Weak PC sales, strong dollar hurt Nvidia's 2nd-qtr forecast
By Kshitiz Goliya and Anya George Tharakan
(Reuters) - Nvidia Corp forecast lower-than-expected revenue for the second quarter, weighed down by lower demand for its graphic processor units due to a fall in personal computer sales and a strong dollar.
The graphics chipmaker's shares fell as much as 4.4 percent in extended trading on Thursday after it also reported first-quarter revenue and profit below estimates.
Chief Financial Officer Colette Kress attributed the tepid forecast to a fall in demand from original equipment manufacturers (OEMs) and softness in the overall PC market.
Worldwide PC shipments fell 6.7 percent to 68.5 million units in the first quarter, and are expected drop 4.9 percent during the year, research firm IDC said in April.
Rival chipmaker Advanced Micro Devices Inc reported a steep fall in first-quarter sales last month and said it expected weak demand for PCs to continue for some time.
A strong dollar, which has risen about 9 percent against a basket of major currencies, also contributed to Nvidia's weak results and forecast.
"Nvidia does a lot of their business in US dollars and due to the change in currency and strength of the dollar it has made their GPU (graphics processor unit) gaming more expensive and probably ... cost prohibitive," Wedbush Securities analyst Betsy Van Hees told Reuters.
Nvidia, which also competes with Intel Corp, forecast second-quarter revenue of $1.01 billion, plus or minus two percent, below the average analyst estimate of $1.18 billion, according to Thomson Reuters I/B/E/S.
The company made its name developing graphics technology for high-end PCs, but has struggled to expand into smartphones, a market dominated by Qualcomm Inc.
Nvidia said on Tuesday that it would wind down its Icera modem operations that it bought in 2011, exiting the mobile chip market.
The company's net income fell to $134 million, or 24 cents per share, in the first quarter ended April 26, missing the average analyst estimate of 26 cents.
Excluding items, Nvidia earned 33 cents per share.
Revenue rose 4.4 percent to $1.15 billion, but missed the average estimate of $1.16 billion.
Nvidia's stock was down 1.2 percent at $20.20 in after-market trading.
(Editing by Simon Jennings)
