Nvidia Third-Quarter Earnings Top Estimates on Tablet Orders

Nvidia Corp., a maker of graphics processors, reported fiscal third-quarter earnings that topped analysts’ estimates as it grabbed market share and won orders for chips used in tablet computers.

Net income in the period that ended Oct. 28 rose to $209.1 million, or 33 cents a share, from $178.3 million, or 29 cents, a year earlier, Santa Clara, California-based Nvidia said yesterday in a statement. Revenue climbed 13 percent to $1.2 billion. Analysts on average had estimated earnings of 30 cents on sales of $1.2 billion, according to data compiled by Bloomberg.

Orders for Nvidia’s Tegra chips used in Google Inc.’s and Microsoft Corp.’s new tablets are helping it sidestep a slump in demand for personal computers, according to Ambrish Srivastava, a San Francisco-based analyst at BMO Capital Markets. The company is also taking share from rival Advanced Micro Devices Inc. in the market for chips used in add-on cards that speed graphics in PCs, Srivastava wrote in a report.

“The fundamentals are OK,” said Daniel Berenbaum, a New York-based analyst at MKM Partners LLC. “These guys are gaining market share and Tegra seems to be doing well.”

The company also said it will begin paying a dividend for the first time, initiating a quarterly payout of 7.5 cents a share on Dec. 14, and extended a $2.7 billion share-repurchase program through December 2014.

Nvidia shares rose as high as $13.10 after the report yesterday. They had gained less than 1 percent to $12.68 at the close in New York, and are down 8.5 percent this year.

Branching Out

Under Chief Executive Officer Jen-Hsun Huang, Nvidia has branched out into processors that run mobile phones and tablets, trying to lessen its dependence on PCs.

Revenue in the fourth quarter, which ends in January, will rise to $1.03 billion to $1.18 billion, the company said. Analysts had estimated $1.21 billion on average, according to data compiled by Bloomberg. A year earlier, Nvidia had sales of $953.2 million.

While predictions fell short of published estimates, many investors had been expecting a lower forecast, MKM’s Berenbaum said.

Last month, Intel Corp., the largest maker of chips for PCs, said profit was being hurt by rising stockpiles of unsold chips as consumers and corporations scale back purchases. The PC market is on course for its first annual decline in more than a decade, according to researcher IHS ISuppli.


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