Monday, May 9, 2011

Nvidia Corp. (NASDAQ: NVDA): Q1 Earnings Preview 2011

Nvidia Corp. (NASDAQ: NVDA) is scheduled to release its first-quarter earnings after the market close on Thursday, May 12, 2011. Analysts, on average, expect the company to report earnings of 19 cents a share on revenue of $946.89 million. In the year ago quarter, the company reported earnings of 23 cents per share on revenue of $1 billion.

Nvidia Corporation provides visual computing technologies that generate interactive graphics on workstations, personal computers, game consoles, and mobile devices. NVIDIA serves the entertainment and consumer market with its GeForce graphics products, the professional design and visualization market with its Quadro graphics products, the computing market with its Tesla computing solutions products, and the mobile computing market with its Tegra system-on-a-chip products. 

In the preceding fourth-quarter, the Santa Clara, California based company's net income was $171.7 million, or 29 cents per share, compared to $131.1 million, or 23 cents per share, in the year-ago quarter. On an adjusted basis, the companyearned 23 cents per share in the latest quarter. Revenue decreased 10% to $886.38 million from $982.49 million in the same quarter last year. Analysts, on average, expected the company to report earnings of 21 cents a share on revenue of $894.42 million.

At its last earnings call in February, the company forecast first quarter revenue to be up 6% to 8% sequentially, implying first quarter revenue of $939.56 million to $957.29 million. GAAP gross margin for the first quarter is expected to be in the range of 48.5% to 49.5%.

Given robust growth in the core GeForce and Quadro businesses, it appears that NVIDIA has been regaining market share.

Meanwhile, the company has continued to introduce new products at regular intervals. Nvidia stands to benefit from growing demand for handheld devices like smartphones and tablets. The company's Tegra product, designed to serve the fast growing tablet PC market, is already gaining traction among manufacturers. At the Consumer Electronics Show in Las Vegas in early January, the Tegra chips appeared in several new tablets and smartphones running Google's (NASDAQ: GOOG) Android operating system, giving the company a lead against competitors like Qualcomm (NASDAQ: QCOM) and Texas Instruments (NYSE: TXN). 

Nvidia also dropped some impressive news during this year's Mobile World Congress, unveiling a quad-core Tegra processor and a three-year roadmap for its speedy SoC. Codenamed "Kal-El," the new Tegra chip is already sampling and could land in products as early as August. Nvidia hasn't shared the chip's official name, but the company supposedly views it as the third-gen Tegra and has referred to it as the Tegra 3. ccording to Nvidia's roadmap, the company plans to launch an updated Tegra architecture every year through 2014. "Wayne" will follow Kal-El in 2012, "Logan" is due in 2013, and by 2014 Nvidia plans to unleash its "Stark" processor, which will bring nearly a 100-fold increase in computational power from 2010's Tegra 2.

However, few industry experts are concerned that high price tags for devices such as Motorola's (NYSE: MMI) Xoom -- pricier than Apple Inc's (NASDAQ: AAPL) dominant iPad -- would translate into disappointing Tegra business. Moreover, the competition is intensifying, with chipmakers from Marvell Technology Group Ltd (NASDAQ: MRVL) to Qualcomm Inc. and Texas Instruments Inc. eyeing the same market.

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