--Nvidia's third-quarter profit more than doubled
--Company says results driven by accelerating graphics sales and strong traction in its mobile chip business
--Chip maker reports sequentially higher revenue in all of its businesses
(Updates throughout with additional details and analyst comments.)
By Shara Tibken Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Nvidia Corp.'s (NVDA) fiscal third-quarter profit more than doubled on robust demand from videogame and professional customers.
Nvidia's main graphics-chips business has held up over the past year despite fears of a slowdown in consumer spending. On Thursday, the Santa Clara, Calif., company said sales actually strengthened in the latest period.
"Our [graphics] business accelerated in the third quarter, driven by strong demand from gamers and the professional market," Chief Executive Jen-Hsun Huang said.
Meanwhile, Nvidia's mobile processor, dubbed Tegra, benefited from new devices coming onto the market, Huang said. The strong position of its Tegra applications processor in mobile devices has boosted the top line, though some analysts have worried about competition from competitors such as Qualcomm Inc. (QCOM) and Texas Instruments Inc. (TXN).
"With Tegra 3 phone wins well ahead of Tegra 2's pace, we're expecting strong growth in the year ahead," he said.
Shares, down 6% in the year through Thursday's close, climbed 5% to $15.20 in after-hours trading.
Many investors and analysts have taken more bearish views on Nvidia of late, worried about share loss in graphics and intensifying competition in the smartphone and tablet market. Needham analyst Rajvindra Gill said investors were relieved by the results Thursday, helping send shares higher.
"It wasn't an out-of-the-park quarter, but the negative sentiment was pretty high heading into the quarter," he said.
The Silicon Valley company is best known for chips called graphics processing units, or GPUs, which generate visual effects in videogames played on personal computers and consoles. Questions have been raised about the long-term future of that business, in part because Intel Corp. (INTC) and Advanced Micro Devices Inc. (AMD) have begun including graphics as a built-in feature of microprocessor chips.
However, Nvidia and AMD, which also sells GPUs, have said those chips continue to be added to PC configurations. Nvidia on Thursday said revenue in its consumer graphics business grew 1% sequentially to $644.8 million, largely due to a 23% rise in desktop GPU revenue.
One negative factor in Nvidia's GPU business has been Apple Inc.'s (AAPL) recent decision to drop Nvidia GPUs in favor of AMD's products. Nvidia on Thursday said that move contributed to a sequential decline in notebook GPU revenue, as did likely share loss by Intel to AMD. Nvidia GPUs are often paired with Intel processors.
Nvidia, meanwhile, has placed a major bet that it can move beyond PCs into mobile devices, with chips that combine graphics and a microprocessor on the same piece of silicon. The company has experienced strong traction with its Tegra mobile chip, but rivals have racked up recent high-profile design wins.
Nvidia on Thursday said revenue for its consumer products group, which includes Tegra, rose 14% from the second quarter. Most of the gain came from the mobile chip and a seasonal increase in game console royalties, the company said.
Nvidia also reported revenue in its professional solutions business, which includes workstation graphics, increased 9.5% sequentially to a record $230.3 million.
For the quarter ended Oct. 30, Nvidia reported a profit of $178.3 million, or 29 cents a share, up from $84.9 million, or 15 cents a share, a year earlier. Excluding stock-based compensation, acquisition-related costs and other items, per-share earnings climbed to 35 cents from 32 cents. Analysts expected income of 26 cents a share, according to a Thomson Reuters poll.
Revenue grew 26% to $1.07 billion. In August, Nvidia forecast 4% to 6% sequential revenue growth, which would generate between $1.06 billion and $1.08 billion, a view ahead of analysts' estimates at the time.
Gross margin widened to 52.2% from 46.5%.
For the current quarter, the company said revenue could vary by up to 2% from the third quarter, which would mean $1.04 billion to $1.09 billion in revenue. Analysts on average project $1.07 billion, according to Thomson Reuters.
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