ATI squeaks by first-quarter earnings expectations

ATI Technologies on Thursday returned to profitability in its first quarter, but missed revenue estimates and lowered its outlook.

Shares in the 3D graphics company slipped in pre-session trading on the Island ECN electronic trading network, off 6 cents to $5.94. In early trading on the Nasdaq, the stock was unchanged at $6.

The company, based in Markham, Ontario, reported earnings of $11.8 million or 5 cents per diluted common share, topping First Call estimates by a penny. Total revenue for the quarter was $350.5 million, which fell short of the analysts' consensus figure of $388.5 million.

Both earnings and revenue for the quarter, ended Nov. 30, fell compared with the same period a year ago, from earnings of 25 cents a share on revenues of $413.5 million.

Gross margins showed sequential improvement, increasing to 26.1 percent from 23 percent in the fourth quarter of 2000.

At the same time, ATI executives also cut their outlook for the second quarter because of the slump affecting the entire PC sector. The company said revenue is not expected to exceed $300 million, with earnings coming in around pro forma even. The revised numbers are well below First Call estimates, which have earnings pegged at 6 cents a share.

According to company executives, a general softening of demand and higher-than-usual inventories in the PC market have created an environment of price-competitiveness and volume uncertainty.

Company executives said they are adopting a conservative approach to earnings and revenue estimates over the next two quarters but remain confident about the potential for continued growth in new and developing markets.