Nvidia Corp, a maker of chips for computers and Microsoft Corp's Xbox, said second-quarter revenue dropped as much as US$172.9 million from the first-quarter as demand for processors waned.
Sales dropped to between US$410 million and US$430 million in the quarter that ended Sunday, at best a 26 percent drop from the prior three months. Nvidia, which had forecast a rise in sales, said earnings will be "at or above break even" for the quarter because of costs to write down excess inventory of Xbox chips.
"This is a substantial miss," said Brian Foote, an analyst with Ryan Beck & Co, who has an "underperform" rating on Nvidia. "I was lower than most analysts, but even my numbers weren't expecting a 26 percent decline."
Nvidia's sales fell as consumers bought fewer computers from companies such as Apple Computer Inc, leaving manufacturers with surplus of components, Chief Executive Officer Huang Jen-hsun said during a conference call. The CEO said 13 percent fewer personal computers were shipped in the quarter than in the prior three months.
The shares, which rose more than fourfold last year and were the best performer on the Standard & Poor's 500 Index, rose US$1.10 to US$16.22 during regular trading hours.
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