Nvidia shows strength in servers, but mobile sales plunge

Nvidia CEO Jen-Hsun Huang
IDG News Service

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Nvidia exceeded Wall Street expectations for its second quarter of fiscal 2014, with strong showings in its desktop, workstation, and especially server businesses. But its Tegra business stumbled badly, even though the company had warned that it would do so.

Nvidia reported a profit of $96.4 million or 16 cents per share on revenue of $977.2 million for the quarter, as profits fell 19 percent and revenue was down 6.4 percent from a year ago.

The lowered estimates may have been due to the fact that Nvidia had warned that its Tegra 4 chips wouldn’t arrive on schedule. Nvidia had said in April that it had adjusted its Tegra mobile chip schedule to try and pull in the Tegra 4i, a mobile chip that also integrated LTE baseband technology. Unfortunately, that cost Nvidia: Tegra revenue came in at $52.6 million, down a whopping 70.7 percent from a year ago.

”The GPU business continued to grow, driving our fourth consecutive quarter of record margins,” said Jen-Hsun Huang, president and chief executive officer of Nvidia, in a statement. “We also began shipping GRID virtualized graphics, which puts the power of Nvidia GPUs into the datacenter. We look forward to a strong second half, with new Tegra 4 devices coming to market, SHIELD moving beyond the U.S. and broader sampling of Project Logan, our next-generation Tegra processor, which brings Kepler, the world’s most advanced GPU, to mobile.”

Nvidia could use a boost from its Shield gaming console.

While the majority of the PC market sticks with low-cost PCs that use integrated graphics, Nvidia has clearly benefited from buyers in the surging PC gaming market, and sales should pick up when its Shield project—despite iffy reviews—begins shipping in higher volumes. Overall, the GPU business had revenue of $858.6 million, up 9.3 percent sequentially and up 7.5 percent year over year, Nvidia reported. Desktop GPU sales grew by 3.9 percent year over year, workstations grew by 14.3 percent, and server GPUs—where supercomputers use them for specialized computing—grew by a whopping 127.5 percent. But in notebooks, revenue fell by 1.7 percent.

Nvidia’s outlook is stronger, $1.05 billion for the third fiscal quarter. But the company’s struggles in the mobile market may be a sign of weakness that rivals such as Qualcomm, AMD, and Intel may pounce upon. Time will tell whether or not Nvidia can recover.

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