Nvidia's Estimates, Price Target Cut by Prudential

The brokerage lowers 2003 and 2004 estimates on the company due to lackluster Xbox sales.

Author:: Michael Dunn
Publish date:: Apr 19, 2002 9:44 AM EDT

Shares of

Nvidia

were falling on news that Prudential cut its EPS and revenue estimates for the company due to weak demand for Microsoft's Xbox.

Prudential now expects Nvidia, chipmaker for the

Microsoft

(MSFT) - Get Report

game console, to see 2003 full-year EPS of $1.72 on revenue of $2.235 billion, down from its earlier forecast of $1.77 on revenue of $2.40 billion. For 2004, the analyst expects Nvidia to see EPS of $2.08 on revenue of $3.20 billion, down from $2.15 on revenue of $3.20 billion. The lowered expectations are still within the company's guidance.

The cuts come a day after

Microsoft announced that it has backed away from its original goal of selling between 4.5 and 6 million Xbox consoles by the end of June. Now the company expects shipments of about 3.5 million to 4 million, due primarily to the difficulty of cracking the Japanese market.

Microsoft recently announced that it would cut its price on the console in Europe in hopes of stimulating sales, and the company has set a full-year 2003 sales goal of 9 million to 11 million consoles.

With Microsoft's market penetration in question, Prudential also cut its price target on Nvidia to $62 from $75.

Shares of Nvidia were recently down $1.10, or 2.8%, to $38.52.