infoTECH Feature

February 17, 2012

Nvidia Gives Less Optimistic Outlook for Sales of Tegra 3 Processors

Floods in Thailand – which led to shortages of disk drives – were among the reasons that Nvidia didn’t do as well as first predicted in the most recent quarter.

The 2011 floods in Thailand stopped production of disk drives and led to higher prices for components, Bloomberg Businessweek reported. Sales of Nvidia’s Tegra 2 chips for mobile devices slowed down as well, according to a recent report from The Wall Street Journal.

The news had an impact on the company’s stock. On Thursday, Reuters reported that Nvidia shares fell 6 percent before trading ended. Nvidia now predicts it will see $540 million in sales this year for Tegra 3 processors – about half of the $1 billion in sales it had released in an estimate from a few months ago.

“We wish in the future the company did not put such aggressive targets out there, such as the one around Tegra, or risk losing additional credibility,” BMO Capital Markets said in a note quoted by Reuters (News - Alert).

On Wednesday, Nvidia released a financial report that showed revenue for fiscal 2012 jumped 12.8 percent over fiscal 2011 to $4.00 billion. However, revenue in the 4Q dropped 10.6 percent to $953.2 million from $1.07 billion in the previous quarter, the company said. Revenue for the fourth quarter of fiscal 2012 increased 7.5 percent from $886.4 million in the same period a year earlier. For fiscal 2013, the company is predicting its revenue will be between $900 million and $930 million, according to a report appearing on TMCnet.

Nvidia has been competing with Qualcomm (News - Alert) and Texas Instruments, as it sells in the smartphone and tablet sectors, according to Reuters.

“I am pleased with our achievements last year. Our GPU business grew sharply. And, with the success of Tegra, we established our position in the mobile market,” Jen-Hsun Huang, president and CEO of Nvidia, said in a company statement. “We expect continued growth ahead, as Tegra 3 powers a new wave of quad-core super phones and Kepler, our next-generation GPU architecture, sets new standards in visual and parallel computing.”

Ed Silverstein is a TMCnet contributor. To read more of his articles, please visit his columnist page.

Edited by Jennifer Russell

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