Tags: NVDIA | sales | Thai | floods

NVIDIA Sales Likely Slowed by Thai Floods

By    |   Tuesday, 14 February 2012 08:20 AM

Processor chip manufacturer NVIDIA (NVDA) is producing high-demand chips for mobile computing, personal computers and large-scale computing. Yet the company is facing a sales slowdown due to factors outside the company's or even its customers' control — Thai floods that affected PC output.

NVIDIA produces graphics processing (GPU) chips used in personal computers up through supercomputers. The company also manufactures the Tegra line of mobile processors used to run smartphones and tablets.

NVIDIA growth will come, the company says, "as the world becomes increasingly visual and mobile." In the second half of 2011, the company launched the Tegra 3, the first quad core mobile processor.

For the first three quarters of the NVIDIA 2012 fiscal year, through Oct. 31, 2011, the company reported revenue of $3.04 billion, up from $$2.66 billion a year earlier.

Net income for the period was 76 cents per share, up from 42 cents. For the full fiscal year the consensus earnings estimate is 95 cents per share, compared to 65 cents earning in fiscal 2011.

PC shipments slow

In the final months of 2011 and probably for the first four to six months of 2012, the number of personal computers shipped by the major manufacturers will be down due to hard drive shortages resulting from flooding in Thailand.

Less computer shipments means NVIDIA sells fewer graphics processors. Advanced Micro Devices (AMD), for instance, reported a 10 percent decline in the sales of its competing graphic products in the calendar fourth quarter.

NVDIA sales for the 2012 fourth quarter and into the first two quarters of the next year are expected to flatten or decline due to the problems of the personal computer producers.

Nevertheless, NVIDIA forecasts that sales of the Tegra mobile computing chips will increase, by a factor of 10 by 2015. Graphic processor sales are expected to almost double in the same period. If NVIDIA can keep its products at the top of the component list of computer manufacturers, a multi-year period of strong sales growth is possible.

The analysts at JMP Securities recently downgraded NVDA to market underperform from market perform and set a target price 25 percent below the current share value.

The company next reports on Feb. 15.

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Tuesday, 14 February 2012 08:20 AM
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