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Nvidia Predicts Sales That Exceed Estimates on PC Demand

Nvidia Corp. (NVDA), a maker of graphics chips, forecast second-quarter sales that exceeded analysts’ estimates, as a new microprocessor from Intel Corp. helped fuel demand for more expensive personal computers.

Revenue in the current period will rise 4 percent to 6 percent from the first quarter to as much as $1.02 billion, Santa Clara, California-based Nvidia said in a statement. That compares with an average analyst estimate of $990.4 million, according to a Bloomberg survey.

Demand for Nvidia’s graphics chips rose as the debut of Intel’s new processor stimulated demand for new PCs, Chief Executive Officer Jen-Hsun Huang said in an interview. While that helped Nvidia sell its chips into high-end machines used by gamers and those who edit videos, demand is still weak in some areas of the market, he said.

“The PC marketplace is softish,” Huang said. “However, there are several segments of opportunities. The tablet is a factor in some lower parts of the marketplace.”

Nvidia is trying to lessen its dependence on chips used in PCs with a push into processors for mobile phones and tablet computers. That business, based on a chip called Tegra, began to take off this quarter, said Huang.

Moving Into Mobile

“It’s starting to contribute,” said Sujeeva De Silva, an analyst at ThinkEquity LLC in San Francisco, who has a “hold” rating on the stock and doesn’t own it. “Tegra had been challenged for years to get design wins.”

Net income in the first quarter fell to $135.2 million, or 22 cents a share, from $137.6 million, or 23 cents, a year earlier, the company said in the statement. Sales in the period that ended May 1 declined 4 percent to $962 million.

Nvidia fell 61 cents to $19.89 in extended trading after the report. The company’s shares advanced 63 cents, or 3.2 percent, to $20.50 at 4 p.m. New York time on the Nasdaq Stock Market. The stock has gained 33 percent this year.

Nvidia’s attempts to move into mobile, with new customers such as Motorola Mobility Holdings Inc., are also aimed at easing the effects of a drop in sales of chipsets, which help connect processors to other parts of a PC. New designs by Intel Corp. (INTC) and Advanced Micro Devices Inc. (AMD) are threatening to make Nvidia’s chipset business obsolete.

To further its mobile ambitions, Nvidia said this week it will acquire closely held Icera Inc. for $367 million, adding radio processors needed in phones and tablets.

To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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