ATI Technologies slashes forecast for Q3 sales

ATI Technologies, the Ontario-based firm which will supply graphics chips for Microsoft's next-gen Xbox 360 console, has been forced to cut its forecast for third-quarter sales.

The company also posted a much lower forecast than expected for Q4, sending share prices dropping by 8 per cent to $14 on the Nasdaq index.

On March 24, ATI issued a Q3 revenue forecast of between $560 million to $600 million. The number now stands at $530 million, with operating expenses at $143 million and gross margin at around 29 per cent.

Fourth-quarter revenues are estimated at around $600 million - over $60 million less than analysts predicted, according to Reuters.

ATI blamed the lower forecasts on changes in the market, stating: "While we believe end-user demand remains stable, a product mix shift in the quarter toward the lower end of the desktop and notebook discrete market caused revenues to come in below expectations."

However, ATI also stated that unit sales were up, with its personal computer business posting unit growth of around 5 per cent.

The news of a cut in forecasts follows comments made by ATI boss Dave Orton at a seminar last week, where he described the company as starting "to look much more like a PC/digital consumer company, not a PC company that's dabbling in digital consumer." The full story can be found here.

ATI is expected to post third-quarter results on June 23.