* Fourth-quarter net was $174 mln, or 28 cents EPS
* Q1 revenue forecast at $940 mln vs estimate of $1.07 bln
By Noel Randewich
SAN FRANCISCO, Feb 13 Nvidia gave a
revenue outlook for the current quarter that missed
expectations, pointing to a slowing PC industry and slower
production of tablets using its chips ahead of the release of
With PC sales losing ground to tablets, Nvidia is betting on
its graphics expertise to make high-performance processors for
mobile devices. Its earnings rose more than expected in the
fourth quarter with its chips appearing in popular devices from
The company, whose core business is graphics chips for PCs,
made inroads in tablets last year but competition from Qualcomm
has Wall Street concerned it may struggle to keep its
mobile business growing fast.
"Looks like some of those products didn't have as strong an
end of year as some might have expected and that they're now
burning inventory," Cody Acree, an analyst at Williams
Financial, said in reaction to Nvidia's revenue guidance.
Chief Executive Officer Jen-Hsun Huang told analysts on a
quarterly conference call he expects a dip in sales of mobile
processors in the first quarter as manufacturers wind down
production of devices using Nvidia's Tegra 3 chips ahead of
launching new gadgets with upcoming Tegra 4 chips.
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 Surface Windows RT tablet.
But some analysts worry Nvidia may struggle to win new
business for its upcoming Tegra 4 chip as competition
intensifies and Samsung Electronics, which
increasingly depends on its own chips, gains market share.
Nvidia is putting the finishing touches on Long Term
Evolution (LTE) technology, which Huang said is necessary to
move beyond tablets and compete against Qualcomm in high-end
"We're working around the clock," Huang said. "We'll have
some phone success this year but we're not expecting to have a
whole lot of phone design wins until we have, until we engage
the market, with LTE."
Microsoft's long-awaited launch of Windows 8 in
October brought touchscreen features to laptops but failed to
spark a resurgence in sales that Nvidia and other PC chipmakers
and manufacturers had hoped for.
Nvidia's traditional PC graphics chip business, which
accounts for most of the company's revenue, grew 7 percent in
the fourth quarter versus the year-ago quarter after the company
gained market share.
Revenue in Nvidia's Tegra group, the bulk of which comes
from Tegra sales, grew 90 percent year over year, to $208
million in the quarter.
The company also said it expects to break ground this year
on a new building at its headquarters to accommodate growth.
Nvidia plans in the second quarter to start shipping a new
hand-held gaming device with the upcoming Tegra 4 processor and
a built-in screen. The device, referred to as Project Shield,
runs Android games currently found on smartphones and tablets
and can also stream video games from PCs.
Nvidia expects to sell them through brick-and-mortar and
online retailers, Huang told Reuters in an interview. Asked how
many he expects to sell, Huang was optimistic: "We don't know
the size of the market. I feel a little bit like the first year
of an iPod. Who knows?"
The company said its fiscal fourth-quarter net income rose
to $174 million, or 28 cents a share from $116 million, or 19
cents a share, in the same quarter last year. Analysts on
average expected 24 cents, according to Thomson Reuters I/B/E/S.
The Santa Clara, California, chipmaker said fourth-quarter
revenue rose to $1.107 billion from $953.2 million in the
Revenue in the current quarter, Nvidia said, would be $940
million, plus or minus 2 percent.
Analysts were expecting revenue of $1.102 for the fourth
quarter ended in January and $1.067 billion for the first
quarter ending in April.
Shares of Nvidia were down 1.7 percent in extended trade
after closing down 0.48 percent at $12.37 on Nasdaq.