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Nvidia Results Top Estimate; Outlook Weak

Nvidia Results Top Estimate; Outlook Weak
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2/15/2012 5:54 PM ET

Graphics chip maker Nvidia Corp. (NVDA: Quote) said Wednesday that its fourth quarter profit fell 32% from last year, when results were boosted by a hefty gain from a legal settlement with Intel Corp. (INTC). Fourth quarter revenue grew 7.5% from a year earlier.

The company's quarterly earnings per share, excluding items, came in above analysts' expectations as did its quarterly revenue.

However, the company forecast first quarter revenue below analysts' current consensus estimate.

Nvidia shares are currently down 5.44% in after hours trading after closing Wednesday's regular trading session at $16.17, down 7 cents. The shares trade in a 52-week range of $11.47 to $26.01.

Following the June 2011 acquisition of Icera, Nvidia currently offers the two main processors used in smartphones. They are the applications processor, in the form of the NVIDIATegra super chip, and the baseband processor, based on Icera technology.

Nvidia, which launched Tegra 3 last year, the world's first quad-core processor for super phones and tablets, is betting high on the chip.

During the fourth quarter, the company's Tegra 3 processors started shipping to consumers in the Asus Transformer Prime tablet. The tablet is the first to run Android 4.0, "Ice Cream Sandwich." Asus has also announced a $249 tablet to be based on Tegra 3.

However, new mobile processors from rivals Texas Instruments Inc. (TXN) and Qualcomm Inc. (QCOM) is expected to give Nvidia a tough fight. Moreover, Nvidia's processors have struggled in a market dominated by Apple Inc.'s (AAPL) iPad tablet, which relies on processors designed by Apple itself.

Nvidia had lowered its revenue fourth quarter outlook last month, citing a global disk-drive shortage due to flooding in Thailand and a more than expected decline in business for the company's Tegra 2 processor.

For the fourth quarter, the Santa Clara, California-based company's net income fell to $116.0 million or $0.19 per share, compared to $171.7 million or $0.29 per share for the year-ago quarter.

Excluding items, adjusted net income for the fourth quarter increased to $158.1 million or $0.26 per share from $142.4 million $0.24 per share in the prior year quarter.

On average, 30 analysts polled by Thomson Reuters expected the company to earn $0.19 per share for the fourth quarter. Analysts' estimates typically exclude special items.

Reported gross margin for the quarter improved to 51.4% from 48.1% a year earlier, while adjusted gross margin increased to 52.5% from 48.3% last year.

Fourth quarter revenue rose 7.5% to $953.19 million from $886.38 million in the same quarter last year. Twenty eight analysts had a consensus revenue estimate of $950.51 million for the fourth quarter.

"I am pleased with our achievements last year. Our GPU business grew sharply. And, with the success of Tegra, we established our position in the mobile market," said Jen-Hsun Huang, president and chief executive officer of NVIDIA.

Looking forward, Nvidia forecast first quarter revenue of $900 million to $930 million. Analysts currently expect the company to post revenue of $944.85 million for the first quarter.

Reported gross margin for the first quarter is expected to be 49.2%, plus or minus 1 percentage point; while adjusted gross margin is expected to be 49.5%, plus or minus 1 percentage point.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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