By Noel Randewich
SAN FRANCISCO Nov 8 Graphics chipmaker Nvidia
initiated a quarterly dividend that helped send its
shares higher and forecast quarterly revenue below expectations
as it pushes further into a growing tablet market to offset weak
With PC sales suffering from economic uncertainty and a
growing consumer preference for tablets, Nvidia has staked its
future on leveraging its graphics expertise to make
high-performance processors for mobile devices.
The company has made inroads in tablets but competition from
larger rival Qualcomm has Wall Street concerned the
company may struggle to keep its mobile business growing fast.
Nvidia said it was initiating a quarterly dividend of 7.5
cents a share.
"They're joining the party. Most of their peers pay
dividends and now they are too," said Alex Gauna, an analyst at
JMP. "The investment community is very conscious of companies
returning capital to investors and they're listening to their
Nvidia's Tegra 3 mobile processor is used in Google's
Nexus 7, one of only a handful of tablets to make
inroads against Apple's iPads. The Tegra 3 chip is also used in
Microsoft's recently launched Surface tablet.
But Apple's recent launch of the iPad mini, which
uses Apple's own processors, could cut into sales of the Google
and Microsoft devices, analysts believe.
Nvidia's consumer products revenue, the bulk of which comes
from the Tegra business, grew 28 percent, year over year, to
$243.9 million and accounted for a fifth of Nvidia's business in
the third quarter.
Its traditional PC graphics chip business grew 15 percent
versus the year-ago quarter. In that business, Nvidia is
believed to be taking some market share from rival Advanced
Micro Devices with its most recent components.
The Santa Clara, California, chipmaker reported
third-quarter revenue of $1.204 billion, up from $1.066 billion
in the year-ago quarter.
It said revenue in the current quarter would be between
$1.025 billion and $1.175 billion.
Analysts were expecting revenue of $1.193 billion for the
quarter ended in October and $1.206 billion for the quarter
ending in January, according to Thomson Reuters I/B/E/S.
Third-quarter net income was $209 million, or 33 cents a
share, up from $178 million, or 29 cents a share in the same
quarter last year.
Non-GAAP earnings per share were 39 cents.
Shares of Nvidia rose 1.34 percent in extended trade after
closing up 0.6 percent at $12.68 on Nasdaq.