Nvidia Falls as Forecast Trails Estimates: San Francisco Mover

Nvidia Sales Forecast Misses Estimates
Jen-Hsun Huang, president, chief executive officer, and co-founder of Nvidia Corp., speaks during the 2011 International Consumer Electronics Show (CES) in Las Vegas. Photographer: Jacob Kepler/Bloomberg

Nvidia Corp., a maker of graphics processors, fell the most in more than three months after its first-quarter sales forecast missed estimates, providing more evidence that hard-disk shortages are cutting into personal-computer production.

Revenue for the period ending April 30 will be $900 million to $930 million, the Santa Clara, California-based company said yesterday in a statement. Analysts had estimated $940.4 million on average, according to a Bloomberg survey.

Nvidia also abandoned its fiscal 2013 projection because turmoil in the PC market has made it harder to predict sales. The company had already cut its forecast for the fourth quarter, saying last month that a lack of disk drives from flood-ravaged Thailand hurt production of PCs. Nvidia gets most of its revenue from its GeForce chips, which are used to create high-end graphics in desktop and notebook computers.

“Their guidance for the first quarter is significantly below what the Street was looking for,” said Patrick Wang, an Evercore Partners Inc. in New York. He has an underweight rating on the stock.

Nvidia shares fell 4.4 percent to $15.46 at 9:43 a.m. in New York after touching $15 for the biggest intraday decline since Oct. 20. The stock had the third-biggest drop on the Standard & Poor’s 500 Index today. It had risen 17 percent this year through yesterday.

Thailand Flooding

Last year’s flooding in Thailand shut down production of disk drives and increased prices of the components. That delayed manufacturing of PCs and prompted some computer makers to exclude graphics cards from their systems -- an effort to keep their prices down.

The company scrapped its full-year earnings predictions without giving a new forecast. Nvidia had projected sales of $4.7 billion to $5.7 billion for the fiscal year ending in January 2013.

The shortage of disk drives will probably wipe out PC shipment growth in calendar 2012, Chief Executive Officer Jen-Hsun Huang said in an interview. The company also is struggling to get enough chips made with the latest production technique from supplier Taiwan Semiconductor Manufacturing Company Ltd.

“The yield is below our expectations for the moment,” he said. “We’re expecting disk-drive shortages to continue.”

Nvidia’s fourth-quarter net income fell 32 percent to $116 million, or 19 cents a share, from $171.7 million, or 29 cents, a year earlier. Sales climbed 7.5 percent to $953.2 million in the period, which ended Jan. 29.

First-quarter gross margin, or the percentage of sales remaining after deducting the cost of production, will be 49.2 percent, plus or minus 1 percentage point, according to the statement. Analysts had estimated a gross margin of 52 percent.

The company is trying to branch out into microprocessors for phones, lessening its reliance on PCs. Nvidia’s Tegra processor is designed to challenge products from Texas Instruments Inc. and Qualcomm Inc. Nvidia said last month that orders for those chips have been slow because customers are waiting for an updated Tegra, due this quarter.

Customers will begin announcing phones featuring Tegra 3 soon, Huang said. He expects revenue from that product to increase by 50 percent this year.


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