NVIDIA to Focus on LTE-Capable Chips as it Returns $1B to Shareholders
After announcing that Tegra, NVIDIA’s mobile chip, is growing at a pretty speedy rate, we learn that the business is expected to remain “flat” for the remainder of the year due to the delay in the launch of Tegra 4 and Tegra 4i. With that news, investors weren’t pleased and shares dropped, but recovered when NVIDIA announced plans of returning $1 billion to shareholders this fiscal year.
The company will return the cash via previously announced dividends of about $50 million a quarter plus additional share buybacks. The $1 billion also includes $100 million in share buybacks this quarter.
NVIDIA co-founder and CEO Jen-Hsun Huang stated that, as the company focuses on chips with high-speed LTE capabilities used catered to smartphones, its mobile processor business is expected to stay flat. The CEO stated that the decision to return cash to shareholders is due to the positive outlook regarding NVIDIA’s new markets, product such as Tegra, cloud-based graphics products for gaming, workstations and data centers.
“We’re confident that as we go into the second half, growth will return,” Huang said. “How do we feel about the Tegra business? … This year Tegra will be about flat.”
NVIDIA is focusing on chips with LTE capabilities as it is used in high-end smartphones and currently, Qualcomm dominates this area. NVIDIA’s Tegra 3 mobile processor was used in the Google Nexus 7 but the search giant has opted for Qualcomm’s Snapdragon processors for use in the latest version of the Nexus 7.
SiliconANGLE’s contributing editor John Casaretto shared his thoughts regarding NVIDIA’s bold move of returning cash to shareholders on this morning’s NewsDesk with Kristin Feledy.
“It’s kind of regearing for NVIDIA,” Casaretto says. “They’re hitting another gear here pretty soon. They’re just kind of been running at this pace for a little bit and feeling the effects of the PC market all together.”
Casaretto also stated that NVIDIA faces a number of challenges as it transitions to the mobile market especially in the form of Qualcomm and making chips with LTE capabilities. He mentioned that though Google has chosen Qualcomm’s Snapdragon for it’s next version of the Nexus 7, NVIDIA has a lot of things going on for them especially with Project Shield coming in the second quarter.
In other news, NVIDIA’s Project Shield, an Android-based handheld gaming console, which was announced at CES 2013, will hopefully hit shelves this second quarter as it will soon go into production.
At NVIDIA’s Annual Investor Day, the company showed off what Logan, its next generation chip, is capable of. Huang demoed Battlefield 3 with the chip and compared it to the latest iPad. Logan, or Tegra 5, is the company’s first mobile chip featuring the Kepler GPU architecture which supports DirectX 11 graphics.
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