Nvidia fourth quarter solid; Upbeat on Tegra, Tesla

Nvidia reported strong fourth quarter earnings and said that it was upbeat on its Tegra chip and the ability to power so-called superphones.

The company reported fourth quarter earnings of $171.7 million, or 29 cents a share, on revenue of $886.4 million, down 10 percent from a year ago. Wall Street was expecting earnings of 22 cents a share fully loaded. Non-GAAP earnings were 23 cents a share, 7 cents better than estimates. Revenue was a bit lighter than the $892 million expected by Wall Street, but Nvidia said that there were discrepancies in analyst estimates due to a legal settlement with Intel. That settlement with Intel resulted in a $57 million credit to operating expenses.

In a statement, Nvidia CEO Jen-Hsun Huang said the results detail "the larger story of transformation." He added that while graphics chips are critical, the company's growth will come from mobile computing. "Tegra is positioned center stage in the revolution in super phones and tablets, while Tesla is becoming an essential processor for supercomputing," he said.

Indeed, Nvidia is interesting to watch. On the tablet front, Nvidia is winning design wins with Acer, Dell, LG and Motorola as well as Toshiba and Samsung. Meanwhile, Nvidia's processors are becoming an option for high performance computing.

As for the outlook, Nvidia projected first quarter revenue growth of 6 percent to 8 percent from the fourth quarter. Margins will be about 48.5 percent to 49.5 percent.

In prepared remarks, Nvidia CFO David white said:

• Revenue from discrete graphics processors was "particularly strong throughout the quarter" since desktop and notebook demand was up for GeForce chips.
• Nvidia expects to gain notebook share when Intel resumes shipments of its Sandy Bridge chipset.
• Tesla and Tegra chips showed sequential gains. Tegra customers have started to ramp production of tablets and smartphones.

Related:

• Superphones need super chips: The mobile processor race is on
• Nvidia: We'll have quad-core Tegra in products soon
• CES 2011: Nvidia is developing its first CPU
• CES: Nvidia, ARM partner on company's first high-performance CPU