Advice on a possible Gorilla...
I'd like to do a Gorilla analysis of my own, mainly just to go through the process, and I wanted to get the thread's impression about the company that I'm leaning towards.
I've been following ATI Technologies (NASDAQ:ATYT or TSE:ATY) for quite a while now and recently I've seen some signs that something might be brewing in the E-Appliance and/or mobile computing markets.
ATI is currently THE leading graphics card developer for PCs supplying DELL, IBM, Apple, Gateway, etc. for desktop and laptop computers. The laptop component has been extremely good to them and the have had solid revenue/ernings growth for years. While sales jumped 67% between 1998 and 1999, that's not where I see the possible tornado.
ATI has made it well known over the last year or so, that they were going to be moving head-on into the E-Appliance and mobile computing markets and have been designing cards expressly for this purpose. I hadn't seen much about it taking off though until they announced early this week that they have been chosen by Sony for their VAIO Slimtop (mobile). Then shortly after that, they announced that they will be supplying Sony with the graphics and video components for Sony's set-top boxes and would be the supplier of choice for the lifetime of the boxes (E-appliance).
Then a couple of days ago, ATI announced the aquisition of ArtX Inc. for $400M which not only places them directly at the top of graphics side of the E-appliance industry but brings them established business with such notables as Nintendo, Acer and Matsushita.
Now, I work in the Computer Graphics industry, so I am fairly aware of the competitive issues involved, but I would love some feedback regarding the potential for gorilladom. My initial reaction is that we might be looking at more of a King due to the fact that they are in the business of component design, but with a current P/E multiple of slightly over 30, I think it well worth the study time.
Any thoughts? Should I continue looking at this one?
-sm- |
