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Mobile device market ups Nvidia sales

Posted: 14 Nov 2011 ?? ?Print Version ?Bookmark and Share

Keywords:graphic chip? mobile device? GPU business?

Nvidia Corp.'s move toward mobile devices has pushed its sales to grow more than five percent. Although the revenue forecast was a little lower than expected, still, the Q3 result shows that things are looking up for the company that has recently launched its latest mobile processor.

Anxious to move beyond its traditional business of designing graphics chips for PCs, Nvidia has jumped into mobile devices with its Tegra chips. The company had some successes early this year with its processors appearing in tablets made by Samsung Electronics and LG Electronics, although sales have grown less quickly than many investors had expected.

Its most recent mobile processor, Tegra 3, also faces growing competition from Qualcomm Inc. and Texas Instruments Inc. Nvidia said sales in its professional solutions group, which includes graphics chips used in workstations, grew 9.5 percent sequentially in Q3.

Emerging markets such as Chinawhere many families are buying their first PCshave supported sales of Nvidia and other PC chipmakers in recent quarters and helped offset slow demand in the U.S. and Europe. Investors also fear a slowdown in PC manufacturing late this year and in 2012 after flooding in Thailand disrupted production of hard drives.

Goldman Sachs recently warned that global PC shipments in the December quarter are likely to fall three percent YoY, instead of rising 3.1 percent as it had previously expected. If manufacturers build fewer PCs, that would mean less demand for the computer graphics chips that Nvidia depends on for most of its revenue.

Nvidia's consumer products group that includes the Tegra chips rose 14 percent sequentially to $191 million in the quarter. CEO Jen-Hsun Huang said Tegra revenues would reach $1 billion next year, surprising some analysts.

The company's main GPU business, which includes graphics chips used in PCs and revenue from a licensing deal with Intel Corp, increased one percent from Q2. Nvidia said revenue in the quarter would be up or down two percent from the past quarter. That implies revenue of $1.045-$1.087 billion, compared with analysts' average forecast of $1.069 billion.

GAAP earnings were $178.3 million, or 29 cents per share, compared with $84.9 million, or 15 cents a share, in the same period a year earlier. Analysts on average had expected Q3 EPS of 26 cents, according to Thomson Reuters I/B/E/S.

Nvidia's revenue for the quarter ending October 30 was $1.066 billion, up 26 percent and a bit above analysts' average estimate of $1.062 billion. Shares climbed 5.5 percent in extended trade after closing up 1.05 percent at $14.47.

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