ATI FY2006Q1 Results and Conference Call

[Geo]

http://ir.ati.com/phoenix.zhtml?c=105421&p=irol-newsArticle&ID=798067&highlight=

At least they are back in the black. Tho margins are still below Orton's magical 30% at 28.7% and predicted to go down another point this quarter. Conference call notes to follow (should start momentarily).

 

[Druga Runda]

I am not afraid that they are going out of business anytime soon, but pre 9700 I think that was a real possiblity.

 

[neliz]

and word on "future performance"?

 

[Geo]

and word on "future performance"?

Not yet. Assuming R580 is X1900, they are burying it in "X1K family". Haven't reached Q/A yet tho.

Edit: "Over the next 30 days you'll see us recapture the high-end performance . . .from ourselves". That sounds like R580

 

[neliz]

Thanks..

I expect a full report on my desk next morning.

Edit: lol

 

[Bouncing Zabaglione Bros.]

Any hints on the RD580 launch and availability timescale?

 

[_xxx_]

Not yet. Assuming R580 is X1900, they are burying it in "X1K family". Haven't reached Q/A yet tho.

Edit: "Over the next 30 days you'll see us recapture the high-end performance . . .from ourselves". That sounds like marketing bull

Corrected!

But interesting, now we can be quite sure that R580 is here within a month! Nice. I assume nV will follow shortly after. Now if we only had any serious info on G71...

 

[neliz]

Corrected!

But interesting, now we can be quite sure that R580 is here within a month! Nice. I assume nV will follow shortly after. Now if we only had any serious info on G71...

Twist it and read that R580 will launch before G71!

R580 will take over the crown of R520OC and G71 will challlenge the R580..but G71 won't have the upper hand in image quality.. so THEY will take the performance crown again..

 

[Geo]

Corrected!

Clearly was intending that as their slammie on GTX512 availability.

 

[Geo]

Conference call --As always, idiosyncratically selected and as best as my ears could tell me.

Orton:

"All product lines grew". Desktop grew 25%

Great Strides. Return to leadership. All desktop reached volume shipments. X1800XT clear peformance leader for any part shipping in volume (heh!). 10's of thousands shipped. Great sell-thru.

Crossfire highest performing multi-gpu in market.

Desktop channel was a growth driver. Sales up over 50%. Desktop chipset a year ago was in "rounding error", now approaching 10% total, higher in AMD.

Handheld shipping on new platforms.

Reached 10 million shipments in hdtv.

XB360 demand overwhelming.

Margins improving. Desktop improved. Old products still dragging it down. Over 50% of business will be X1K in Q2.

Operationally approved predictability and agility significantly. Better prediction tools.

CFO:

PC 79% of total revenues. Desktop discrete 50% of that. Desktop up 35%.

Sales of X1K less than 10% of company revenues in quarter [quarter ended Nov 30, so that makes sense].

Chipset up 30%

XB360 royalties have started. Royalties in quarter $10M, including revenues from Nintendo.

Chipset margins still improving a bit. Chipsets predicted to be 25% of revenue in 2Q.

Inventory $331M. Repurchased shares during quarter of $5.7M. Cash $608M on hand.

[Assuming R580 is X1900, then they are burying it in "X1K" family results]

Orton:


Other than chipset, they expect to be where they want on margins exiting Q2.
"Over the next 30 days you'll see us recapture the high-end from ourselves."

Edit: B3D front page is reporting he said "ninety" instead of "thirty" here. Don't know if that's from a transcript. I've gone back and listened three times and I still can't tell which he said (he was teleconned in from Santa Clara which didn't help).

QA

Blended chipset margins in mid-teens. How do you get to targets? A: Back end costs (substrates) are going up up making it harder. Really need next gen 600 family to achieve chipset margins.

Pricing environment? A: Pricing OEM level at design win. Market reasonably stable. Channel is more variable.

X1000 gross margins? A: In the range we've talked about right from the start. Costs will improve so margins will improve. [dance, dance, dance]

Chipset with Intel? A: Q1 is still higher in AMD. A little short on supplies couldn't fulfill. "Strong opportunity" in CY 06.

Desktop discrete growth? ASP low midrange of their target. Good unit growth. 20% increase in units, largely due to X1K.

Marketshare in channel start turning around? A: FYQ2 one direction and that's up, "including new 580".

"Introduction of 580 in quarter" going to help Q2 revenue (quarter ends Feb 28).

Notebook? A: Expecting to stay in 60-70% marketshare range going forward.
++++

So my read is they sound very confident of having R580 announced by late January and racking up sales in numbers material to revenue during February --See EDIT above.

 

[neliz]

This would confirm l'inqs rumour that RD580 and R580 are launched at the same time.. giving a 2x16PCIe crossfire setup "performance leadership"

 

[Geo]

This would confirm l'inqs rumour that RD580 and R580 are launched at the same time.. giving a 2x16PCIe crossfire setup "performance leadership"

There was a bit more on Crossfire in that early part, but either he had mumbleitis or I had "morning ear", and didn't get it in real time. I usually do these things from recording and go back and forth as often as necessary, but this was real time today.

 

[kemosabe]

As usual, geo, a very thorough account of the facts. Just finished listening to the CC myself and found that things are slowly getting back on track for ATI financially, but the sheer volume (and unfavourable cost structure) of their integrated chipsets is like an anchor on those gross margins. There's no longer any doubt about the R580 January launch. I was surprised by the confidence with which Orton claimed very strong forward visibility for maintaining 60-70% market share in the notebook segment. The battlefield is ripe for more bloodletting.

 

[neliz]

geo, would it be about the 1900's having crossfire 2, i.e. no more dongle? probably something like advanced crossfire support, i.e. allowing it to work on non ati chipsets etc..

oh well.. we'll see...

 

[_xxx_]

geo, would it be about the 1900's having crossfire 2, i.e. no more dongle?

No idea, but I highly doubt it. They're probably happy they got it working at all so far, methinks (no pun intended). I can see something like that in the next refresh or R600 maybe.

EDIT:
Unless 2x16 PCI-E has enough throughput to leave the dongle away, but as I get it that's not the case. Anyone in the know?

 

[rwolf]

Thanks for the summary Geo.

 

[neliz]

EDIT:
Unless 2x16 PCI-E has enough throughput to leave the dongle away, but as I get it that's not the case. Anyone in the know?

2x1600xt's outperform the 1800xl and don't require a dongle.
If xl's and xt's are not PCIe bandwidth limited yet, doubling the available bandwidth would allow some spare room for crossfire wouldn't it?

 

[Arty]

Clearly was intending that as their slammie on GTX512 availability.

Thanks for the summary geo.

 

[Moloch]

2x1600xt's outperform the 1800xl and don't require a dongle.
If xl's and xt's are not PCIe bandwidth limited yet, doubling the available bandwidth would allow some spare room for crossfire wouldn't it?

Link

 

[Geo]

This would confirm l'inqs rumour that RD580 and R580 are launched at the same time.. giving a 2x16PCIe crossfire setup "performance leadership"

I have to say that I didn't get that from the call. But I would agree that the "penumbra from the emanations" from various sources lead me to believe this is more likely to be true than not. FWIW. I wouldn't bet the mortgage on it, but if I was a little lickered up I'd risk some disposable income on it.