ATI Technologies

(ATYT)

was under pressure Tuesday as investors sweated revenue growth that was slightly below what Wall Street had forecast.

The Markham, Ont., microprocessor maker earned $63.7 million, or 25 cents a share, in the three months ended Nov. 30, up about 34% from earnings of $47.4 million, or 19 cents a share, last year. Revenue in the first quarter rose 31% from a year ago to $613.9 million.

Excluding the cost of stock-based compensation, ATI earned $71.4 million, or 28 cents a share, beating the Thomson First Call consensus by a penny. But the company's top line came in about $13 million below the consensus estimate of $627.0 million and the shares were recently down 9 cents, or 4.5%, to $19.29.

Among its segments, ATI said, revenue from its personal-computer chip division rose 20% from a year ago, while total notebook revenue rose by about the same percentage. Handset chip revenue rose 80% from a year ago "due to a growing number of design wins and robust market demand for feature phones in general.

"Revenues from digital television products grew dramatically based on market growth, design wins and the continued penetration of our products among top digital TV manufacturers," the company said.

For the current quarter, ATI's second, the company expects revenue to be within $20 million of the first quarter's. Analysts surveyed by Thomson First Call were forecasting earnings of 23 cents a share in the February quarter on sales of $591.9 million.

"We expect gross margin in the second quarter to be approximately the same as the first quarter of fiscal 2005 as improved PC margins should offset seasonal weakness of our consumer products and game console businesses," the company said.