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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: Dan3 who wrote (78770)	4/29/2002 6:05:40 PM
From: SteveC	Read Replies (1) \| Respond to of 275872

Nvidia Says Results to Beat Forecasts (also news on why contracting with MSFT isn't a great idea) By REUTERS LOS ANGELES (Reuters) - Graphics chipmaker Nvidia Corp. on Monday said its results for the current quarter would beat Wall Street expectations and announced a restatement of financial results for most of the past 3 years after an accounting investigation. The company, whose stock was the best performer in the S&P 500 index last year, also said it is in arbitration with Microsoft on a pricing dispute that could force it to make graphics chips for the Xbox game console at a loss if the matter is not resolved in its favor. The outlook for the current quarter caused Nvidiashares to close higher by $5.06, or 16.7 percent, at $35.43 in heavy trade on the Nasdaq. Nvidia was the eighth-most-heavily traded Nasdaq issue on volume of almost 33 million shares, more than twice its average daily turnover in the past month. The restatement of revenues and earnings came at the request of the Securities and Exchange Commission and covered fiscal 2000 and 2001 and the first three quarters of fiscal 2002, the Santa Clara, California-based company said. It also said Chief Financial Officer Christine Hoberg was taking a leave of absence and the board of directors was looking for a permanent replacement. Corporate Controller Mary Dotz was named interim CFO. Due to the restatement, which focused on the timing of charges and accruals and corrections to the costs of goods and expenses, net income for fiscal 2002 increased by about $2.1 million, or 1 cent per diluted share; net income for fiscal 2001 decreased by about $3.7 million, or 3 cents per diluted share; and net income for fiscal 2000 increased by about $2.9 million, or 2 cents per diluted share. RESTATEMENT ``NEUTRAL'' ``It's neutral in my mind to the extent that you've got restating going on but the magnitude of it is not very large,'' said Brian Foote, an analyst at Ryan, Beck & Co. ``It sounded like errors rather than obfuscation.'' Another analyst, who declined to be named, said the news will largely remove the specter of the SEC investigation, which is still ongoing. ``They're not totally out of the woods but it's a step in the right direction,'' the analyst said. In mid-February, Nvidia said it was the subject of a formal investigation by the SEC into its accounting practices. That probe was spurred by an investigation into alleged insider trading by some company engineers. For the fiscal first quarter ended April 28, Nvidia forecast net income of $79 million to $84 million, or 45 cents to 48 cents per diluted share. Analysts' average forecast is 42 cents per share, according to Thomson Financial/First Call. In a note to clients on Monday, brokerage SG Cowen said the Nvidia news was also positive for Taiwan Semiconductor Manufacturing Co. Ltd. (2330.TW), which is Nvidia's primary chip manufacturer. DISPUTING CHIP PRICES WITH MICROSOFT Nvidia and Microsoft Corp. (MSFT.O) are disputing the price Microsoft pays for one of the custom graphics processors Nvidia designed for the Xbox game console, Nvidia Chief Executive Jen-Hsun Huang told Reuters. Microsoft has forced Nvidia into arbitration over the price of chips made for the Xbox, and Nvidia said on Monday that if it loses it may have to make the graphics chips at a loss. The net result could be either a gain of $13 million as deferred revenue from the Microsoft deal comes on to the books if Nvidia wins the case, or the prospect of having to pump up production, pay damages and slash prices if it loses, executives said. ``When all this gets resolved, my guess is it'll be a pretty dramatic positive impact on our business,'' Huang said on a conference call with analysts. Huang said that because of the deferrals, revenue in the fourth quarter of fiscal 2002 was about $13 million lower than it would have been otherwise. Less than two weeks ago, Microsoft lowered its own fiscal 2002 sales guidance for the Xbox by as much as 40 percent on a unit basis, blaming weak sales in Europe and Japan. It also cut prices on the console by as much as 38 percent in Europe and Australia, citing the need to boost sales. Ryan, Beck & Co.'s Foote said the Microsoft arbitration could possibly start a trend as other brand-name manufacturers that use Nvidia's chips try to negotiate for lower prices. ``It points to the fact that pricing is an issue out there,'' he said. ``Somehow I get the sense other customers could follow suit