Sidney

SAN FRANCISCO (MarketWatch) -- ATI Technologies Inc. said after the market close Monday that its fiscal fourth-quarter revenue would come in substantially lower than previously forecast as a result of slow sales for desktop computer chips and a sizable inventory write-down.

The graphics chipmaker cut its fourth-quarter revenue forecast to a range of $465 million to $480 million, compared with its previous forecast of $550 million to $680 million. Analysts surveyed by Thomson First Call were expecting revenue of $560.9 million.

Shares of Markham, Ontario-based ATI were down 2.3% to $11.08 in after-hours trading.

ATI (ATYT) said its desktop product line sales slowed, both in units and average selling prices.

The company expects an inventory write-down of $60 million to $70 million, and its gross margin percentage to fall into single digit range from a previous prediction of 29% to 30%.

ATI also said operating expenses, excluding stock-based compensation costs, are expected to be in the range of $143 million to $148 million. The company did not offer a revised earnings forecast. Analysts had previously expected a profits 7 cents a share.

ATI will be providing the graphics processor units for the Xbox 360 video game console from Microsoft Corp. (MSFT), due out on shelves this holiday season.

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