SAN JOSE, Calif. — Following its proposed plan to be acquired by Advanced Micro Devices Inc. (AMD), ATI Technologies Inc. on Wednesday (Sept. 6) lowered its sales forecast by up to a staggering $140 million for the quarter.
Blaming a sudden drop in demand for Intel-based chipsets, graphics chip maker ATI (Markham, Ontario) said that consolidated revenue for the fourth quarter of fiscal 2006 is currently expected to be approximately $520 million.
The announcement stunned observers. This is $100-to-$140 million below estimates before AMD offered to buy the company.
ATI missed
Wall Street's projections for the third fiscal quarter. Given anticipated near-term PC market conditions, the company's revenues for the fourth quarter of fiscal 2006 in June were expected to be between $620-to-$660 million.
The anticipated revenue shortfall for the fourth quarter is due primarily to lower sales volumes of integrated chipsets for Intel-based platforms. In addition, handheld revenue was lower than expected, reflecting a supply chain adjustment by one of ATI's major customers.
"While we anticipated a decline in future Intel-based chipset business following the announcement of the acquisition agreement with AMD, the decrease occurred much sooner than we expected," said Dave Orton, CEO of ATI, in a statement. "Our other product lines are quite healthy and the response to our recent handheld, digital TV and GPU product announcements has been extremely positive from both customers and from the overall market."
As reported,
AMD said that it would acquire graphics specialist ATI for about $5.4 billion. Following that announcement, Intel removed ATI's chipsets from its roadmap. ATI also scrapped the launch of its 65-nm chipsets optimized for Intel's processors, according to the Commercial Times in Taiwan.
On Wednesday, AMD and ATI announced that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, relating to the proposed acquisition of ATI by AMD, has expired.
In addition, the Commissioner of Competition issued an advance ruling certificate in connection with the proposed acquisition under the Canadian Competition Act, and the German Federal Cartel Office likewise has cleared the transaction. As a result, the conditions to the acquisition relating to U.S., Canadian and German antitrust approvals are now satisfied.
The proposed acquisition remains subject to the approval of ATI shareholders, court approval of the plan of arrangement, and certain other regulatory approvals, including approval by the Minister of Industry under the Investment Canada Act and prior clearance under competition laws in Taiwan, as well as other customary closing conditions. The transaction is expected to be completed during ATI's first quarter of fiscal 2007, which ends Nov. 30.
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