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Nvidia's third-quarter revenue outlook exceeds expectations

By Noel Randewich

SAN FRANCISCO (Reuters) - Nvidia Corp posted higher fiscal second-quarter earnings on Thursday and gave a forecast for current-quarter revenues that exceeded Wall Street's estimates, sending shares of the graphics chipmaker higher in after-hours trade.

The outlook in the PC industry has brightened following news that PC shipments were flat in the June quarter, a better-than-expected result.

Nvidia relies on selling graphics chips for PCs for most of its business but it is also making inroads into cars and data centers, seen as potentially faster-growing markets for its chips.

In the second quarter, revenue from Tegra chips for automobiles and mobile devices jumped 200 percent to $159 million.

“They’re doing better than their peers. … The Tegra number was better than expected,” said FBR analyst Chris Rolland.

After struggling to compete against larger chipmakers like Qualcomm in smartphones and tablets, Nvidia has increased its focus on using its Tegra chips to power entertainment and navigation systems in cars made by companies including Volkswagen's Audi, BMW and Tesla.

Nvidia in July launched its own tablet aimed at game enthusiasts, called Shield, with Tegra chips and other high-end components, bucking an industry trend toward commoditized, inexpensive devices.

Nvidia has also made progress into cloud computing data centers, with IBM, Dell and Hewlett-Packard offering servers with Nvidia chips. Its GRID graphics technology for data centers is also being tested by other potential enterprise customers.

The Santa Clara, California company reported second-quarter revenue of $1.1 billion, up 13 percent from the year-ago quarter as it expanded its focus on cars and cloud-computing.

For the current quarter, Nvidia said it expects revenue of $1.2 billion, plus or minus 2 percent. Analysts on average expected second-quarter revenue of $1.1 billion and third-quarter revenue of $1.16 billion, according to Thomson Reuters I/B/E/S.

Nvidia's net income in the second quarter, which ended on July 27, totaled $128 million or 22 cents per share, compared with $96 million, or 16 cents a share, in the year-ago quarter. Analysts on average expected 20 cents.

Non-GAAP earnings per share were 30 cents.

Nvidia said it expects third-quarter GAAP and non-GAAP margins of 55.2 percent and 55.5 percent, respectively.

Shares of Nvidia rose 3.9 percent in extended trade after closing down 1 percent at $17.46 on Nasdaq.

(Reporting by Noel Randewich; Editing by Paul Simao and Gunna Dickson)

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