Nvidia Aims for Growth Amid Slowdown

The extra kick of revenue, along with surprising strength in Nvidia's gross profit margin -- the company delivered gross margin of 41% vs. the 39.6% expected by analysts -- allowed Nvidia to clear the Street's EPS expectations.

Nvidia posted net income of $61.7 million, or 11 cents a share, in the three months ended October 26, down from $235.7 million, or 38 cents a share, at this time last year.

Excluding $8.3 million in restructuring charges, as well as $38 million in stock compensation expenses and a $4.5 million charge related to a royalty dispute, Nvidia said it earned 20 cents a share.

Analysts polled by Thomson Reuters were looking for 12 cents a share, excluding charges.

One of Silicon Valley's most successful chip firms, Nvidia has fallen upon hard times in recent months as the company struggled with increased competition and its own product glitches.

In August, Nvidia reported its first loss in six years as it took a $196 million charge to account for packaging defects that causes some of its graphics chips to overheat.

Last month, the company said it was cutting 6.5% of its workforce in order to shave $7 million to $8 million from its quarterly operating expenses.

Meanwhile, rival ATI, a unit of Advanced Micro Devices(AMD Quote), has taken market share from Nvidia, thanks to a new desktop graphics processor that offers impressive performance for its price.

In Thursday's conference call, Nvidia's Huang said that the company is now manufacturing its desktop graphics processors with circuits that measure 55 nanometers, instead of the 65 nanometers circuits in previous versions of the chip. Smaller circuit sizes allow chipmakers to reduce their manufacturing costs and improve the performance of a chip.