53% since then. But it seems like investors had discounted the bad news for 2005 and the potential good results for 2006.

As we have mentioned back on September 2005, ATI is the sole supplier of graphic chips for Xbox 360 console. Xbox 360 is expected to be released this coming Tuesday. Furthermore, the demand for graphic chips in general is increasing. The world is becoming more digitized day by day. Developing countries are starting to computerize their life and that is just the beginning. As storage capacity grows, consumers can demand video capabilities on their electronic devices and this expands the market for graphic chips further.

To answer the question whether ATI has turned around, the answer is we don't know. But, all indication points to the above paragraph and the reason to be optimistic for graphic chip makers like Nvidia and ATI Technologies. If ATI can execute and maintain its market share, its share price will warrant a higher price than today. It is expected to announce earnings in mid December 2005. If it has execution problem for the quarter, we believe that management will announce the news sometime before November ends. It can occur sometime this week.

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Disclaimer: The sole purpose of this article is educational. This article is merely the opinion of the writer and is not in any way a buy/sell recommendation regarding ATI Technologies (ATYT) or other securities.

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