SAN FRANCISCO (Reuters) - Graphics chipmaker Nvidia Corp (NVDA.O: Quote, Profile, Research, Stock Buzz)
warned on Wednesday that revenues and gross margin would miss analysts'
estimates due in part to weak demand, sending its shares down 25
percent.
It also cited delayed production of a new product and price cuts on some other chips due to a price war.
While Nvidia's warning, coming on the cusp of the quarterly earnings
season, could be seen as a harbinger of further earnings warnings, big
technology companies so far have not warned of the weak U.S. economy
leading to results that are worse than expected.
"Market weakness is going to be an issue, but I don't see any other
companies preannouncing their quarters that are on the PC side of
things," said Raymond James & Associates analyst Hans Mosesmann.
"AMD is not preannouncing, Intel didn't preannounce and Micron said
the PC market has looked good," Mosesmann said, referring to processor
makers Advanced Micro Devices Inc and Intel Corp, and memory chip maker
Micron Technology Inc. "A lot of what Nvidia is seeing is specific to
them."
The company expects second-quarter revenue in a range of $875
million to $950 million and said its gross margin would be lower than
its internal expectations.
Analysts currently expect Nvidia to have a second-quarter profit of
28 cents per share on revenue of $1.01 billion, according to Reuters
Estimates.
"The estimated decrease in revenue and gross margin is due to
several reasons: end-market weakness around the world, the delayed ramp
of a next generation MCP, and price adjustments of our GPU products to
respond to competitive products," the company said in a statement.
When the company reported first-quarter results it said it had no
reason to believe the current quarter would be "anything other than
seasonal," Chief Financial Officer Marvin Burkett said on a conference
call. Continued...
