Investing in the components of the PC industry can be tricky. Even Intel (NASDAQ:INTC), the CPU market's longtime leader, must now worry about its rejuvenated competitor AMD (NYSE:AMD).

In hard drives, memory, and other portions of the PC industry, the situation has been even worse, with a handful of players continually beating on each other. With all this as a backdrop, you can hardly fault investors for running away from video and graphics company ATI Technologies (NASDAQ:ATYT) after the company announced lackluster third-quarter results.

However, it's still debatable whether ATI's ongoing battle with graphics-technology rival and Motley Fool Stock Advisor pick NVIDIA (NASDAQ:NVDA) has actually taken a turn for the worse. ATI had a slight loss this quarter (versus a $0.19 profit per share a year ago) despite its total revenues rising 8%. The other glaring negatives for ATI are the large slug of inventory the company has accumulated, and lower margins, due largely to increased sales of lower-margin products in its PC business.

Slightly offsetting the quarter's negative aspects, ATI still managed to generate positive cash flow from quarterly operations, and has a cash war chest of $644 million against negligible long-term debt of $29 million. In addition, while the PC business is tough, the consumer side of the business appears poised for further growth, with sales to Motorola (NYSE:MOT), Microsoft (NASDAQ:MSFT), and Samsung, to name a few.

Despite all the negatives, I can think of worse places to invest in the realm of technology. ATI and NVIDIA still dominate their industry technologically, and both have relatively large cash hoards. As long as the two can keep the other graphics chipset designers on the industry's fringes, there's little reason why both cannot be profitable.

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Nathan Parmelee has no financial interest in any of the companies mentioned. You can view his profile here. The Motley Fool has an ironclad disclosure policy.