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Nvidia reported earnings today for its third fiscal quarter ended Oct. 30. that beat analysts expectations.

Nvidia is the world’s biggest independent maker of graphics chips for PCs and its results show the overall health of the PC industry. In addition, the company is diversifying into mobile processors with its Tegra line  of processors for Android smartphones and tablets. The company recently announced the shipment of its Tegra 3 line of mobile processors as part of an effort to drive innovation in mobile devices.

Nvidia reported GAAP net income of $178.3 million, or 29 cents a share, more than double the $84.8 million, or 15 cents a share a year earlier. On a non-GAAP basis, Nvidia reported non-GAAP net income of $217.0 million, or 35 cents a share.

Revenues were $1.07 billion, up 25 percent from $843.9 million a year ago on a GAAP basis. Non-GAAP revenue was $1.07 billion, up 5 percent sequentially from $1.02 billion.

Analysts had expected non-GAAP earnings of 26 cents a share and revenues of $1.06 billion. Overall, analysts have been wary of Nvidia because Apple, which doesn’t use Nvidia chips, has been so successful in the smartphone and tablet businesses. Android devices are taking off, but the competition with rivals such as Qualcomm is stiff in that market.Eleven smartphones and 23 tablets are now using Tegra.

“Nvidia’s strategy is coming into its own as the world becomes increasingly visual and mobile,” said Jen-Hsun Huang, chief executive of Nvidia, in a statement. “Our graphics processing unit (GPU) business accelerated in the third quarter, driven by strong demand from gamers and the professional market. And our mobile business benefited from new devices coming onto the market.”

With Tegra 3 positioned well, Huang said he expects strong growth in the market. For the fourth quarter, revenues are expected to be flat, plus or minus two percent, from the third quarter. Gross profit margins are also expected to be flat to up half a percent. During the third quarter, Nvidia’s Tesla processors were chosen to be used in a new 18,000-GPU supercomputer being built by the Oak Ridge National Laboratory.

Consumer GPU sales were up 1 percent from the prior quarter at $644.8 million. Nvidia’s MCP chip set business is winding down, declining to $22.4 million in the third quarter. Nvidia’s high-end desktop business benefited from strong demand as gamers upgraded their computers to play Battlefield 3 and Elder Scrolls V: Skyrim.

Nvidia believes a new cycle of revival for PC gaming products is at hand because the PC’s graphics are racing ahead of the five or six-year-old game consoles on the market. Nvidia also launched a new version of its 3D Vision stereoscopic 3D glasses during the quarter.

“This is likely to be a multi-year cycle driven by advances in PC games,” Huang said in a conference call with analysts.

Nvidia lost some share in the notebook GPU segment as Advanced Micro Devices came on strong. And Apple isn’t currently using Nvidia chips in its notebooks. Workstation graphics were up 9.5 percent to $230 million. Tegra and other segment sales were $191.1 million, up 14 percent. Nvidia is now ramping up production on 28 nanometer products. The company has $2.75 billion in cash.

Tegra 3, which is three times faster than Tegra 2 and has five core processors on it, is expected usher in a new era of growth for powerful new smartphones and tablets.

“We have more design wins for Tegra 3 today than we had with Tegra 2,” Huang said. He said Nvidia hasn’t won all design wins and lost a recent Motorola design contest. Texas Instruments’ OMAP 4 chip won that deal instead.

Filed under: games, VentureBeat

This week kicked off with the Associated Press voicing concerns about how websites obtain permission to distribute content and share revenues. A debate has sparked about the ‘fair use’ doctrine (publishing a headline and/or sentence from story) and tracking the legal use of the content. Search engines and news aggregators were all somewhat implicated as those who may be misusing content, so we decided to take a look at their impact upon driving traffic to news websites, which ultimately generate ad revenues.

Like many categories, search is one of the main sources that drive traffic to the News & Media category, referring nearly 22% of visits in March 2009. Branded searches for news properties represent a large share of the top search terms driving traffic to the category. Another major source is the front pages of portals such as Yahoo! and MSN, including the personalized versions like My Yahoo and My MSN. In comparison, social networking websites and blogs referred a far smaller share of visits to News & Media websites from links or references posted on their pages.

Traffic moving between News & Media websites is also a main source of traffic equal to search at 21.63% in March 2009. However, the shares of the sources are distributed broadly across a wide number of websites where the highest share coming from any one website was only 2.28%.

Although several of the online aggregators are at the heart of the content distribution argument, they do successfully send visits to news properties rather than keeping them upon their own websites. Two sources that have increased the share of referrals in March 2009 when compared to March 2008 are Drudge Report and The Huffington Post. Others that have remained consistent include Google News, Yahoo! News and My Yahoo.