NVIDIA Corporation (NASDAQ:NVDA) plans to release its fourth quarter financial results on Feb.12. The graphics chip maker company would host a conference call on the same day at 2 p.m. PT (5 p.m. ET) to discuss the operating performance.
Wall Street expects Nvidia to earn 18 cents a share, according to analysts polled by Thomson Reuters. The consensus estimate implies a drop of 35.7 percent from last year when it earned 28 cents a share.
Despite being lackluster, Nvidia's earnings have managed to top Street view thrice in the preceding four quarters, with upside surprise ranging between 16.7 and 30 percent. and came in line with estimates in the last quarter. The consensus estimate remained unchanged in the past three months while two analysts have raised their profit view for the quarter in the last 30 days.
[Related -NVIDIA Corporation (NVDA) Q3 Earnings Preview: Can We See Another Beat?]
Quarterly revenues are projected to drop 4.8 percent to $1.05 billion from $1.11 billion in the same quarter last year. Nvidia expects fourth quarter revenue of $1.05 billion, plus or minus two percent.
Nvidia has two key segments - Graphics Processing Unit (GPU) business and Tegra. The GPU business includes GeForce graphics chips and cards for PCs, Tesla graphics for super-computing applications, Quadro for computer-aided design or medical imaging. GPU accounts for more than 80 percent of sales.
The second is the Tegra line of mobile system-on-a-chip (SoC) processors. Tegra integrates a CPU, GPU, and memory controller onto a single chip that powers smartphones and tablets. Last year, Tegra accounted for 18 percent of total revenues.
[Related -Nvidia Corporation: Ramping Tegra 4 In 2H May Compress Current Gross Margins]
Investors would be keeping a close eye on GPU unit performance amid declining PC sales as the segment primarily caters to PCs. The GPU unit's revenue grew only 2 percent in 2012, and, in fact, over the past 3 years sales have fallen 3 percent.
BMO Capital Markets analyst Ambrish Srivastava expects revenues in the GPU segment to be down 3 percent sequentially. Within the GPU segment, discrete PC GPU shipments is projected to be down 3 percent from the third quarter and ASP approximately flat. Also within the GPU segment, combined Quadro and Tesla revenues are expected to be roughly flat versus third quarter.
Meanwhile, Tesla chips gained traction in supercomputing space, and the market would welcome if there is any positive momentum in Tesla sales.
In November, Nvidia and IBM announced plans to integrate the joint-processing capabilities of Tesla GPUs with IBM POWER processors. Investors would look for additional updates on the partnership.
The company launched Tesla K40 GPU accelerator, which it claimed as the world's highest performance accelerator ever built, delivering extreme performance to a widening range of scientific, engineering, high performance computing (HPC) and enterprise applications.
Nvidia also unveiled its GeForce GTX 780 Ti gaming GPU based on its Kepler architecture, which provides an advanced, low-thermal-density design that translates into better cooling, quieter acoustics. The GTX 780 Ti features 25 percent more cores than the GTX 780 GPU, includes a 7Gbps of onboard memory and supports NVIDIA GPU Boost 2.0 technology.
Another focus point would be Tegra, which is considered as the next leg of growth for Nvidia. Wall Street would be watching for customer signings on the smartphone front as it faces cut throat competition from market leader Qualcomm, Inc. (NASDAQ:QCOM). For the Tegra processor segment, revenue should increase about 20 percent as the company continues to ramp its Tegra 4 processor.
Investors would be looking for updates on its newly launched Tegra K1 mobile processor, a 192-core super chip based on Kepler architecture.
Gross margin is another key metric. Nvidia estimates GAAP and non-GAAP margins to be approximately 54.2 percent and 54.5 percent, respectively.
The magnitude of the upcoming Tegra 4 ramp may impact margins of Nvidia. Margins are particularly susceptible to oscillate in the second half of 2013 given that to what extent a rebounding lower-margin Tegra business is going to offset growing Tesla adversely, and to a lesser extent, GRID sales. So, investors would focus on margin commentary.
Meanwhile, GRID interest is very encouraging. Thus far, GRID is being well-received in the marketplace as customer sign-ups and trails are increasing with material revenue generation likely still several quarters out. The market would watch for traction of GRID platform.
Moreover, the outlook for the first quarter revenue would be closely monitored, and it may decide the movement of the stock depending upon how it fares with the Street view.
For the third quarter, the Santa Clara, California-based company reported net income of $118.7 million, or 20 cents a share, compared to $209.1 million or 33 cents a share for the year-ago quarter. Excluding items, it earned 26 cents a share. Revenue for the third quarter fell 12.5 percent to $1.05 billion. Gross margin for the quarter improved to 55.4 percent from 52.9 percent a year ago while adjusted gross margin increased to 55.7 percent from 53.1 percent last year.
Out of 33 analysts covering the stock, six analysts have a rating of "strong buy" or "buy," while 22 analysts recommend "hold." Five analysts have a " sell" rating on the stock, which has traded between $12.04 and $16.44 during the past 52-weeks. It has gained 27 percent in the last year.
No comments:
Post a Comment