Nvidia share price: Q3 profit tops estimates but outlook misses

Written by: Farquar McIntosh
October 21, 2019

iNVEZZ.com, Friday, November 8: Nvidia Corp (NASDAQ:NVDA) yesterday posted third-quarter profit that topped analysts’ expectations, boosted by revenue from new businesses that helped offset weakness in the PC market. The company’s forecast for the final quarter, however, fell short of analysts’ expectations.

In yesterday’s extended trading Nvidia shares rose as much as 4.2 percent, after closing 2.38 percent lower on the Nasdaq at $14.55. The stock has gained about 19 percent so far this year.
Trade these shares now through Hargreaves Lansdown from £5.95 per deal.
**Third quarter**
Nvidia’s profit before certain costs was 26 cents per share in the third quarter that ended on October 27, which was better, albeit slightly, than an average analysts’ forecast of 25 cents. The company’s net income declined 43 percent to $118.7 million, or 20 cents a share, from $209.1 million, or 33 cents, in the previous year. Revenue declined year-on-year by 12.5 percent to $1.05 billion, matching analysts’ expectations. Gross margins were 55.4 percent, up from 52.9 percent a year ago.

The company is pushing towards new markets such as mobile devices, in a bid to diversify from its core business of selling graphic processors for personal computers, which has been hit by continuing decline in the PC market. Sales of its Tegra chip for mobile phones declined 54 percent from a year earlier. However, the Tegra revenue more than doubled from the previous quarter, which signalled that demand might be picking up.

Bloomberg quoted Betsy Van Hees, an analyst at Wedbush Securities in San Francisco, as saying: “We did see a nice bounce back in Tegra.” She also added that expectations for earnings and revenue “were pretty low”. Van Hees has the equivalent of a buy rating on Nvidia shares.
The latest version of the Tegra graphic processor, the Tegra 4, is the basis of Nvidia Shield, a portable gaming device that the Santa Clara-based company is building and selling itself. The device went on sale on July 31, priced at $300 apiece.


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Nvidia said it expected revenue to be $1.05 billion, plus or minus two percent, in the fourth fiscal quarter. The implied range of $1.03 billion to $1.07 billion is lower than the $1.08 billion average estimate of analysts, according to data compiled by Bloomberg. Nvidia forecast gross margins at 54.2 percent in the quarter.

The chipmaker said that it was raising its quarterly dividend payment to 8.5 cents a share from 7.5 cents, and added $1 billion to its stock repurchase programme. It has a total of $1.29 billion available for buying its own shares before January 2016.
**As of Thursday buy Nvidia shares at $14.63**
**As of Thursday sell Nvidia shares at $14.15**
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