UPDATE 2-Nvidia's 3rd-qtr revenue outlook exceeds expectations

Thu Aug 7, 2014 5:27pm EDT

(Adds detail on results, analyst's comment, background)

By Noel Randewich

SAN FRANCISCO Aug 7 (Reuters) - Nvidia Corp posted higher fiscal second-quarter earnings on Thursday and gave a forecast for current-quarter revenues that exceeded Wall Street's estimates, sending shares of the graphics chipmaker higher in after-hours trade.

The outlook in the PC industry has brightened following news that PC shipments were flat in the June quarter, a better-than-expected result.

Nvidia relies on selling graphics chips for PCs for most of its business but it is also making inroads into cars and data centers, seen as potentially faster-growing markets for its chips.

In the second quarter, revenue from Tegra chips for automobiles and mobile devices jumped 200 percent to $159 million.

"They're doing better than their peers.  The Tegra number was better than expected," said FBR analyst Chris Rolland.

After struggling to compete against larger chipmakers like Qualcomm in smartphones and tablets, Nvidia has increased its focus on using its Tegra chips to power entertainment and navigation systems in cars made by companies including Volkswagen's Audi, BMW and Tesla.

Nvidia in July launched its own tablet aimed at game enthusiasts, called Shield, with Tegra chips and other high-end components, bucking an industry trend toward commoditized, inexpensive devices.

Nvidia has also made progress into cloud computing data centers, with IBM, Dell and Hewlett-Packard offering servers with Nvidia chips. Its GRID graphics technology for data centers is also being tested by other potential enterprise customers.

The Santa Clara, California company reported second-quarter revenue of $1.1 billion, up 13 percent from the year-ago quarter as it expanded its focus on cars and cloud-computing.

For the current quarter, Nvidia said it expects revenue of $1.2 billion, plus or minus 2 percent. Analysts on average expected second-quarter revenue of $1.1 billion and third-quarter revenue of $1.16 billion, according to Thomson Reuters I/B/E/S.

Nvidia's net income in the second quarter, which ended on July 27, totaled $128 million or 22 cents per share, compared with $96 million, or 16 cents a share, in the year-ago quarter. Analysts on average expected 20 cents.

Non-GAAP earnings per share were 30 cents.

Nvidia said it expects third-quarter GAAP and non-GAAP margins of 55.2 percent and 55.5 percent, respectively.

Shares of Nvidia rose 3.9 percent in extended trade after closing down 1 percent at $17.46 on Nasdaq. (Reporting by Noel Randewich; Editing by Paul Simao and Gunna Dickson)

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Comments (1)
M.CH wrote:
Tegra 4 now has a total of 23 design wins
The competition, Qualcomm Snapdragon 800+801, now has a total of 292 design wins

Note that 23/292 gives a ratio of 12.7 to 1, actually quite similar to the ratio between Qualcomm’s market cap at 121.6B and Nvidia’s at 9.87B…

But now for the new Tegra K1 processor:
Tegra K1 has a total of 4 design wins
Xiaomi Mipad
Google Nexus 8
Microsoft Surface 3
Acer CB5 Chromebook

The comptetition, Snapdragon 805 has a total of 3 design wins
Samsung Galaxy Note 4
Samsung Galaxy S5

For the first time ever, Nvidia has a slightly greater number of design wins to Qualcomm, per comparable product, instead of the usual 10 or 15 to 1 ratio. The recent announcement by chinese authorities that Qualcomm would be treated as a monopoly may push certain chinese makers to go with Nvidia, which may accelerate the increase in Tegra’s market share.

If Nvidia does, over a year for example, take over 10% of Qualcomm’s 6.81B/quarter market share, 681M USD would represent a 62% increase in revenue. In terms of market cap this would, when it occured, value Nvidia’s stock at 28.6 USD instead of today’s 17.7 USD…

Aug 07, 2014 5:59pm EDT  --  Report as abuse
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