Nvidia's Profit Doubles

The company beats analysts' revenue and earnings estimates.
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Updated from 4:45 p.m. EST

Nvidia

(NVDA) - Get Report

on Thursday reported the close of a robust year and forecast another one to come.

Earnings at the graphics chipmaker more than doubled in its fiscal fourth quarter, and the company predicted much better-than-expected sales in its current period.

"With more growth drivers than ever, this should be another year of strong growth," company CEO Jen-Hsun Huang said on a conference call.

Investors cheered the news, sending Nvidia's stock soaring $5, or 10.6%, in recent after-hours trading to $52.20.

In the quarter ended Jan. 29, the graphics chipmaker earned $98.1 million, or 53 cents a share. That was up from $48 million, or 27 cents a share, in the same period a year earlier.

Sales rose 12% to $633.6 million.

On average, analysts polled by Thomson First Call were expecting the company to earn 49 cents a share on sales of $625.33 million in the just-completed quarter, Nvidia's fourth fiscal period.

Nvidia doesn't provide a per-share forecast, but its previous guidance implied an earnings range of about 44 cents to 50 cents a share on sales of about $612.6 million to $630.1 million.

Per usual, the company offered only a partial outline of its expectations for its current first quarter. Relative to fourth-quarter results, that forecast calls for sales to rise 3% to 5%, gross margins to increase 50 to 100 basis points and operating expenses to jump 5% to 10%.

Additionally, the company expects stock options, which it will begin expensing this quarter, to cost about $20 million.

Assuming that the company's interest income remains about the same and its share count grows at about the same rate it did in the fourth quarter, Nvidia's guidance implies earnings of about 41 cents to 50 cents a share -- 50 cents to 59 cents a share without options costs -- on sales ranging from about $652.6 million to $671.6 million.

In contrast, analysts have forecast earnings of 45 cents a share in the current period on $614.5 million in sales. It was not immediately clear if those estimates included options charges.

Not including options costs, Nvidia earned $64.4 million, or 36 cents a share, on sales of $583.8 million in the year-ago period.

In the coming year, the key growth drivers for the company will be its chips for mobile handsets; its NForce integrated chipsets, which tap into the processing power and memory of a computer's CPU; and so-called discrete graphics chips, which have their own memory and processor, company CFO Marv Burkett said in an interview with

TheStreet.com

.

The company expects to launch a new line of discrete graphics chips "soon," he said, although Burkett declined to give a specific date.

For all of fiscal 2006, Nvidia earned $302.6 million, or $1.65 a share, on $2.38 billion in sales. In fiscal 2005, the company earned $100.4 million, or 57 cents a share, on $2.01 billion in sales.

In the just-completed quarter and all of fiscal 2006, Nvidia's tax rate was 16% of income, down from 20% a year earlier. The tax rate decline had to do with operational changes the company made in the first half of its fiscal year last year that served to decrease the amount of its business that was taxed at U.S. rates, said Burkett.

Nvidia expects that tax rate to continue in its first quarter and for the foreseeable future, he said.

Nvidia shares closed regular trading Thursday up $2.22, or 5%, to $47.20.