Bloomberg News

Nvidia Revenue Forecast Misses Estimates on PC Demand Slump (2)

August 09, 2013

Nvidia Corp. (NVDA:US), a maker of graphics processors, forecast fiscal third-quarter sales that fell short of some analysts’ estimates, dragged down by sluggish personal-computer sales.

Revenue will be $1.03 billion to $1.07 billion in the period ending in October, the Santa Clara, California-based company said in a statement yesterday. That compares with analysts’ average estimate for $1.1 billion, according to data compiled by Bloomberg. Sales in the latest fiscal quarter declined 6.4 percent to $977.2 million.

A record slump in PC shipments is cutting into the market for Nvidia’s main product as consumers adopt smartphones and tablets to check e-mail, shop, play games and browse the Web. Nvidia may find it increasingly harder to make up for the decline as its mobile-chip initiative falters and rivals boost their computer-graphics offerings, according to Alex Gauna, an analyst at JMP Securities in San Francisco.

“The question mark now will be, ‘Can they hit their guidance?’” said Gauna, who has the equivalent of a hold rating (NVDA:US) on the stock. “They’re doing a little bit better than you would have thought” in the latest quarter, he said.

Nvidia slipped 1.4 percent to $14.49 at the close in New York, leaving the stock up 18 percent this year.

Net income in the fiscal second quarter fell 19 percent to $96.4 million, or 16 cents a share, the chipmaker said.

Tegra Shrinking

Nvidia now expects revenue from Tegra -- a processor for mobile devices - to decline by $200 million to $300 million this year from approximately $750 million in 2012, Chief Executive Officer Jen-Hsun Huang said on a conference call yesterday. The company had previously said sales would be little changed.

Gross margin, or the percentage of sales remaining after deducting the cost of production, will be little changed at 56 percent in the fiscal third quarter, Nvidia said.

Global PC shipments fell 10.9 percent to 76 million in the three months that ended in June, the fifth consecutive drop, market researcher Gartner Inc. said last month. Sales slid from a year earlier in all regions, including a 1.4 percent drop in the U.S.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net


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  • NVDA
    (NVIDIA Corp)
    • $18.47 USD
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