NVIDIA Corp. (NVDA) reported fourth-quarter fiscal 2011 earnings per share of 23 cents, exceeding the Zacks Consensus Estimate of 21 cents.
The company reported fourth quarter revenues of $886.4 million, up 5.0% from the prior quarter and down 9.8% from the comparable quarter in the prior year. The Graphic Processing Unit (GPU) business of the company moved up 5.5%, while MCP revenue fell significantly as the company entered the final phase of the business.
The Consumer business improved despite a seasonally down console business, as the company received benefit from strong Tegra segment growth. Moreover, the company witnessed strong growth in desktop and notebook segments.
On the other hand, the company’s Professional business suffered slightly. The company witnessed a decline in Quadro sales, offset considerably by strong growth in Tesla.
Operating Results
Gross margin on a GAAP basis was 48.1%, up from 46.5% in the previous quarter and 44.7% in the year-earlier quarter. Gross margin on a non-GAAP basis was 48.1%, up from 46.5% in the previous quarter and 44.7% reported in the comparable quarter last year.
Gross margin of 48.1% was at the high end of the company’s guided range, primarily as a result of richer GPU product mix than the company had expected at the beginning of the quarter.
GAAP operating expense in the quarter was around $246.6 million, down from $288.3 million in the prior quarter, and also down from $304.4 million in the year-ago quarter.
The company reported net income of $171.6 million, or $0.29 per diluted share on a GAAP basis, compared with $131.0 million, or $0.23 in the year-earlier period. Including the total pre-tax impact of non-GAAP adjustments net income in the quarter was $139.0 million, or $0.23 per diluted share, compared with $131.0 million, or $0.23 in the year-earlier quarter.
Balance Sheet & Cash Flow
The company exited the quarter with cash, cash equivalents and marketable securities balance of $2.83 billion, up from $1.98 billion in the previous quarter, while the balance for inventories stood at $345.5 million, down from $377.8 million.
Guidance
For the first quarter of fiscal 2012, the company expects revenues to be up approximately 6.0% to 8.0% sequentially. GAAP gross margin is expected to range from 48.5% to 49.5%. GAAP operating expenses are expected to be approximately $327.0 million. The tax rate is expected to be in the range of 16.0% to 18.0%.
The company reported decent fourth-quarter numbers, but is optimistic about its long-term growth with the gradual recovery in demand for graphic chips. Moreover, the company rolled out the first quad-core mobile processor. The company will also receive $1.5 billion in a licensing agreement with Intel Corp. (INTL) that spans over six years.
However, the company’s performance may be slightly tempered by cyclical weakness, economic slowdown in Europe and increased competition.
The company has a short-term Zacks #1 Rank (Strong Buy).
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