Video card giant
slashed its second-quarter revenue estimate by $150 million and said it would write off a large amount of obsolete product as inventory trends at
hurt its product mix.
The Santa Clara, Calif., chipmaker expects revenue of $410 million to $430 million and earnings that are near or above break-even, including the charge. Analysts polled by First Call were expecting revenues of $567.9 million and earnings of 40 cents a share, although those estimates didn't account for the charge.
In a conference call, the company cited personal computer demand that plunged 12% sequentially in the quarter instead of the 5%-7% previously forecast. With demand estimates much too high, the company added, product built up at the end of the first quarter.
In addition, a decision by Intel to clear its channels of Celeron processors and move out certain older versions of the Pentium 4 hurt Nvidia's product mix and gross margins. The company insisted, however, that the phenomenon doesn't imply a broad change in consumer preference toward cheaper machines.
The inventory write-down reflects a change in the design of Microsoft's Xbox game console that made certain Nvidia chipsets obsolete, and much lower-than-expected demand for
Advanced Micro Devices
The company said it's cautious about the overall market in the third quarter.
The shares were down about 16% to $12.59 on Instinet.