$13.77 from $1.52 is not 12 percent. You must be wrong, that 900% and I
doubt it went that high.
"Radeon350" wrote in message
om...
http://www.teamxbox.com/news.php?id=4727


After ATI said on Thursday it struck a deal with Microsoft to develop
graphics technology for the Xbox successor, shares of the
Ontario-based graphics chip maker jumped more than 12 percent at the
open on Nasdaq, rising $1.52 to $13.77 with more than 4 million shares
traded, making it the most active stock on the exchange. Meanwhile,
nVIDIA's stock fell 53 cents to $16.25.


The Agreement

"ATI's deal to develop next-generation graphics technology for
Microsoft Corp.'s Xbox successor will be structured as a royalty
agreement," said Rick Bergman, a senior vice president of marketing
and general manager of ATI's desktop business.

"We get funds for the actual development of the chip, and then in the
future when we actually ship devices, then yes, we get a royalty per
device," Rick Bergman, a senior vice president of marketing and
general manager of ATI's desktop business told Reuters in an
interview.

ATI already produces chips for Nintendo's GameCube under a royalty
agreement. Graphics chips for Microsoft's Xbox video game console are
currently supplied by ATI rival nVIDIA.

Industry Analysts Talk

"That is, in effect, an arrangement with no downside for ATI, unlike
Nvidia's relationship with Microsoft whereby it was essentially
selling chips in the normal model and, by our estimates, not likely to
have much actual earnings from the project," Brian Piccioni,
semiconductor analyst at BMO Nesbitt Burns Inc., said Thursday.

In a research report issued earlier this week on Tuesday, First
Associates Investment Inc.'s Dennis dos Santos said it has raised its
price targets for the company as "evidence mounts evidence that ATI
has overtaken Nvidia Corp. for industry leadership." Mr. dos Santos
said First Associates has a "buy" rating on the stock. He raised his
price target from $16 (Canadian) to $19.50 for ATI's shares in
Toronto. "We believe that once investors become convinced that the
leadership of the industry has changed hands, ATI will be accorded the
'industry leader's' premium multiple." He also noted that as the next
generation of gaming consoles are due for 2005 or 2006, major awards
would come this year. "A win with Microsoft would add between $0.10
and $0.20 per share to EPS, beginning in fiscal 2005," Mr. dos Santos
wrote.

"Microsoft is always particularly vague in terms of its press releases
and not spilling too much, but we are very confident that this in fact
represents the next generation of Xbox," said David Hodgson, an
analyst with Dundee Securities.

"nVIDIA has really given a lot of signals that they're trying to
distance themselves from Xbox2," Michael McConnell, an analyst for
Pacific Crest Securities, said earlier this summer. "That relationship
has really soured over the last year. Microsoft in general is just not
a very nice partner to deal with. I think the whole experience left
nVIDIA with a bad taste in their mouth."

"This decision marks a major victory for ATI, having beaten out the
incumbent Xbox graphics chips provider and archrival nVIDIA," Paul
Howbold, an analyst at Desjardins Securities Inc., wrote in a report.
Although Xbox will probably not be sold until the end of 2005, Mr.
Howbold raised his Nasdaq stock target price by $1.50 to between
$14.50 and $20 from between $13 to $18.

"nVIDIA didn't want to meet Microsoft's demands for the floating
design of Xbox Next. It didn't make sense to partner on the project.
At this moment in time, ATI is working with Microsoft," an nVIDIA
staffer said in June, according to Spong.com, which first broke the
story.

"nVIDIA had recently signaled the company wouldn't be interested in
pursuing the next-generation Xbox business", says Jon Peddie,
principal analyst for Jon Peddie Research. "The company recently said
it was looking to cut costs, and a number of industry observers have
indicated that Microsoft was looking for another partner".