UPDATE 2-Nvidia sales outlook below Street, shares slip
6:59pm EDT
* Q1 EPS 23 cts vs Street view 21 cts
* Q1 rev $1 billion vs Street view $986.2 mln
* Q2 revenue forecast below Street
* Shares down 3 pct (adds background, analyst comment; updates shares)
By Gabriel Madway
SAN FRANCISCO, May 13 (Reuters) - Nvidia Corp <NVDA.O> reported better-than-expected results, but the graphics chipmaker's sales forecast for the current quarter was below Wall Street's target, and shares fell 3 in extended trading on Thursday.
For the July quarter, Nvidia forecast that revenue would fall 3 to 5 percent from the previous period, implying sales of $950 million to $970 million.
That compares with Wall Street's estimate for revenue of $990 million.
Nvidia forecast gross margins of 46 percent to 47 percent, which was above the consensus target of 45 percent.
But analysts said the sales forecast and Nvidia's inventory level, which rose 17 percent, spooked investors.
Sterne, Agee & Leach analyst Vijay Rakesh said: "The guide was obviously down and also it looks like their inventories were up quite a bit."
"Any chip company reporting numbers with inventory up more than just a couple of percentage points is not going to be viewed favorably," said Wedbush Morgan analyst Patrick Wang.
Nvidia's shares are down roughly 20 percent this year, badly lagging the performance of rivals Intel Corp <INTC.O> and Advanced Micro Devices <AMD.N>.
Nvidia dominates the graphics market for desktop and notebook computers along with rival ATI, which is owned by AMD.
Nvidia is embroiled in a lawsuit with Intel over Nvidia's right to produce chipsets -- collections of chips on a board that connect a microprocessing brain to other parts of a computer.
The suit prompted Nvidia to halt development of chipsets, which make up close to 30 percent of its sales.[ID:nN13201671]
The company is instead shifting its focus to high-performance computing and mobile chips for devices such as tablet computers, while maintaining a core business selling graphics chips designed for games, high-definition video and advanced photo editing.
The company's first Tegra mobile chips are used in the Microsoft's <MSFT.O> Zune HD and Kin mobile phone. Nvidia executives say a tablet computer powered by the company's chips should arrive in the second half of the year. [ID:nN07142546]
Nvidia said it swung to a net profit of $137.6 million, or 23 cents a share, in the fiscal first quarter ended May 2, versus a year-ago net loss of $201.3 million, or 37 cents a share.
That exceeded analysts' estimates for a profit of 21 cents a share, according to Thomson Reuters I/B/E/S.
Revenue surged 51 percent to $1 billion, versus Wall Street's target of $986.2 million.
Nvidia said sales were led by its high-end Fermi processor, which saw strong consumer demand.
Shares of Santa Clara, California-based closed at $14.65 on the Nasdaq and fell to $14.18 in extended trading. (Reporting by Gabriel Madway; editing by Carol Bishopric) |
