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Bucking the trend in the overall market, graphics chipmaker Nvidia Corp. beat analyst estimates, posting higher than expect quarterly earnings and revenue. The GPU maker Nvidia's chips are typically used to enhance video games on PCs, and Nvidia competes with Intel and AMD, which have their own GPU offerings.
SAN FRANCISCO, Nov 6 (Reuters) - Graphics chipmaker Nvidia Corp (NVDA) reported quarterly results on Thursday that topped Wall Street's estimate, as the company held the line on expenses while sales fell, and shares surged 12 percent.
Nvidia said its fiscal third-quarter net earnings for the quarter ended Oct. 26 came in at $61.7 million, or 11 cents a share, down 74 percent from $235.7 million, or 38 cents a share, in the year-ago period.
But after excluding items related to the company's recently announced layoffs and other charges, Nvidia earned 20 cents a share, beating the average analyst estimate of 12 cents a share, according to Reuters Estimates.
Revenue fell 20 percent to $897.7 million but topped the average analyst estimate of $889.2 million, according to Reuters Estimates.
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Chief Executive Jen-Hsun Huang, on a conference call with investors, said the company will focus on regaining lost ground in the desktop segment even as it pushes into the more rapidly growing notebook market.
"We lost some market share recently as we were transitioning. But those things are all behind us now and we are focused on going after the share that we lost."
The company said it bought back $300 million worth of stock in the quarter.
Nvidia designs chips called GPUs, or graphics processing units, used to run computer games on desktop and laptop computers, and is moving into other areas, such as wireless handsets. Nvidia is locked in fierce competition with Intel Corp (INTC) and Advanced Micro Devices Inc (AMD) in the GPU market.
Last month Apple Inc (AAPL) unveiled a new MacBook Pro model featuring a Nvidia graphics chip.
Nvidia forecast fourth-quarter revenue would fall around 5 percent and gross margins would stay flat with the third quarter at around 41 percent, even though it said visibility is poor.
"I would caveat our outlook that there can be a wide range on the outcome," said Chief Financial Officer Marvin Burkett. "I also believe it is unrealistic to expect any sort of robust Christmas spending on the part of the consumer."
Further cost-cutting is not a priority, and revenue growth is, Burkett said.
Nvidia's shares have fallen more than 75 percent this year as the company felt the effects of the economic slowdown and a slumping PC market. In September, the company announced plans to cut 6.5 percent of its workforce.
Shares of Santa Clara, Calif.-based Nvidia closed the regular session down 89 cents, or nearly 10.5 percent, at $7.62, but then rose to $8.55 in extended trading. (Reporting by Gabriel Madway; editing by Carol Bishopric and Gerald E. McCormick)
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