2 very favourable articles on ATI. One in the Saturday Toronto Star saying that ATI will announce about 6 contract wins during the next couple weeks including a win against NVDA. In that note, recent ads for the new Dimension 4100 series have shown ATI cards rather than NVDA on some models.
And finally, a very positive mention in Barron's - unusual for that publication to find anything positive.
interactive.wsj.com
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ATI Technologies, the erstwhile leader in computer graphics stocks, burned investors with May-quarter sales of just $288 million, down 5% from the year-earlier period's and 24% below the preceding quarter's. Even before $88 million in special charges, the Toronto firm suffered a May-quarter loss of 10 cents per share. From a March high of 23, the shares have plunged to 8 7/16.
Catching the eyes of investors, instead, is nVidia. The Santa Clara-based firm's sales more than doubled to $149 million in the quarter ended April, and earnings reached $18 million, or 23 cents per share (adjusting for a recent split). As Wall Street dumped ATI, it's sent nVidia shares up 175% this year, to 63 5/8 .
Like ATI, nVidia makes chips needed to run the increasingly splashy graphics of Websites and PC games. ATI has been the market leader in recent years, reaping more than a third of industry sales with products that, if not the fastest, are among the most inexpensive, says analyst Kathleen Maher of market-research firm Jon Peddie Associates. The fastest chips have come from nVidia. The introduction of a mass-market version of its GeForce2 3D chip this spring forced ATI to discount its products more deeply than it had planned.
ATI responded last month with its own 3D chip, the Radeon, which company president Dave Orton claims will compete against nVidia's products for slots in this fall's PC models. While the August quarter will be comparable to May's, Radeon should restore growth in coming quarters.
Yet ATI shares are priced as if the firm is not competitive with nVidia. At 8 7/16, ATI trades at about 19 times consensus estimates of 45 cents for the August 2001 year, or less than half nVidia's multiple of 42 times the January 2002 year earnings of $1.50 forecast by Mark L. Edelstone of Morgan Stanley Dean Witter. Edelstone's got a target for nVidia shares of $100.
Mike Hara, nVidia's investor relations rep, expects a lively two-horse race, like that of Intel and AMD -- with nVidia in the lead, of course. At current stock prices, however, the bookies are giving better odds on ATI. |
