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Nov-06-2009Nvidia sees Q4 revenue above Street estimates(topic overview)
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SAN FRANCISCO, Nov 5 (Reuters) - Graphics chipmaker Nvidia Corp (NVDA.O: Quote, Profile, Research ) forecast fourth quarter revenue above Wall Street expectations, and said its new server and mobile chips were gaining momentum. Its shares rose 6 percent in after-hours trading. The company, which also benefited from strong spending among consumers on its core graphics cards, said on Thursday, that its high-end server and mobile computing platforms -- Tesla and Tegra, respectively -- were quickly gaining momentum. "We invested for quite a long time in this area we call mobile computing, and we were certain that the vast majority of us are going to demand computing everywhere," said Nvidia Chief Executive Jen-Hsun Huang, adding that the Tegra mobile platform is doubling every quarter off its small base. "This is an investment that is starting to come home to roost." [1] Nvidia's forecast for a 2 percent sequential rise for revenue in the fourth quarter also surpassed Wall Street's forecast of $868.11 million. The company said its GAAP gross margin is expected to be in the range of 40 percent to 42 percent, while GAAP operating expenses are expected to be about $305 million. Nvidia has benefited from the consumer market, as its core business of selling graphics cards and chipsets augment its fledgling server and mobile businesses.[2] The company expects fourth-quarter revenue to be up about 2 percent from the third quarter, well above Wall Street's expectations. The company said its GAAP gross margin is expected to be in the range of 40 percent to 42 percent -- versus the average Wall Street forecast of 40 percent -- while GAAP operating expenses should be an in-line $305 million.[3]
Nvidia predicted that fourth quarter revenues (for the period that closes at the end of January) would be up 2 percent from the third quarter. That was also above what Wall Street expected.[4]
Industry analysts say that Nvidia has lost market share over the past quarter to AMD. Nvidia expects revenue to rise 2% from the third quarter to $921.3 million in the fourth quarter, while analysts on average were looking for $868.1 million, according to Thomson Reuters. The relatively low sequential growth expectation is due to supply constraints that Nvidia faces after witnessing stronger-than-expected demand for new chips made with its 40-nanometer manufacturing process, said Chief Financial Officer David White.[5] SAN FRANCISCO, Nov 5 (Reuters) - Graphics chipmaker Nvidia Corp ( NVDA.O ) posted higher than expected earnings on the back of increased consumer spending, sending its shares up nearly 6 percent. The company, which competes with Advanced Micro Devices' ( AMD.N ) ATI unit to sell graphics hardware for computers, reported on Thursday earnings excluding items of $110.3 million, or 19 cents a share, in its third quarter, compared with $111.4 million, or 20 cents a share, a year earlier. That exceeded the average analysts' estimate of 10 cents a share, according to Thomson Reuters I/B/E/S.[6] Nvidia, which competes with Advanced Micro Devices' ( AMD.N ) ATI unit to sell graphics hardware for computers, said third quarter net income rose to $107.6 million, or 19 cents a share, from $61.7 million, or 11 cents per share in the year ago period.[2]
Excluding items, non-GAAP net income for the third quarter was $110.3 million or $0.19 per share, compared to $111.4 million or $0.20 per share in the prior year quarter.[7] The Santa Clara, California-based company reported GAAP net income for the third quarter of $107.6 million or $0.19 per share, compared to $61.7 million or $0.11 per share for the year-ago quarter.[7] For the first nine months, the company reported a GAAP net loss of $199.1 million or $0.36 per share, compared to GAAP net income of $117.6 million or $0.20 per share for the same period last year.[7]
The Santa Clara, Calif. -based company reported Thursday that it earned $107.6 million, or 19 cents a share, for the three months that ended Oct. 25. Revenue rose less than 1 percent to $903 million but the company said it saw improvement in each of its PC, professional services and consumer businesses.[8] Graphics chip maker Nvidia reported good third fiscal quarter results thanks to the continuing recovery of the personal computer market. The company reported today that revenues came in at $903.2 million for its third fiscal quarter, compared to analysts' expectations of $838.1 million.[4] In the final three months of the year, Nvidia said it expects revenue to grow 2 percent from the third quarter, implying sales of $921.1 million, which would beat analysts' current forecast of $868.1 million.[8] Sales for the fiscal third quarter ended last month were, $903.2, up from the $897.6 million booked for the same period last year and well above the $838.1 million in revenue analysts were expecting.[9]
Twenty-three analysts had a consensus revenue estimate of $838.09 million for the third quarter.[7]
Looking forward, Nvidia expects fourth quarter revenue to to be up slightly, about 2%, from the third quarter, implying fourth quarter revenue of about $921.27 million.[7] Revenue for the third quarter increased to $903.21 million from $897.66 million in the same quarter last year.[7]
Third quarter net income was $107.6 million, up from $61.7 million a year ago.[4]
On average, 21 analysts polled by Thomson Reuters expected the company expected the company to report earn $0.10 per share for the third quarter.[7] Weisel believes a stronger than expected GPU market offset competitive share loss, as indicated by recent market data. Looking forward: Weisel expects the company to guide in-line with its above-Street January quarter revenue estimate of $930.0M, though from a higher base.[10] Shares climbed 6.6% to $13.08 in after-hours trading. The graphics-chip maker's results far exceeded its own and Wall Street's expectations and it predicted fiscal fourth-quarter revenue above analysts' estimate.[5] The company's quarterly earnings per share, excluding items, also breezed past Wall Street expectations as did its quarterly revenue.[7]
The chip sector as a whole has been lifted by increased consumer demand, particularly during the previous quarter's back-to-school shopping season. That has helped tech heavyweights such as Intel Corp ( INTC.O ) and Apple Inc ( AAPL.O ) post earnings well above Wall Street expectations.[2]
Revenue rose to $903.2 million, versus Wall Street's average forecast of $838.1 million.[6] The results easily beat estimates of analysts surveyed by Thomson Reuters, who were expecting a profit of 10 cents a share on revenue of $838 million.[8] Excluding items, earnings were $110.3 million, or 19 cents a share, compared with $111.4 million, or 20 cents a share. That exceeded the average analysts' estimate of 10 cents a share, according to Thomson Reuters I/B/E/S.[2]
The graphics chipmaker posted adjusted earnings, excluding one-time items, of 19 cents a share, down a penny from the 20 cent pro forma profit in the year-ago quarter, but far better than the dime profit analysts were looking for, according to Yahoo! Finance.[9]
For the quarter ended Oct. 25, Nvidia reported a profit of $107.6 million, or 19 cents a share, up from $61.7 million, or 11 cents a share, a year earlier.[5]
The consensus estimate is 10c for EPS and $838.09M for revenue, according to First Call. Management's guidance from the last earnings call was for Q3 revenue to be up 5%-7% over Q2's reported $776.5M. That implies a range of $815.33M-$830.86M. Some analysts would not be surprised to see a little upside to consensus estimates as Apple's ( AAPL ) MacBook, an NVIDIA customer, sales were pretty strong during the quarter, and the overall inventory levels remain in balance.[10] Thomas Weisel expects NVIDIA could exceed consensus and has October quarter estimates of 8c on $835.2M in revenue. They're currently modeling for the core GeForce GPU business to improve modestly, growing 2% quarter-over-quarter, with this segment's gross margin expanding by roughly 200bps to 25.5%.[10]
Gross margin rose to 43.4% from 41% amid the sales gains. In its mobile business, based on its new Tegra chip, Nvidia is working on more than 50 projects, Huang said, including media players, smartphones, tablet computers and gadgets for automobiles. The Tegra chip is "growing at a steady rate," he said. -By Jerry A. DiColo, Dow Jones Newswires; 212-416-2155; jerry.dicolo@dowjones.com (Kathy Shwiff contributed to this report.)[5] Nvidia also is now embroiled in a lawsuit with Intel over the graphics maker's rights to produce chipsets -- collections of chips on a board that connect a microprocessing brain to other parts of a computer. That lawsuit threatens the future of the company's desktop and laptop chipset products, which constitute nearly 30 percent of Nvidia's revenue. To counter those threats, it has begun focusing on Tesla and Tegra, which executives have dubbed the future of the company, though they are still tiny parts of Nvidia's business.[3]
SAN FRANCISCO, Nov 5 (Reuters) - Graphics chipmaker Nvidia Corp ( NVDA.O ) forecast better-than-expected fourth-quarter revenue on the back of increased consumer spending, and its shares rose nearly 6 percent.[2] NEW YORK — Graphics chip maker Nvidia Corp. said consumer demand is healthy and improving as it reported a 74 percent jump in third-quarter profit.[8]
While the rising industry tide is lifting Nvidia, it faces tough competition from Advanced Micro Devices, which launched a new generation of graphics chips in September. Nvidia hasn't yet launched its new chip, code-named Fermi. That could lead to a loss in market share.[4] NEW YORK ( TheStreet ) -- Nvidia ( NVDA Quote ) shares rose Thursday as the chip shop flew by third-quarter financial targets.[9]
Nvidia's chips are used in desktop computers, laptops, graphics workstations, servers and game consoles. It new Tegra chip is the brain of Microsoft's new Zune HD music handheld.[4] Nvidia, which makes graphics chips for desktop and notebook computers, as well as mobile devices and high-end workstations, has seen demand pick up as sales of computers and other tech products increase. Though the stock is down by about 25% from its 52-week high in September, it has more than doubled from a four-year low last November.[5] Nvidia had been expected to offer the latest sign from the semiconductor industry that demand for electronics is beginning to recover, particularly spending on personal computers. It has benefited from the consumer market, as its core business of selling graphics cards and chipsets augment its fledgling server and mobile businesses.[6]
The firm anticipates the quarter's top performer to be NVIDIA's consumer product line, for which Weisel is modeling quarter-over-quarter revenue growth of 30% driven primarily by the ramping Tegra mobile applications processor.[10] "We came out of last quarter several million units short, and that is a lot of PCs," said Nvidia's Huang. "This surely constrains our growth." He added that the company probably had an opportunity to do $50 million to $100 million more in business in the previous quarter.[5] The company's GPU business, which sells the graphics cards used to play video games and process other video-intensive data, posted 25% growth from the second quarter.[5]
"Our growth was almost across every segment of our business," Nvidia Chief Financial Officer David White told Reuters in an interview, adding that most of the company's growth came from consumer spending.[2]
Analysts currently expect the company to post revenue of $868.11 million. [7] In August, Nvidia had predicted $815.3 million to $830.9 million, above analysts' then-estimate of $767 million.[5]
Analysts were looking for a 3.5% sequential increase. In the most recent quarter, Nvidia says its Tegra chip was built into to gadgets: Microsoft's ( MSFT Quote ) Zune portable media player and Samsung's YP-M1 media device.[9] Morgan Stanley downgraded Nvidia tp sell on concerns that chip supplies were running ahead of demand. The Morgan analysts also wrote that Nvidia faces challenges as it tries to shift its business toward portable devices and phones from PCs.[9]
"We continued to make progress in the third quarter with healthy market demand across the board," said Jen-Hsun Huang, president and chief executive officer, Nvidia.[7] "We continued to make progress in the third quarter with healthy market demand across the board," CEO Jen-Hsun Huang said in a press release Thursday.[9]
"Demand is really strong. We came into this quarter with very, very strong demand again," said Chief Executive Jen-Hsun Huang during a conference call to discuss earnings. "In this quarter, it is pretty clear that everything grew," he said.[5]
GAAP gross margin for the fourth quarter is expected to be in the range of 40% to 42%. [7] GAAP gross margin for the quarter improved to 43.4% from 41.0% a year ago, while non-GAAP gross margin declined to 41.0% from 41.9% last year.[7] Gross margins widened to 43.4% from 20.2% in the prior quarter and 41% in the same period a year ago.[9]
Looking ahead, Nvidia says it expects fourth-quarter sales to be up 2% sequentially from the third quarter. [9] Nvidia now lords over the graphics market for desktop and notebook computers along with rival ATI, which is owned by Advanced Micro Devices Inc ( AMD.N ). Intel ( INTC.O ) has plans to compete with a forthcoming graphics unit built into its microprocessor, code-named Larrabee.[3] Key issues for the conference call: commentary around market share vs. Advanced Micro Devices ( AMD ), and how the industry growth rates look in the face of a pending PC upgrade cycle.[10]
Company shares added 78 cents, or 6.4 percent, to $13.05 in after-hours trading, having closed earlier up 29 cents at $12.27.[8] The Santa Clara, Calif. -based company's shares were up 6 percent in after-hours trading.[4]
NEW YORK (Dow Jones)--Nvidia Corp.' s (NVDA) fiscal third-quarter profit--its second in the past five quarters--jumped 74%, helped by higher margins and strong demand for its graphics cards. [11] The latest quarter results include a benefit of $25.1 million related to insurance reimbursements received during the quarter.[7] Revenue for the nine-month period fell to $2.34 billion from $2.94 billion in the corresponding year-ago period.[7]
SOURCES
1. UPDATE 3-Nvidia sees Q4 revenue above Street estimates | Industries | Technology, Media & Telecommunications | Reuters
2. UPDATE 2-Nvidia Q4 revenue estimate beats Street, shares rise | Reuters
3. Nvidia sees Q4 revenue above Street estimates | Reuters
4. Graphics chip maker Nvidia rides on industry recovery | VentureBeat
5. 2nd UPDATE: Nvidia 3Q Profit Up 74% On Higher Margins
6. CORRECTED - UPDATE 1-Nvidia's Q3 beats Street, shares climb | Industries | Technology, Media & Telecommunications | Reuters
7. RTTNews - Latest Earnings,Upcoming Earnings, Pos Pre Announcements, Pos Pre Announcements , Positive Surprises, Negative Surprises, Hot Stocks, Stock Split Calendar, Stock Buybacks, Dividends, Negative, Positive PreAnnouncements,Surprises .
8. The Associated Press: Nvidia says profit jumps 74 percent in 3Q
9. Nvidia Up on Blowout Numbers | Technology | Financial Articles & Investing News | TheStreet.com
10. Earnings Preview: NVIDIA -- Seeking Alpha
11. UPDATE: Nvidia 3Q Profit Up 74% On Higher Margins - WSJ.com
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