Discrete GPUs, Consumer and Professional Products Lift Nvidia's Revenue

From X-bit Labs: For the second time in a row, Nvidia Corp.'s revenues were boosted by its Tegra line of system-on-chips for ultra-portable devices as well as Tesla and Quadra series for professional usage. Although sales of desktop graphics processing units were up, the increase was offset by declines in sales of chipsets. According to Nvidia, it even could have done better with its consumer products.

"Nvidia's strategy is coming into its own, as the world becomes increasingly visual and mobile. Our GPU business accelerated in the third quarter, driven by strong demand from gamers and the professional market. And our mobile business benefited from new devices coming onto the market. With Tegra 3 phone [design] wins well ahead of Tegra 2's pace, we are expecting strong growth in the year ahead," said Jen-Hsun Huang, president and chief executive of Nvidia.

Nvidia's GeForce business – which includes desktop and notebook GPUs, memory, chipset products and license revenue from the company's patent cross license agreement with Intel – was up 1.0% compared with the previous quarter, at $644.8 million as chipset revenue declined $47.3 million to $22.4 million in the third quarter. In overall, the situation is not bad and the company manages to offset declines in chipset revenues with sales of discrete GPUs and other related products.

The strength in Nvidia's GPU business in the third quarter was largely attributable to its desktop GPU products, with revenue increasing 23% over the prior quarter. This was not only due to seasonal strength for desktop GPU in the third quarter, but also the increased demand for Nvidia's high-end products as consumers geared-up their PCs for new titles such as Battlefield 3, Elder Scrolls V:Skyrim and Star Wars: The Old Republic. The growth in Nvidia desktop GPU business was largely offset by the decline in chipsets as well as a decrease in notebook GPU revenue due to declines in addressable market.

"While overall consumer GPU attach remained stable, we believe the decline of our notebook GPU revenue over the prior quarter was primarily a result of Intel losing some share to AMD CPU in notebook, and our absence from Apple platforms this cycle. Channel inventory was relatively flat in the quarter and remained comfortably within our target levels," said Karen Burns, interim chief financial officer of Nvidia.

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