Nvidia surprises with rock solid first quarter

Santa Clara (CA) - Nvidia today reported revenues of $682 million and net income of $91 million for the first quarter of this year (fiscal 2007) that ended on 30 April. Compared to the first quarter of last year, sales climbed 17% and net income jumped 41%.

A main contributor to improved profitability was the firm’s GeForce 7 graphics processor series, which accounted for more than $250 million in sales and more than half of total graphic chip revenues. As a result, Nvidia’s gross margin increased by 0.1 percentage points and reached a new record high of 42.5%.

Nvidia claims that it was able to grow its market share in the performance DX9 and general DX9 segment from 79 to 83% and from 57 to 60%, respectively, during the first calendar quarter.

According to the quarter report, Nvidia was able to grow its sales in all business segments with the exception of consumer electronics. As Microsoft has switched the graphics chip in its Xbox game console from an Nvidia to an ATI architecture, Nvidia sees its sales declining, but the firm expects its consumer electronics sales to be rapidly picking up once Sony ships its Playstation 3 console later this year. Given the fact that Sony intends to sell six million PS3’s until 31 March 2007, Nvidia said that it expects graphics chip revenues from the PS3 to land somewhere between $50 and $100 million for fiscal 2007.

While the company posted a better-than-expected quarterly profit and said it expects climbin revenues from its mobile graphics processors, the stock lost 3.6% or $1.05 in afterhours trading.