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Nvidia ends shipments of chips for Xbox
By Chris Nuttall FT.com, 00:04 BST May 13, 2005
Nvidia, the graphics chipmaker, said on Thursday it was ending shipments of chips for Microsoft's Xbox game console in the current quarter as what was once one of its biggest customers moved on to its next-generation machine.
Microsoft is expected to release the Xbox 360 in November, featuring a graphics chip from rival ATI. Microsoft had informed Nvidia it would not take any more product after Nvidia's second quarter, ending August 1.
The news was a clear indication that Microsoft was cutting off production of the old Xbox and of the imminent release of its successor. In contrast, Sony is still selling its original PlayStation console several years after the launch of the PS2.
Nvidia's inclusion in the original Xbox, launched in 2001, had been a major boost for the Silicon Valley company, but other areas of its business have since grown and Microsoft is no longer one of its top-ten customers.
An Nvidia chip will feature in the PlayStation 3, expected next year, and the company said revenues from that would begin to flow in after the technology licensing started in the third quarter.
The graphics company reported record sales in its first quarter ending May 1 of $583.8m, up 24 per cent on a year earlier. Net profits were $64.4m or 36 cents per diluted share, compared to $21.3m or 12 cents a year earlier.
Analysts had expected sales of $579.7m and earnings of 28 cents, according to Reuters Estimates.
Nvidia said there had been 20 per cent growth in chip sales for high-end PCs and its next-generation GPU (graphics processing unit) was set to be unveiled at the E3 computer games trade show next week.
The company said it had been forced to write off handheld inventory after Motorola cut its orders for chips for 3G phones as demand failed to meet expectations.
Nvidia expected the handheld segment to return to growth in the second half. It was bullish on the current quarter, usually the seasonally slowest with sales down 5 to 10 per cent on the previous quarter. Instead, Nvidia forecast sales would be flat to slightly up.
Nvidia shares rose nearly 9 per cent in after-hours trading to $24.75 on the news.
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By Chris Nuttall FT.com, 00:04 BST May 13, 2005
Nvidia, the graphics chipmaker, said on Thursday it was ending shipments of chips for Microsoft's Xbox game console in the current quarter as what was once one of its biggest customers moved on to its next-generation machine.
Microsoft is expected to release the Xbox 360 in November, featuring a graphics chip from rival ATI. Microsoft had informed Nvidia it would not take any more product after Nvidia's second quarter, ending August 1.
The news was a clear indication that Microsoft was cutting off production of the old Xbox and of the imminent release of its successor. In contrast, Sony is still selling its original PlayStation console several years after the launch of the PS2.
Nvidia's inclusion in the original Xbox, launched in 2001, had been a major boost for the Silicon Valley company, but other areas of its business have since grown and Microsoft is no longer one of its top-ten customers.
An Nvidia chip will feature in the PlayStation 3, expected next year, and the company said revenues from that would begin to flow in after the technology licensing started in the third quarter.
The graphics company reported record sales in its first quarter ending May 1 of $583.8m, up 24 per cent on a year earlier. Net profits were $64.4m or 36 cents per diluted share, compared to $21.3m or 12 cents a year earlier.
Analysts had expected sales of $579.7m and earnings of 28 cents, according to Reuters Estimates.
Nvidia said there had been 20 per cent growth in chip sales for high-end PCs and its next-generation GPU (graphics processing unit) was set to be unveiled at the E3 computer games trade show next week.
The company said it had been forced to write off handheld inventory after Motorola cut its orders for chips for 3G phones as demand failed to meet expectations.
Nvidia expected the handheld segment to return to growth in the second half. It was bullish on the current quarter, usually the seasonally slowest with sales down 5 to 10 per cent on the previous quarter. Instead, Nvidia forecast sales would be flat to slightly up.
Nvidia shares rose nearly 9 per cent in after-hours trading to $24.75 on the news.
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