Nvidia revenue outlook misses, PC and tablet chips slow
By Noel Randewich
SAN FRANCISCO (Reuters) - Nvidia gave a revenue outlook for the current quarter that missed expectations, pointing to a slowing PC industry and slower production of tablets using its chips ahead of the release of newer models.
With PC sales losing ground to tablets, Nvidia is betting on its graphics expertise to make high-performance processors for mobile devices. Its earnings rose more than expected in the fourth quarter with its chips appearing in popular devices from Google.
The company, whose core business is graphics chips for PCs, made inroads in tablets last year but competition from Qualcomm has Wall Street concerned it may struggle to keep its mobile business growing fast.
"Looks like some of those products didn't have as strong an end of year as some might have expected and that they're now burning inventory," Cody Acree, an analyst at Williams Financial, said in reaction to Nvidia's revenue guidance.
Chief Executive Officer Jen-Hsun Huang told analysts on a quarterly conference call he expects a dip in sales of mobile processors in the first quarter as manufacturers wind down production of devices using Nvidia's Tegra 3 chips ahead of launching new gadgets with upcoming Tegra 4 chips.
Nvidia's Tegra 3 mobile processor is used in Google's Nexus 7, one of only a handful of tablets to make inroads against Apple's iPads. The Tegra 3 chip is also used in Microsoft's Surface Windows RT tablet.
But some analysts worry Nvidia may struggle to win new business for its upcoming Tegra 4 chip as competition intensifies and Samsung Electronics, which increasingly depends on its own chips, gains market share.
Nvidia is putting the finishing touches on Long Term Evolution (LTE) technology, which Huang said is necessary to move beyond tablets and compete against Qualcomm in high-end smartphone chips. Continued...