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Nvidia Says Xbox Speculation Is Just That

Any decision is a ways off, the company says. Also, it is expanding its accounting inquiry.

Graphics chipmaker


(NVDA) - Get NVIDIA Corporation Report

on Monday dismissed talk of


(MSFT) - Get Microsoft Corporation Report

dropping its chip from the next version of the Xbox game console.

"It's all speculation," Michael Hara, Nvidia vice president of investor relations, said of Microsoft's plans for the next version of the Xbox. But he also pointed out that decisions on the next Xbox are likely to come later rather than sooner.

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Responding to a question at the Robertson Stephens technology conference, Hara suggested Microsoft is unlikely to release a new version of Xbox in the next year or two because it will take that long to recoup through royalties some of the money it is losing on the game console.

Rumors about Nvidia losing out on the next version of Xbox began floating around last week, as Microsoft was kicking off its Xbox launch in Japan. The companies shares closed at $49.92 Friday, down 19.7% from Feb. 14, when it reported earnings. Nvidia's shares rose 7.8% Monday to close at $53.83.

Clearly prepared for the Xbox rumor to surface, Hara came to the conference armed with a statement from Microsoft saying that Nvidia is its graphic chipmaker of choice.

Nvidia's CFO Christine Hoberg also said the company's audit committee also has decided to expand its review into how the company timed the recognition of reserves to the past three years since the company went public. On Feb. 14, Nvidia announced its audit committee was conducting a review after receiving a

Securities and Exchange Commission

inquiry. The committee is looking into whether the company improperly shifted $3.6 million of costs during the fiscal year 2001.

Hoberg said the company doesn't consider the inquiry a full-blown investigation. Rather, the SEC has asked Nvidia's audit committee to review certain transactions, she said. Hoberg declined to give a time frame for when the committee expects to complete its audit and could not give specifics on the dollar amounts of the reserves involved.

Hara explained after the session that the audit committee decided it might as well examine all of the company's books while it has them open to respond to the SEC questions.