Topic: Growth Stocks

Technology stocks: New chips push up Nvidia’s sales and earnings

Nvidia Corp., Nasdaq symbol NVDA, designs graphic chips that make computer games run more smoothly and appear more lifelike.

In its 2011 fiscal year, which ended January 30, 2011, Nvidia earned $253.1 million. It lost $68.0 million in 2010. Earnings per share jumped to $0.43 from a loss of $0.12. Excluding one-time items, the technology stock’s earnings per share rose 160.0%, to $0.65 from $0.45. Nvidia spent 24.0% of its sales on research in fiscal 2011, so it’s more profitable than it seems.

Sales rose 6.5%, to $3.5 billion from $3.3 billion. That’s largely due to strong demand for the technology stock’s new Tegra chips, which greatly enhance displays on cellphones and other mobile devices. The company is also seeing strong interest from computer makers for its chips that can process data as well as display graphics.

Last year Nvidia extended a cross-licensing agreement with Intel for $1.5 billion over a six-year period. Motorola, LG Electronics, Acer, Dell and AT&T are all using Tegra chips in some of their products. Samsung and Toshiba will start using the technology stock’s Tegra chips in fiscal 2012.

In February 2011, Motorola will launch its new Xoom tablet computer, which uses new Nvidia processors, to compete with Apple’s iPad. Smartphones using the same processors will also appear in stores by the Christmas season.

You can get our full analysis, including our updated buy/sell/hold advice, on Nvidia in an upcoming issue of Wall Street Stock Forecaster. What’s more, you can get one month free when you subscribe today. Click here to learn how.

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