Outlook Sinks ATI Shares

Although it again did not give specific earnings guidance, ATI's outlook for expenses implies an earnings range of between 12 cents and 22 cents a share, depending on its tax rate.

The Street was expecting a much better outlook. The consensus forecast called for earnings of about 20 cents a share -- well above the midpoint of ATI's implied guidance -- on sales of about $694 million.

By segment, PC revenue rose 8.5% from a year ago to $499.7 million, while consumer revenue rose 120% to $152.6 million. ATI said its gross margin was 30.1% in the latest quarter, up from 29.1% a year ago.

The company's PC-sales were weighed down by soft sales of its flagship discrete graphics chips. Notably, sales of desktop discrete chips fell 10% in the quarter from the year-ago period. But discrete notebook chips also fell by an undisclosed amount.

Orton blamed the declines on a shift in sales in the PC industry in the quarter to lower-end machines, which typically include cheaper integrated graphics processors.