Nvidia Forecasts Sales In Line With Analysts’ Estimates

Nvidia Corp. (NVDA) gave a forecast for fiscal second-quarter revenue that was in line with analysts’ estimates, as demand for high-end graphics cards cushioned its business amid declining shipments of personal computers.

Sales in the current quarter, which ends in July, will be $1.1 billion, plus or minus 2 percent, the Santa Clara, California-based company said yesterday in a statement. That compares with an average analyst estimate of $1.09 billion, according to data compiled by Bloomberg.

Chief Executive Officer Jen-Hsun Huang is trying to lessen Nvidia’s reliance on consumer PCs by spreading the use of his graphics chips into cars, server computers and mobile devices. Companies are increasingly looking at the company’s Grid server product, and Nvidia is predicting that operators of large data centers will boost deployments of graphics chips in their machinery, Huang said in a telephone interview.

“They’ve taken some time but the margin contribution is good and their growth is starting to accelerate,” he said. “We’re starting to see growth from all three drivers kicking in.”

Gross margin, or the percentage of revenue remaining after deducting the cost of production, will be 53.7 percent to 54 percent, the company said. That was shy of an average analyst estimate of 54.7 percent.

Nvidia shares slipped 2.4 percent to $18.05 at the close in New York. The stock is up 13 percent this year.

First-Quarter Report

On May 6, Nvidia reported first-quarter sales and profit that exceeded analysts’ estimates. The company disclosed earnings ahead of schedule after inadvertently sending the release out in an e-mail to a list of 100 people.

Revenue in the period ended April 27 climbed 16 percent to $1.1 billion. Nvidia may have benefited from a slowing rate of decline in PC shipments, particularly in desktops, which are more likely to use high-end graphics cards powered by its chips. Chipmakers Intel Corp. and Advanced Micro Devices Inc. both said the market had stabilized, thanks to demand from companies for new machines.

Profit excluding some items rose to $166.1 million, or 29 cents a share, Nvidia said. On average, analysts had predicted sales of $1.05 billion and profit of 21 cents. Net income in the fiscal first quarter was $136.5 million, or 24 cents a share, up from $77.9 million, or 13 cents, a year earlier.

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

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Jillian Ward, Stephen West

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