* Q1 EPS 10 cents, in line with Street view
* Q1 rev $924.9 mln vs Street view $916 mln
* Says 28 nanometer constraints limiting revenue
* Shares up 9 pct on Nasdaq
By Sinead Carew
May 11 Nvidia Corp's quarterly revenue
and outlook were ahead of low Wall Street estimates on
better-than-expected sales of its latest graphics chips, sending
its shares up 9 percent.
The chipmaker reported strong demand for its newly launched
chips for desktop computers and contract wins for its Tegra
smartphone chips but said revenue and profit is still being
limited by supply constraints and macro economic issues.
The revenue surprise came off very low expectations as
Nvidia had warned in February of weak sales linked to capacity
constraints and new competition in cellphone chips as a big
customer became a competitor.
"There was a lot of fears going into the call that supply
constraints would continue to be an issue. It wasn't was bad as
feared," said Pacific Crest analyst Michael McConnell.
However, the analyst said even though Nvidia was seeing good
demand from its phone and computer customers, it was not clear
that consumer demand would be strong.
"Now the question is if people show up at the stores and buy
these things," he said.
The company's shares rose $1.14 to $13.56 in morning trade
on Nasdaq, but were still well below their $16.17 close before
the February warning.
Nvidia has invested heavily to move beyond its traditional
business of designing graphics chips for PCs, by expanding into
the market for mobile device chips.
On top of supply constraints Nvidia also faces tough
competition from the likes of chip developers Qualcomm Inc
and Intel Corp.
Also top phone maker Samsung Electronics Co.
depends increasingly on its own chips instead of Nvidia's and
Apple Inc uses custom-designed chips in the iPhone.
The company told analysts on a conference call that margins
and revenue are being hurt by a capacity shortage for its
cutting edge 28 nanometer computer graphics chips. Rivals such
as Qualcomm have also complained of shortages in this area.
"Supply is still constrained," a company executive told
analysts, noting that Nvidia and its manufacturing partner TSMC
had not planned for enough 28 nanometer capacity.
The company said it was missing out on "a lot" of sales
because of the manufacturing capacity constraints but did not
Nvidia forecast second-quarter revenue of $990 million to
$1.05 billion, compared with analysts' average estimate of
$976.2 million, according to Thomson Reuters I/B/E/S.
First-quarter revenue fell to $924.9 from $962 million a
year earlier but was better than Wall Street expectations for
First-quarter net income was $60.4 million, or 10 cents a
share, compared with $135.2 million, or 22 cents a share, in the
year-earlier quarter, in line with expectations.
It forecast a second-quarter gross margin of 51.2 percent,
plus or minus one percentage point, compared with 50.1 percent
in the first quarter.
It said expenses would rise to $418 million in the second
quarter from $390.5 million in the first quarter.