ATI Slashes Revenue Expectations, Faces Plethora of Class-Action Suits.

[zippyjuan]

ATI Slashes Revenue Expectations, Faces Plethora of Class-Action Suits.
ATI’s Profit to Be Below Estimations, Company Sued

Category: Video

by Anton Shilov

[ 08/30/2005 | 08:49 AM ]


ATI Technologies on Monday reduced its revenue guidance for the fourth quarter of fiscal 2005 to a range much lower compared to the same period last year. In addition, numerous shareholders have filed class action suits against the graphics giant accusing the firm of misrepresenting its positions.

“This has clearly been a challenging and disappointing quarter for ATI and we are committed to resolving our operational issues. Despite our short term difficulties, we are optimistic about the future. We continue to gain traction in our integrated and consumer businesses,” said David Orton, President and Chief Executive Officer of ATI Technologies.

ATI now expects revenues for the fourth quarter to be in the range of $465 - $480 million, compared to the expected range of $550 - $580 million provided on June 23, 2005. Gross margin percentage for the quarter is expected to be in the single digit range, which includes an inventory writedown that is expected to be approximately $60 - $70 million. Operating expenses, excluding the costs associated with stock-based compensation, are expected to be in the range of $143 - $148 million, which is in line with guidance.

ATI reported revenues of $572.2 million for the fourth quarter of fiscal 2004 (ended August 31, 2004), a 50.3% increase over the fourth quarter a year earlier.

Numerous law firms on behalf of ATI’s shareholders have filed at least seven class action suits against the company. The accusations, claim that that ATI substantially relied on its high-end offerings to fund other parts of its business; that the company’s high-end offerings failed to offset the negative impact of weak gross-margins and declining average sales prices in consumer electronics; that the company, due to production and design issues, was late to the market with its R520 chip, thereby losing market share to both NVIDIA Corp. and Intel Corp. which caused downward pricing pressure for ATI; that ATI’s inventory levels were at a historic high, while current sales levels were insufficient to support the existing cost base; and that the defendants’ positive statements about the company’s progress and future growth lacked in all reasonable basis.

[Bires]

greedy shareholders...

[clutchy]

so now you can get sued if your company doesn't make money?

that sounds pretty ridiculous to me. I thought it was self explanatory that the market does not always go up obviously some people lose money suing the company will only drive it into the ground... nice really nice.

[shocky123]

The lawsuits likely are more oriented towards trying to prove that ATI's financial situation is more-or-less caused by neglegence/intent. Which, by that huge list of fairly basic business practices and principles.. might make a decent case for some of the share-holders who lost big because "ATI was neglegent".. and lost moneys..

who knows.. with the legal system nowadays, it could go either way regardless of physical proof.

~Kyle