ATI Probe Expected To Hurt Company

kinetic · Jan 17, 2003, 05:13 PM

Allegations may unsettle investors

SHOWWEI CHU

Friday, January 17, 2003

The proceedings initiated by the Ontario securities regulator against ATI Technologies Inc. and seven insiders, including founder and chief executive officer Kwok Yuen Ho, will hurt the company, an analyst said.

"Investors are not keen to invest in companies where there are allegations of questionable behaviour by insiders," said one analyst who follows ATI but requested anonymity.

Yesterday, the Ontario Securities Commission's enforcement arm alleged that ATI failed to disclose material information in a timely fashion. It accused three company officials and their spouses of illegal insider trading. It also alleged former legal counsel Sally Daub made a misleading statement to its staff during its investigation.

Company officials weren't available for comment but in a statement ATI said it takes these allegations "seriously." It also mentioned again that a special committee consisting of Paul Russo, who joined the board in January, 2002, is conducting an independent review of the matters.

"Until at least it's resolved, there's bound to be some level of anxiety and that is not good for a company's share price," the same analyst said.

ATI's stock dived 15 per cent or $1.35 yesterday to $7.50 on the Toronto Stock Exchange shortly after the OSC announcement.

Since ATI disclosed last month that the regulator was investigating the company, executives have repeatedly said it has no financial impact on ATI, and that the makeup of the current management is significantly different now with the appointments of chief financial officer Terry Nickerson and president and chief operating officer David Orton.

If Mr. Ho is determined to have violated securities rules, he may be forced to step down from the company, and that could also hurt the company's prospects, the analyst said. His relationship with Asian manufacturers of computers and laptops is very good given that he's been in the industry many years and founded ATI in 1985.

"He's been in the industry a long time and he probably has an outstanding rapport with these people," the analyst said. "I don't think it'd be a good thing for ATI's overall business prospects if it loses its grand ambassador."

ATI, one of the world's biggest graphics chip suppliers to computer manufacturers, thrived during the 1990s because of strong computer sales fuelled by the Internet boom and a need by corporations to upgrade computers to cope with the Y2K millennium bug problem. At its peak in fiscal 2000, ATI's annual sales soared to $1.37-billion (U.S.).

But in the past two years, as with other chip suppliers, ATI's outlook has soured with the contraction of the personal computer sector. It spent most of 2001 turning itself around by making big changes to the organization.

For fiscal 2003, ATI is expected to post a profit excluding acquisition-related costs of 17 cents a share on revenue of $1.1-billion, according to Thomson Financial/First Call.

Jan 17, 2003, 05:13 PM	#1
kinetic DriverHeaven Senior Member Join Date: May 2002 Location: Manchester England Posts: 2,559 Rep Power: 0	ATI Probe Expected To Hurt Company Allegations may unsettle investors SHOWWEI CHU Friday, January 17, 2003 The proceedings initiated by the Ontario securities regulator against ATI Technologies Inc. and seven insiders, including founder and chief executive officer Kwok Yuen Ho, will hurt the company, an analyst said. "Investors are not keen to invest in companies where there are allegations of questionable behaviour by insiders," said one analyst who follows ATI but requested anonymity. Yesterday, the Ontario Securities Commission's enforcement arm alleged that ATI failed to disclose material information in a timely fashion. It accused three company officials and their spouses of illegal insider trading. It also alleged former legal counsel Sally Daub made a misleading statement to its staff during its investigation. Company officials weren't available for comment but in a statement ATI said it takes these allegations "seriously." It also mentioned again that a special committee consisting of Paul Russo, who joined the board in January, 2002, is conducting an independent review of the matters. "Until at least it's resolved, there's bound to be some level of anxiety and that is not good for a company's share price," the same analyst said. ATI's stock dived 15 per cent or $1.35 yesterday to $7.50 on the Toronto Stock Exchange shortly after the OSC announcement. Since ATI disclosed last month that the regulator was investigating the company, executives have repeatedly said it has no financial impact on ATI, and that the makeup of the current management is significantly different now with the appointments of chief financial officer Terry Nickerson and president and chief operating officer David Orton. If Mr. Ho is determined to have violated securities rules, he may be forced to step down from the company, and that could also hurt the company's prospects, the analyst said. His relationship with Asian manufacturers of computers and laptops is very good given that he's been in the industry many years and founded ATI in 1985. "He's been in the industry a long time and he probably has an outstanding rapport with these people," the analyst said. "I don't think it'd be a good thing for ATI's overall business prospects if it loses its grand ambassador." ATI, one of the world's biggest graphics chip suppliers to computer manufacturers, thrived during the 1990s because of strong computer sales fuelled by the Internet boom and a need by corporations to upgrade computers to cope with the Y2K millennium bug problem. At its peak in fiscal 2000, ATI's annual sales soared to $1.37-billion (U.S.). But in the past two years, as with other chip suppliers, ATI's outlook has soured with the contraction of the personal computer sector. It spent most of 2001 turning itself around by making big changes to the organization. For fiscal 2003, ATI is expected to post a profit excluding acquisition-related costs of 17 cents a share on revenue of $1.1-billion, according to Thomson Financial/First Call.