Sat, Aug 08, 2009 - Page 11 News List

Nvidia stock advances on higher revenue forecast

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Nvidia Corp climbed 6.7 percent in early US trading yesterday after forecasting third-quarter revenue that beat analysts’ estimates, buoyed by demand for computer-graphics cards.

Nvidia forecast sales of as much as US$830.9 million in the third quarter, which ends in October. That compares with an average estimate of US$757 million in a Bloomberg survey of analysts.

Sales will grow between 5 percent and 7 percent in the period from the previous three months, the company said.

Chief financial officer David White said the company’s business was rebounding as the recession eases. Nvidia, the second-largest maker of graphics chips, is also getting its chips into mobile-device and scientific-computing markets. Improvements in manufacturing, meanwhile, is helping cut costs and lift profit margins.

“These guys are recovering from very, very low levels,” said Hans Mosesmann, an analyst for Raymond James & Associates Inc in New York.

Nvidia, based in Santa Clara, California, rose as much as US$0.88 to US$14 in trading before US exchanges opened, after closing at US$13.12 on the NASDAQ Stock Market on Thursday.

The company reported a loss of US$105.3 million, or US$0.19 a share, in the second quarter, which ended on July 26. The loss included an expense of US$119.1 million to fix and replace defective chips.

A year earlier, Nvidia posted a loss of US$120.9 million, or US$0.22 a share. It also had an expense to repair chips in that quarter, amounting to US$196 million.

Second-quarter revenue was US$776.5 million, compared with US$892.7 million a year earlier. Analysts had predicted US$709.2 million on average.

Nvidia had predicted that sales would rise 5 percent from the US$664.2 million in the first quarter, indicating a forecast of about US$697 million. It projected a gross margin of between 32 percent and 34 percent. Excluding some items, the margin was 36.3 percent.

Nvidia trails Intel Corp in sales of graphics chips. Intel, also based in Santa Clara, sells its semiconductors as part of other products, such as microprocessor sets. Nvidia competes more directly with Advanced Micro Devices Inc, based in Sunnyvale, California, in the market for separate graphics chips used in computer cards.

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