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Nvidia Results Top Estimates; Outlook Weak

Nvidia Results Top Estimates; Outlook Weak
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Graphics chip maker Nvidia Corp. (NVDA: Quote) said Thursday after the markets closed that its first quarter profit rose 29% from last year, helped by higher revenue and improved margins.

The company's quarterly earnings per share also came in above analysts' expectations as did its quarterly revenue. However, the company forecast second quarter revenue below analysts' current consensus estimate.

"The success of Kepler-based GPUs within and beyond the PC helped drive another quarter of record margins," said Jen-Hsun Huang, president and chief executive officer of Nvidia. "Kepler is capturing share among gamers, strengthening our workstation and supercomputing segments, and will fuel new growth opportunities for our GRID server graphics solutions. With Tegra 4 devices and Tegra 4i certification on the way, we're gearing up to return to growth in the second half."

Nvidia shares are currently gaining 1.15% in after hours trading after closing the day's regular trading session at $13.91, up a penny. The shares trade in a 52-week range of $11.15 to $15.22.

Nvidia specializes in graphics processing units for PCs, but recently it has also been making inroads into the mobile computing market through its Tegra chips.

Earlier this year, the company launched Tegra 4, the world's fastest mobile SOC and the first quad-core A15 SOC.

For the first quarter ended April 28, 2013, the Santa Clara, California-based company reported net income of $77.9 million or $0.13 per share, compared to $60.4 million or $0.10 per share for the year-ago quarter.

Excluding items, adjusted net income for the first quarter was $113.8 million or $0.18 per share, compared to $97.5 million or $0.16 per share in the prior year quarter.

On average, 29 analysts polled by Thomson Reuters expected the company to earn $0.10 per share for the first quarter.

Revenue for the first quarter rose 3.2% to $954.74 million from $924.88 million in the same quarter last year. First quarter revenue fell 13.7% sequentially. Twenty-eight analysts had a consensus revenue estimate of $940.54 million for the first quarter.

Gross margin for the quarter improved to 54.3% from 50.1% a year earlier, while adjusted gross margin increased to $54.6% from 50.4% last year.

The company has said previously that it plans to return in excess of $1 billion this fiscal year to shareholders in the form of share repurchases and quarterly dividend payments. During the first quarter, Nvidia repurchased $100 million of stock and paid $46.3 million of dividends. As part of its capital return program, the company plans to continue its quarterly dividend program at $0.075 per share and to return additional cash of at least $750 million during fiscal 2014, largely through a structured share repurchase program.

The company said it will pay its next quarterly cash dividend of $0.075 per share on June 14 to all shareholders of record on May 23.

Looking forward, the company forecasts second quarter revenue of $975 million, plus or minus 2%. Analysts currently expect the company to post revenue of $1.01 billion for the second quarter.

Reported and adjusted gross margins for the second quarter are expected to be flat relative to the prior quarter, at 54.3% and 54.6%, respectively.

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by RTT Staff Writer

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