Mobile chips should lift Nvidia’s profits

Article Excerpt

NVIDIA CORP. $11 (Nasdaq symbol NVDA; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 574.0 million; Market cap: $6.3 billion; Price-to-sales ratio: 1.7; No dividends paid; WSSF Rating: Average) should also benefit from rising demand for consumer electronics. That’s because it is a leading designer of 3D-capable video chips for computers and other devices. These chips make video games run more smoothly, and appear more life-like. Nvidia outsources most of its production to chipmakers in Asia. Computer sales have been strong in the past few months, but more consumers are opting for machines with cheaper, integrated video chips instead of Nvidia’s video cards. Weaker demand in Europe and China is also weighing on Nvidia’s sales. As well, Apple is using video chips made by rival Advanced Micro Devices Inc. in its new Mac desktop computers. In its second quarter, which ended August 1, 2010, Nvidia lost $141.0 million, or $0.25 a share. One-time items, including warranty payments related to defective chips,…