Robbie Stephens Conference: Nvidia Takes a Victory Lap, Aims for New Markets

SAN FRANCISCO -- There must be something about having a stock up 18% the day after a strong earnings report that makes presenting at a conference soooo nice.

In this winter of discontent, earnings warnings and recession worries, graphics chipmaker Nvidia (NVDA Quote - Cramer on NVDA - Stock Picks) got a chance to take a victory lap around the Robertson Stephens Technology 2001 Conference here, talk up its deal to supply the Microsoft (MSFT Quote - Cramer on MSFT - Stock Picks) Xbox video game console and try to defuse talk of channel stuffing in Taiwan.

Nvidia President and CEO Jen-Hsun Huang told an audience of investors the company's next push would be into supplying the mobile computing market with 3D graphics chips, currently a nonexistent part of its revenue mix. Then Huang said the second half of 2001 would be when the first returns from the Microsoft Xbox kick in. "The 2001 forecasts account for very little X-Box," Huang said.

After the close Wednesday, Nvidia announced fourth-quarter earnings of 38 cents a share, a penny higher than analysts expected.

The near-term focus of the company, which leads the market for 3D graphic chips for desktop computers, will be breaking into the Apple (AAPL Quote - Cramer on AAPL - Stock Picks) computer market, and the laptop market, in which it has already inked a deal with Toshiba.

In a breakout session, company executives were asked about the company's relationship with Taiwan's Edom, one of its biggest customers, and concerns that Edom could be "stuffing the channel" with Nvidia chips it couldn't sell.

Christine Hoberg, Nvidia's chief financial officer, said Nvidia doesn't book any revenue from Edom until the units are resold to customers. "Edom is our best paying customer," Hoberg said, adding that Nvidia would likely be able to determine whether the company was stuffing the channel.