Nvidia Projects Sales That May Top Estimate on Gaming Growth

  • Third-quarter profit, sales also beat analysts' estimates
  • Maker of chips for computer games also will raise dividend

Nvidia Corp., the largest maker of graphics chips used for personal-computer games, forecast sales that may exceed analysts’ estimates on demand for hardware that can handle the most visually intensive applications.

Revenue in the quarter ending in January will be $1.3 billion, plus or minus 2 percent, the company said Thursday in a statement. That compares with analysts’ average estimate of $1.21 billion, according to data compiled by Bloomberg. The company also said it would raise its quarterly cash dividend 18 percent to 11 1/2 cents per share.

Though the company’s gaming graphics business continues to grow, Chief Executive Officer Jen-Hsun Huang is attempting to extend the business into corporate data centers and cars to provide other sources of revenue as the global PC market is caught in a multiyear slump.

With most of the company’s sales in specialized areas such as gaming and enterprise, “Nvidia has pulled away from the pack of traditional (commodity) PC/smartphone market players,” analysts at Raymond James Equity Research wrote in a note to investors ahead of the earnings report.

Gaming Chips

That was reflected in the performance of its divisions, with its graphical processing unit bringing in $1.11 billion in sales in the quarter from gaming and automotive systems, according to a CFO commentary published online. This was offset by data center and professional graphics sales, which each declined 8 percent.

Shares of the chipmaker rose as much as 9.6 percent in extended trading after closing Thursday at $27.71 in New York. The stock is up 38 percent this year.

Net income in the fiscal third quarter, which ended in October, was $246 million, or 44 cents a share, compared with $173 million, or 31 cents, a year earlier. Profit, excluding certain costs, was 46 cents a share, compared with analysts’ estimates of 35 cents. Sales rose 6.5 percent to $1.31 billion, against estimates of $1.18 billion.

Total worldwide personal-computer shipments sank by 7.7 percent in the three months that ended in September, Gartner said last month, as slower desktop sales and higher dollar-based prices constricted sales.

Nvidia may be less affected by that sales decline than other traditional PC vendors, said Kevin Cassidy, an analyst at Stifel Nicolaus & Co. Gaming computers are “application specific, and corporate America isn’t buying those, but the gamers are,” he said.

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