Struggling Nvidia says it may pay up to $125m to shutter Icera modem biz

Those car, cloud, and gaming bets better pay off

Nvidia GeForce

Nvidia posted mixed results for the first quarter of its fiscal 2016, even as it looks forward to exiting the mobile chip business in favor of new markets.

Total revenue for the quarter was $1.15bn, which narrowly missed analysts' estimates. It also represented disappointing year-on-year growth of just 4.4 per cent, compared to 9.4 per cent growth in the previous sequential quarter.

Worse, the chipmaker's net income was down 2.2 per cent from the year-ago period, at $134m. Yet it still managed to beat Wall Street's earnings prognostications handily, posting earnings of $0.33 per diluted share, compared to the average estimate of $0.26 per diluted share.

It really wasn't a bad quarter for Nvidia, all in all. Last quarter's revenue gains were driven by strong growth in the firm's GPU business, but this is the customary dry season for consumer PC sales and Nvidia's GPU sales suffered predictably as a result.

Nvidia says sales of higher-end GPUs for PC gaming and high-performance computing are still doing well, though, with gaming GPU sales in particular up 14 per cent from last year's Q1. Total revenue for Nvidia's GPU segment this quarter was $940m, a 4.7 per cent year-on-year increase.

Sales of the chipmaker's Tegra CPUs similarly gained 4.3 per cent in the first quarter, with total revenue of $145m. Nvidia says this was mostly driven by increased sales to makers of automotive infotainment systems, development services, and use in Nvidia's Shield gaming devices – and it is these sorts of markets that Nvidia is most interested in as it looks to edge its way out of the highly competitive market for chips for mobile devices.

As part of that shift, Nvidia announced earlier this week that it is winding down its Icera LTE modem unit, and although it says it's "open to a sale" of those operations, it said on Thursday that it expects to eat between $100m and $125m in restructuring charges in fiscal 2016 as a result.

Stiff competition from the likes of Qualcomm and Samsung is one reason why Nvidia wants out of the mobile biz. But it's still looking to make some money out of that market; its patent lawsuit against both rivals is scheduled to be heard by the US International Trade Commission in June.

Investors weren't particularly thrilled with how the rest of Nvidia's business went this quarter, however, and their restlessness sent the firm's share price down slightly in after-hours trading on the news. ®

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