NVIDIA Cuts Revenue Expectations After Drive Shortages Impact Sales
It’s no secret that the advent of the iPad has impacted PC sales and all but shut other tablet manufacturers out of the market. As a result, graphics processor supplier Nvidia has been forced to lower its revenue expectations for its fourth quarter, which will end on January 29th.
Nvidia cites shortages of hard disk drives and a decreased demand for its Tegra 2 system-on-chips as the reason that it failed to meet the numbers that it projected back in October.
A global shortage in disk-drives was caused by the flooding in Thailand back in October and November, where several factories were abandoned as the water continued to climb. This ended up having a huge impact, causing prices to rise and shipments by PC OEMs to be reduced. Many companies decided not to include graphics cards in their systems because of the extra hard drive expense.
Nvidia was not the only company to suffer – Intel also had a drop in revenue when manufacturers bought cheaper chips to make up for the rising cost of hard disk drives.
In addition to the shortage of HDDs, Nvidia’s Tegra 2 chips also experienced a significant drop in demand. The decline came sooner than the company expected, and before devices using the Tegra 3 processor began full-steam production in the first quarter of 2012.
Nvidia’s projected earnings for the fourth quarter are now $950, down from the original expectation of $1066 million. Nvidia stock dropped 5.6 percent to $14.10 following the announcement.
The Santa Clara-based company should bounce back as its Tegra 3 is adopted by tablet manufacturers seeking to create iPad-competitive tablets with advanced processors and graphics throughout 2012.
[via Bloomberg]