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Technology Stocks : ATI Technologies in 1997 (T.ATY) -- Ignore unavailable to you. Want to Upgrade?

To: Sleeperz who wrote (3977)	8/31/1999 2:06:00 PM
From: PHILLIP FLOTOW	Read Replies (2) \| Respond to of 5927

Latest story: 08/31 10:47A (DJ) =DJ ATI Tech Stk Down On Rumors Of Lost Dell Contract >ATYT Story 3386 =DJ ATI Tech Stk Down -2: Nvidia Reports Design Wins >ATYT Nvidia Corp. (NVDA) has issued a press release Tuesday saying it has secured design wins for its GeForce 256 graphics chip with five personal computer markers, including Dell Computer Corp. (DELL), Gateway Inc. (GTW), Compaq Computer Corp. (CPQ), Micron Electronics Inc. (MUEI) and NEC Direct. In the release, it isn't clear which line of Dell computers will feature Nvidia's GeForce 256. Officials at the three companies still can't be reached for comment. Dean McCarron, principal at consultant company Mercury Research, said the GeForce 256 is Nvidia's latest chip and he said there haven't been any design wins yet announced for it. McCarron said it is hard to tell how significant the GeForce 256 design wins are. Without further information, he said it is difficult to tell if this means Nvidia is winning market share from ATI Technologies Inc. (ATYT). Both Nvidia and ATI already supply graphics chips for various Dell computer lines. But McCarron said the GeForce design wins are in the high-end computer market, which hasn't been ATI's focus. ATI is focused on the mid-tier and low-cost computer market, he noted. He said ATI's market share is about 31% in the overall graphics market (counting both desktop and laptop computers), about double the size of S3 Inc.'s (SIII) market share and three times the size of Nvidia's share. He said it won't be known if Nvidia is gaining market share with the GeForce 256 for another few quarters, as he said it takes that long for design wins to translate into shipped products that can be measured in terms of market share. The GeForce 256 supports AGP 4X, a characteristic of the chips that makes them perform faster. ATI and other chip companies have AGP 4X chips as well. These chips, however, haven't been adopted in the market yet because Intel Corp. (INTC) has delayed the release of the next chipset called Camino. The chipset works with graphics chips and Camino has been delayed to about the end of September, McCarron said. But he said the GeForce 256 chip doesn't need the new Camino chipset and can work with older chipsets. Working with old chipsets means the GeForce 256 won't support AGP 4X, but he said there are enough other feature advantages of the GeForce 256 for PC makers to start using the chip. McCarron said he doesn't believe the GeForce 256 design wins are a major threat to ATI. In the computer market of the past, the top-end computers eventually were replaced by even faster computers, so the top-end units would eventually become low-end units. That way, if a graphics chip company won a design win at the top-end of the computer market, it was likely that the graphics chip would still be used as the computer fell to the low-end market. But in the new computer market, many computers are specially designed for the low-end, low-cost market and ATI has been strong at landing deals in this area, McCarron said. A greater threat to ATI comes from the new integrated chips that combine logic and graphics into one chip. These are aimed at low-cost computers. These new chips are being developed by many companies including ATI and Intel. In the next couple of years he expects integrated chips to replace stand-alone graphics chips in the low-end market. Analysts that follow ATI point out that there is short pressure on ATI. The ATI short position as of Aug. 15 on the Toronto Stock Exchange was 182,175 shares, down 25,487 from two weeks previous. On Nasdaq, the short position as of Aug. 13 was 8.1 million shares, up from 7.7 million the previous month. There has been some speculation about Nvidia winning Dell business. In an Aug. 20 research note, Research Capital Corp. analyst Brian Antonen wrote: "Although we expect ATI to continue to grow its overall market share, investors should expect that there will be some shuffling of graphics vendors in the major accounts. We feel that the biggest threat to ATI is Nvidia. We think that Nvidia will take a piece of the Dell Optiplex line of corporate PCs from ATI and when this is announced, investors are sure to view it negatively." In the note, he maintained his "buy" rating on ATI. Trading in ATI's stock is still halted. -Scott Adams; 416-306-2026; scott.adams@dowjones.com PHIL