Nvidia Sees Sharp Drop in Profit, Still Ahead of Forecasts

Paul Lilly

Will the real Nvidia please stand up? Getting a read on the graphics chip maker is turning out to be nigh impossible. On one hand, Nivida has been hammered over a mobile graphics manufacturing defect that led to an "abnormal failure rate," much negative press, and questions about how widespread the problem might actually be. Then the tide changed as Apple announced it would be outfitting its refreshed MacBook line with Nvidia's 9400M GPU instead of Intel silicon. Is the company poised to fall or on the rebound?

Looking over Nvidia's financial report appears to raise even more questions than answers. For the three months that ended October 26, the company's profits have plummeted 74 percent to $61.7 million, down from $235.7 million one year earlier. But despite the free fall, earnings per share sat at 20 cents, or almost twice as much as the average estimate of 11 cents projected by First Call.

In terms of market share, Nvidia acknowledges losing ground to AMD's ATI unit, but also believes its on the verge of an upswing.

"We were caught flat footed at 65nm and our chip and board solution was just too expensive," said Jen-Hsun Huang, president and CEO of Nvidia. "We've made that transition (to 55nm) in Q2. And in Q3 we're through that transition and we're off and running."

Which direction the company is running towards, however, is anyone's guess.

Image Credit: Nvidia

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