Nvidia shares up on raised outlook

AP News
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Posted: Sep 07, 2011 9:39 AM
Nvidia shares up on raised outlook

Shares of Nvidia Corp., a maker of graphics and tablet chips, jumped in premarket trading Wednesday after it said sales were growing faster than expected.

The stock was up $1.13, or 8.6 percent, at $14.31 ahead of the market open.

Late Tuesday, Nvidia said it expects revenue of $4.7 billion to $5 billion for the fiscal year that begins Jan. 30, well above the $4.4 billion that analysts polled by FactSet expect on average.

Nvidia CEO Jen-Hsun Huang said the company expects growth in both graphics chips and chips for tablets and smartphones.

Romit Shah of Nomura Securities noted that Nvidia's processors go into 70 percent of the tablets that run Google Inc.'s Android software, in competition with Apple Inc.'s iPad. But like other analysts, he was not impressed with the raised outlook.

"Although we believe the company is well positioned in the long term, we are not updating our estimates due to the ongoing macro weakness and the lack of substantial competition to Apple from Android tablets," Shah wrote in a morning note.

Vijay Rakesh at Sterne Agee said Nvidia raising its expectations looked premature. The company is facing a lot of competition in tablets and smartphones, and lacks the ability to bundle its processors with chips that can handle connectivity to 3G networks like Qualcomm Inc. can.