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Technology Stocks : John, Mike & Tom's Wild World of Stocks

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To: Logain Ablar who wrote (2333)	5/23/2001 11:32:48 AM
From: John Pitera	Read Replies (1) of 2850

Tim, you are right about that -g- Here is some NVDA news: NVIDIA (NVDA) 92.90: Many investors have watched with wonder at NVDA's relative price strength. Despite the Nasdaq's worst performance in history, this maker of graphics processors trades just two points shy of its all-time high. The company reported first quarter results tonight which served as some explanation for its "market favorite" status. Quarterly net income was reported at $0.40 EPS which beat consensus estimates by a penny. Similarly, revenues of $240 million slightly edged out analyst expectations. Yet more importantly, NVDA continues to demonstrate momentum in its business and a dominating market position. On the conference call, management made nearly every financial comparison on a sequential basis. Total sales rose 10% sequentially while stand-alone processor growth was 14%. Gross margins edged up 30 basis points sequentially behind a rise in NVDA's weighted average selling price. Notably, first quarter inventories dropped to 53 days from a prior quarter level of 60 days. But perhaps most impressive, is NVDA's share of the graphics proccessor market which has now grown to 85%. Forward guidance from NVDA was unchanged -- the company sees 8% sequential growth in the second quarter with 12% sequential growth for quarters three and four. NVDA also expects operating expenses to be "at or below the low end of the current range." Fiscal year 2003 annual growth is projected to be 40%. Managment acknowledged potential upside to these numbers but said "we do not believe it is necessary to alter that guidance at this time." Those are the key numbers and its clear NVDA is running on all cylinders. The important question to ask yourself is whether NVDA will one day have a chip in every computer. This is part of what's driving the share price and what makes NVDA one of the few compelling buy and hold propositions. On the call today, management discussed potential applications for its processors in television set top boxes, online applications, or even car navigation systems. Those represent entirely untapped markets. In the here and now, NVDA's GPU has been designed into Microsoft's X-box which is due for release on November 8. NVDA will provide 45 days lead time in manufacturing process for the X-box. NVDA currently trades at 65.8x trailing earnings. With an annual growth rate of 50% for 2001 this factors to a very attractive Price/Earnings to Growth Rate (PEG) of 1.3x. The long-term risk on NVDA is that an Intel (INTC) or Applied Micro Devices (AMD) will design graphics processing technology into their standard microprocessors. The consensus view is that this won't represent a real threat for at least three years if it comes to pass at all. -- Michael Ashbaugh, Briefing.com

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