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Xbox 2 Rumor Sends ATI Shares Higher

Posted by simoniker on from the non-story-turns-into-story dept.

In a slightly bizarre turn of events, a rumor that appeared to start on UK games site Spong.com, claiming that ATI may be providing the graphics chip for the Xbox 2, replacing current provider Nvidia, has ended up significantly affecting ATI's stock price, sending it up over 5 percent on a day when many other tech stocks lost ground. As an analyst quoted in the Yahoo article suggests, "..we think it's a decision that has not been made yet and it is purely speculation to guess as to who may or may not win." But that doesn't seem to have stopped investors acting as the rumor gathered steam and percolated through more major news sites.

15 comments

  1. First post by Anonymous Coward · · Score: 3, Insightful

    It's sad that investors react so strongly to a rumor that the second place console maker might use a product in their next console.

    Then again, I've always said that the XBox is just a very expensive piece of marketing for the XBox2.

  2. Heh... by mbogosian · · Score: 3, Insightful

    ...ATI may be providing the graphics chip for the Xbox 2, replacing current provider Nvidia, has ended up significantly affecting ATI's stock price....

    That is until investors figure out that ATI will get screwed when Microsoft leaves them with a bunch of useless inventory and no recourse just like they did with nvidia....

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    1. Re:Heh... by Anonymous Coward · · Score: 0

      ATI doesnâ(TM)t manufacture the flipper chip for Nintendo. They receive a license fee for each chip that NEC manufactures. I suspect, if this rumor turns out to be true, they will have learned from the nVidia fiasco and their dealings with Nintendo and avoid similar problems. You are correct that investors should be worried until more details emerge.

    2. Re:Heh... by bmnc · · Score: 1

      Maybe the reason Ati might be providing the graphics chip is because Nvidia has been burnt once, and doesnt want anything to do with M$. Or rather, Nvidias prices for M$ have gone up for a prospective XBOX2 ;)

  3. Not very uncommon by TripleA · · Score: 1, Offtopic

    The whole IT-boom and crash three years ago was all about expectations and rumors too.

  4. Next up: by Slime-dogg · · Score: 1

    Stocks in STMicroelectronics soar as the decision to use the next generation of Kyro graphics cards in the XBox is made. STMicro no longer produces the card, and isn't even really a part of the industry, but investors insist on bringing back the company.

    Parties on the MS side are saying "Yay! Tile graphics. Something different and literally Cool!" Well, that's what STMicro would like them to say.

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  5. Better sell on Monday. by Anonymous Coward · · Score: 0

    This won't last long.

  6. I bet Nintendo isnt too happy about this... by Anonymous Coward · · Score: 3, Interesting

    seeing how ATI is also providing them with a graphics chip for their next console.

  7. The real lesson here... by Imperator · · Score: 1

    ...is how easy stock manipulation is these days. I wouldn't be surprised if the rumor were incited by someone who had just purchased lots of ATI stock. This sort of thing happens all the time, and is rarely prosecuted. Look at what SCO is doing for an example of stock manipulation being done by the company itself--a "pump and dump" scheme for the executives.

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  8. Cutting Cost by laserlights2000 · · Score: 0

    Well, Microsoft needs to do something in order to cut cost, and ATI produces, with cost lover than nVidia. For the first xbox, nVidia was a last minute desision, I believe. Similar to Intel and AMD, Microsoft is MAKING them compete, create new technoglogy with lower prices.

  9. Warcry's Article by Bruha · · Score: 2, Informative

    You can read the Warcry News Network's article at http://www.warcry.com

    Commentary and points to the original article.

  10. Xbox 2 Info from Inside by Anonymous Coward · · Score: 1, Informative
    Working at Microsoft Games Research, I can tell you a few things (anonymously ofcourse). The codename for it is Xenon. We are considering using wireless controllers (no specifics). We are also considering using two TV-outs (our focus group voiced that 4 people crunched together on one TV wasn't too enjoyable). The DVD will be front tray loading rather than on the top. Remote control on/off a possibility (from controller probably). It will be backwards compatible. The controller will be smaller. There will be an expansion slot. Most of the focus group said they weren't interested in web browsing or email with the console, so we will be more media centered.

    Other numbers to consider: In the US, Xbox is #2 with over a million units over GameCube. However, worldwide, Xbox is #3. GameCube has sold just a little over 300,000 units over Xbox.

  11. Strategy by alexo · · Score: 1

    ATI's margins on chips are much higher than their margin on cards. They are concentrating heavily on providing discrete components to OEMs, partners and other manufacturers.