Nvidia's Q1 mixed, hints at layoffs tied to future Icera business sale

Earlier this week, Nvidia made the surprise announcement it would be selling off its Icera cellular chip business.

Nvidia published a mixed bag of first quarter financial results after the bell on Thursday.

The chip maker reported a net income of $134 million, or 24 cents per share (statement).

Non-GAAP earnings were 33 cents per share on a revenue of $1.15 billion, up four percent year-over-year yet down eight percent since last quarter.

But Wall Street was looking for earnings of 26 cents per share with $1.18 billion in revenue.

For the current quarter, Wall Street expects earnings of 27 cents per share and $1.16 billion in revenue.

Nvidia followed up with Q2 revenue guidance of $1.01 billion, plus or minus two percent.

Earlier this week, Nvidia made the surprise announcement it would be selling off its Icera cellular chip business.

Hinting at what it hopes to be a speedy negotiation, Nvidia affirmed it is "open to a sale of the technology or operations."

In an update included in Thursday's report, Nvidia estimated restructuring charges in the range of $100 million to $125 million, expecting most of this impact during fiscal 2016.

Unfortunately, many of those changes will likely include job losses depending on the buyer (or lack thereof).

"These charges will consist of severance and other employee termination benefits, tax expense items and other costs associated with the wind-down, if the company is unable to sell the modem operations," the company explained.

The Icera department includes approximately 500 employees based primarily in the United Kingdom and France with a few more teams scattered across the United States and Asia.

Nvidia bought Icera in 2011 for its 4G LTE modem technology with the interest of using these solutions for growing its smartphone business.

However, with the blossoming of other mobile technologies thanks to the cloud as well as Nvidia's growing interest in deep learning, Icera's resources don't fit the bill anymore.

"The importance of visual computing is evident all around us," wrote Nvidia CEO and president Jen-Hsun Huang, in prepared remarks. "Our expertise in this field enables us to take a leading position to advance deep learning, virtual reality and self-driving cars."

Until a buyer is found, Nvidia said it expects Icera to wind down in-house development over the next year with the intention of forging deals with third-party model suppliers soon.