Aug. 10 (Bloomberg) -- Nvidia Corp., a maker of graphics processors, predicted third-quarter sales that exceeded analysts’ estimates, on robust demand for chips used in tablet devices coming to market in the current quarter.
Revenue for the period ending in October will be $1.15 billion to $1.25 billion, the Santa Clara, California-based company said in a statement yesterday. Analysts had estimated $1.09 billion on average, according to data compiled by Bloomberg.
Nvidia, which has bet on its Tegra mobile processor to capture device revenue, has won orders from Google Inc. and Microsoft Corp. which are pushing into the tablet market with their own devices.
“Tegra has achieved record sales as tablets come into their own,” said Nvidia Chief Executive Officer Jen-Hsun Huang in the statement.
The company may have added orders for as many as 10 million units for Tegra, according to Craig Berger, an analyst at FBR Capital Markets & Co.
Second-quarter net income was $119 million, or 19 cents a share, compared with $151.6 million, or 25 cents, in the same period a year earlier. Revenue rose 2.7 percent to $1.04 billion. Analysts had estimated net income of 14 cents on sales of $1.01 billion, according to data compiled by Bloomberg.
The shares were little changed at $14.62 at the close in New York, and are up 5.5 percent year.
With slowing PC growth and the increasing integration of graphics capabilities into other parts made by Intel Corp. and Advanced Micro Devices Inc., analysts have predicted Nvidia sales are under threat unless it can compensate by building a mobile phone and tablet processor business.
“Nvidia is bullish because it’s the first time their order book for Tegra is full,” said Patrick Wang, a New York-based analyst for Evercore Partners Inc. In graphics chips, “they did gain market share against AMD.”
Tegra sales hit a record, Huang said. The division that includes Tegra posted an increase in revenue of 36 percent to $179.7 million, according to the company. Nvidia is also taking share “in a weak market” with its new PC graphics chip, Kepler.
Shortages from supplier Taiwan Semiconductor Manufacturing Co. have held back sales of the company’s most profitable products. Like Qualcomm Inc. and other chipmakers, Nvidia subcontracts its production to foundries in Asia.
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