NVIDIA (NVDA) Shines In Q3 (Update)

November 6, 2009 1:08 PM EST

(Update with comments from analysts)

Shares of graphic chip maker NVIDIA (Nasdaq: NVDA) are having a great day after reporting third quarter fiscal year 2010 adjusted earnings of 19 cents per share, 9 cents better that than the analyst estimate of 10 cents per share, after the close. The company's earnings per share in the year-ago quarter was 11 cents per share.

Net income for the company in the 2010 third quarter was reported as $107.6 million, compared to the same quarter last year of $61.7 million.

Third quarter revenues rose 16 percent quarter-on-quarter to $903.2 million. Revenues were slightly higher than last year' $897.7 million.

For the fourth quarter, NVIDIA expects revenue to rise approximately 2 percent from the third quarter, GAAP gross margin is expected to be in the range of 40 to 42 percent and GAAP operating expenses are expected to be approximately $305 million.

"We invested for quite a long time in this area we call mobile computing, and we were certain that the vast majority of us are going to demand computing everywhere," NVIDIA CEO Jen-Hsun Huang. "This is an investment that is coming home to roost."

NVIDIA is currently developing a stranglehold on the graphics chip market for desktop and notebook computers, with closest competitor ATI lagging behind. Intel (Nasdaq: INTC), the leading producer of computer processor units (CPUs), is currently developing a graphics chip to compete with NVIDIA that will be inlayed into the CPU itself.

NVIDIA and Intel are currently in a lawsuit over the graphics chip maker's right to produce chipsets.

Shares of NVIDIA are currently moving up 7 percent to $13.12 following the earnings report.


Analyst Comments:
Doug Freedman of Broadpoint AmTech maintains a Neutral rating for NVIDIA stating “that near-term results and trading action will be very dependent on both wafer supply and yield data points from foundry partner TSMC as output will be critical to near-term revenue growths.”

Freedman added that NVIDIA’s plans to enter the x86 CPU market could be difficult from a marketing and technical standpoint.

Bobby Burleson of Canaccord Adams reiterated a buy rating for NVIDIA with a price target of $17, citing that there is a big upside on the stock with healthy demand intact.

Related Categories

Earnings

Stocks Mentioned

Related Entities

• Citi
• Canaccord Adams
• American Technology Research

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