Sales Surge at Nvidia
Updated from 5:04 p.m. EST
Nvidia (NVDA) boosted its sales 41% in the third quarter, blowing past Wall Street estimates.
The Santa Clara, Calif., graphics-chip maker said revenue in the three months ended Oct. 29 totaled $820.6 million, compared with $583.4 million at the same time last year.
Analysts polled by Thomson Financial were expecting Nvidia to report $753.6 million in third-quarter sales.For the quarter, Nvidia earned $106.5 million, or 27 cents a share. Excluding stock-option compensation, EPS was 39 cents. The average analyst expectation, which excludes stock-compensation expenses, called for EPS of 35 cents. Shares of Nvidia, which closed Thursday's regular session at their 52-week high, gained 3.2%, or $1.13, to $36.42 in extended trading. CEO Jen-Hsun Huang described the third quarter as one of the best in company history. "For the third consecutive quarter, we delivered record revenue as we continued to gain share in each of our core businesses," Huang said in a statement. Graphics processors for desktop and notebook PCs -- the largest part of the company's business -- each experienced strong sales, with sequential growth up 13% and 46%, respectively. Nvidia management said the company garnered a 52% share of the market for notebook graphics processors, making Nvidia the No. 1 player in the sector for the first time. And the new GeForce 8800 graphics processor that Nvidia introduced Wednesday will allow the company to continue its strong sales growth in the months ahead, executives said in a postearnings conference call. Huang said the G80 architecture at the heart of the new chip required more than $400 million to develop, representing the company's most ambitious undertaking ever. More importantly, the G80 gives Nvidia a nice lead over rival ATI Technologies , which was recently acquired by Advanced Micro Devices (AMD) and is not expected to have a comparable product until 2007. Management was less forthcoming about its other piece of big news, the recently announced plans to acquire PortalPlayer (PLAY) for $357 million in cash. In their first public comments on the deal, Nvidia executives said the acquisition is expected to have a slightly negative effect on financials in the first year but would hopefully prove "wonderfully accretive" in the second year. But management declined to provide more specific financial guidance, citing the fact that the deal has not closed and still requires shareholder approval.
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