Enviado: 12/10/2004 13:53Ertai,
Na minha intervenção aqui no Fórum procuro sempre, não só partilhar a minha opinião e análise pessoal, como disponibilizar research e informação, bem como artigos de opinião, de outras fontes, desde que ela seja identificada, de fontes fidedignas, com interesse, e no âmbito do forum.
O meu objectivo é garantir aos leitores do Fórum acesso rápido a informação actualizada e pertinente, sobre os titulos aqui discutidos, para dessa forma estarem em melhores condiçoes de tomarem as suas decisões de investimento pessoais.
Curiosamente o artigo que disponibilizei levantou bastante celuma pelo que o autor decidiu escrever novo artigo que aqui coloco:
PS: parabéns pela MACR, quais são os titulos que tem debaixo de olho actualmente?
More on ATI
Tim Goh
My article on ATI sure brought up a storm of discussion, both in e-mail feedback and on the Yahoo! board.
Let me sum up my response in a nutshell: I did not recommend shorting ATI. Heck, I did not even recommend staying away from ATI. What I did was report the news on ATI’s excellent quarter, and highlight a couple areas for investors to look at. Investment banks are falling over themselves to upgrade ATI, and I feel investors need both sides of the story – a balanced view. There is a huge difference between the headline of “ATI’s Success is Doomed” and my headline of “Is ATI’s Success Doomed?".
The goal of the article was to bring up areas of concern for readers to further investigate (an in-depth dissection of the company would take several pages, which is not the format of the Fool Take). If after reading through the areas of concern you eventually decide that ATI can overcome them, then more power to you – I will have accomplished my goal. If readers are more wary after reading the Take and doing their own due diligence, that’s fine too. As I mentioned earlier, the point is to provide both sides of the story and let investors decide for themselves.
Oh, and some people took pains to highlight that ATI has been doing well both in revenue and income. Yes I’m very aware that ATI has done superbly over the past two quarters. I acknowledged that at the beginning of the article, and also pointed out areas for optimism. However, my concerns are about future earnings, especially in the light of ATI sharply raising first quarter guidance.
Ok, now more on the three risks I brought up.
Many have said that the increase in accounts receivable is irrelevant. Right now, it is still very premature to decide if these numbers are condemning. All I said was that the numbers should be watched. As for the relevance of the numbers, put it this way: ATI thought it was significant enough to mention the increase and provide an explanation for them (about 5 minutes into the conference call). By doing so they pre-empted any questions about these numbers. Like I said, it is still early, but should increases in accounts receivable constantly outpace increase in sales, that is a recipe for disaster. Look at Oracle’s near collapse around 1990.
ATI’s past two quarters has shown it taking advantage of its recent success in head-to-head comparisons with Nvidia. They have executed well, no doubt about that. It is no coincidence that Nvidia has suffered during this period. As an ATI investor, you have to be aware of the risk of a reversal if Nvidia catches up. Yes, I am aware that ATI may currently do better on Game X or Game Y. So what? The concern I expressed was for the next generation of games (ie the next battlefield between ATI and Nvidia). Nvidia’s strong performance in Doom III is a turning point. The possibility that many future games license Doom III’s engine is very real, and that may be a catalyst (no pun intended) for Nvidia taking a temporary lead. Thus it is important for those interested in ATI to keep tabs on this.
There are some who said Half-Life is not based on an id Software engine. I was referring to the original Half-Life (do you see a “2″ following it in the article?). Check id Software’s website, heck call Valve and ask them if you like. The original HL was based on the Quake 1 engine, probably with some code from the Quake 2 engine. Half-Life 2 is a whole different ballgame. While the HL2 engine where ATI has an advantage may also be licensed out, I would think that the Doom III engine’s superior graphics and id’s pedigree will see Doom III ultimately having more licensees.
Last point about insider trading and management issues. Companies need good management (care to dispute this, anyone?). Should the insider trading charges be true, it means that the company’s management was not looking out for the best interests of shareholders. If you’re saying that management has been doing well anyway, consider the potential loss of some members of the board should convictions take place.
I think the market really shouldn’t perceive the battle between ATI and Nvidia as a zero-sum game. Each has their own advantages (ATI in DTV market, Nvidia with chipsets like nForce). It is true that they will continue leapfrogging each other in terms of graphics chip performance and fight over market share, but there is enough potential in the market for both companies to do well if they play to their strengths.
I hope this post clarifies some of the issues raised. If not, feel free to e-mail or comment.
timgoh@gmail.com
Na minha intervenção aqui no Fórum procuro sempre, não só partilhar a minha opinião e análise pessoal, como disponibilizar research e informação, bem como artigos de opinião, de outras fontes, desde que ela seja identificada, de fontes fidedignas, com interesse, e no âmbito do forum.
O meu objectivo é garantir aos leitores do Fórum acesso rápido a informação actualizada e pertinente, sobre os titulos aqui discutidos, para dessa forma estarem em melhores condiçoes de tomarem as suas decisões de investimento pessoais.
Curiosamente o artigo que disponibilizei levantou bastante celuma pelo que o autor decidiu escrever novo artigo que aqui coloco:
PS: parabéns pela MACR, quais são os titulos que tem debaixo de olho actualmente?
More on ATI
Tim Goh
My article on ATI sure brought up a storm of discussion, both in e-mail feedback and on the Yahoo! board.
Let me sum up my response in a nutshell: I did not recommend shorting ATI. Heck, I did not even recommend staying away from ATI. What I did was report the news on ATI’s excellent quarter, and highlight a couple areas for investors to look at. Investment banks are falling over themselves to upgrade ATI, and I feel investors need both sides of the story – a balanced view. There is a huge difference between the headline of “ATI’s Success is Doomed” and my headline of “Is ATI’s Success Doomed?".
The goal of the article was to bring up areas of concern for readers to further investigate (an in-depth dissection of the company would take several pages, which is not the format of the Fool Take). If after reading through the areas of concern you eventually decide that ATI can overcome them, then more power to you – I will have accomplished my goal. If readers are more wary after reading the Take and doing their own due diligence, that’s fine too. As I mentioned earlier, the point is to provide both sides of the story and let investors decide for themselves.
Oh, and some people took pains to highlight that ATI has been doing well both in revenue and income. Yes I’m very aware that ATI has done superbly over the past two quarters. I acknowledged that at the beginning of the article, and also pointed out areas for optimism. However, my concerns are about future earnings, especially in the light of ATI sharply raising first quarter guidance.
Ok, now more on the three risks I brought up.
Many have said that the increase in accounts receivable is irrelevant. Right now, it is still very premature to decide if these numbers are condemning. All I said was that the numbers should be watched. As for the relevance of the numbers, put it this way: ATI thought it was significant enough to mention the increase and provide an explanation for them (about 5 minutes into the conference call). By doing so they pre-empted any questions about these numbers. Like I said, it is still early, but should increases in accounts receivable constantly outpace increase in sales, that is a recipe for disaster. Look at Oracle’s near collapse around 1990.
ATI’s past two quarters has shown it taking advantage of its recent success in head-to-head comparisons with Nvidia. They have executed well, no doubt about that. It is no coincidence that Nvidia has suffered during this period. As an ATI investor, you have to be aware of the risk of a reversal if Nvidia catches up. Yes, I am aware that ATI may currently do better on Game X or Game Y. So what? The concern I expressed was for the next generation of games (ie the next battlefield between ATI and Nvidia). Nvidia’s strong performance in Doom III is a turning point. The possibility that many future games license Doom III’s engine is very real, and that may be a catalyst (no pun intended) for Nvidia taking a temporary lead. Thus it is important for those interested in ATI to keep tabs on this.
There are some who said Half-Life is not based on an id Software engine. I was referring to the original Half-Life (do you see a “2″ following it in the article?). Check id Software’s website, heck call Valve and ask them if you like. The original HL was based on the Quake 1 engine, probably with some code from the Quake 2 engine. Half-Life 2 is a whole different ballgame. While the HL2 engine where ATI has an advantage may also be licensed out, I would think that the Doom III engine’s superior graphics and id’s pedigree will see Doom III ultimately having more licensees.
Last point about insider trading and management issues. Companies need good management (care to dispute this, anyone?). Should the insider trading charges be true, it means that the company’s management was not looking out for the best interests of shareholders. If you’re saying that management has been doing well anyway, consider the potential loss of some members of the board should convictions take place.
I think the market really shouldn’t perceive the battle between ATI and Nvidia as a zero-sum game. Each has their own advantages (ATI in DTV market, Nvidia with chipsets like nForce). It is true that they will continue leapfrogging each other in terms of graphics chip performance and fight over market share, but there is enough potential in the market for both companies to do well if they play to their strengths.
I hope this post clarifies some of the issues raised. If not, feel free to e-mail or comment.
timgoh@gmail.com
