To briefly answer your points:
>Loss of market share
On the contrary, the market share has increased overall according to the latest reports, particularly in areas such as mobile where ATI has taken a commanding lead. Let's not forget entirely new arenas of growth such as STBs, consoles, and internet appliances.
>Competitors like Intel and Nvidia
There is no additional threat. Intel's threat has considerably diminished over the past year, whereas nVidia's has grown. And lets not forget that many of their older competitors are considerably less of a threat: ie matrox, S3, 3Dfx, and neomagic.
>Shrinking margins
This is perfectly normal in any maturing company/industry. This is not something that's unique to ATI. ATI's CC guidance has always been towards reduced gross margins going forward, so this should not come as a surprise to anyone. However, lets not forget that their projected revenues are also CONSIDERABLY higher, year over year so that does cancel out the reduced margins. ie 1.8B-2.0B revenue for the coming year. This was all factored in by analysts when they were giving their 12 month targets. What's changed? If anything, there's lots of new high margin products coming out, ie Radeon256, HDTV, etc.
>Flat to shrinking revenue growth
Yes, this is true for this quarter, but their projected revenue for the year is still considerably higher for the year. It's not flat at all.
>Negative earnings
Yes, when you take into account increased R&D and the massive writedown they had. This is true of this quarter only. ATI isn't some online auction company running from a basement that's going to have 20 quarters of negative earnings. This is a solid company, with solid products and solid revenues, going through some hard times because of the economy.
It has been waaay oversold, as can be seen by the HUGE buying interest currently. Sure it won't be back to $30 anytime soon, but high teens in a short term outlook is not out of the question as long as the rest of the market can hold its ground. |
