ATI last night reported its highest quarterly sales yet. During the three months to 28 February 2006 - ATI's second quarter of fiscal 2006 - the graphics chip company realised revenues of $672m, up 13.7 per cent on the previous quarter and 10.5 per cent on Q2 FY2005's total.

It wasn't all good news, though. While the quarter's net income under Canadian GAAP rules - $34.1m (13 cents a share) - was up 159.2 per cent sequentially it was down 40.4 per cent on the $57.2m it earned in Q2 FY2005.

Gross margins were down to 28.2 per cent in the quarter, from 28.7 per cent in Q1 FY2006 and 34.2 per cent in Q2 FY2005.

PC-oriented sales accounted for 80 per cent of the quarter's revenues - the rest came from consumer applications, such as digital TV chips. PC revenues were down two per cent year on year thanks to lower demand for discrete desktop GPUs. Sales of notebook GPUs were down year on year too.

Consumers sales, by contrast, were up 127 per cent year on year, with handheld-product sales up 250 per cent and digital TV chips up 75 per cent, ATI said.

ATI said it expects Q3 FY2006 to yield sales of $640-680m - both well up on the $530m it posted for Q3 FY2005 - with gross margins rising to 30 per cent. ®