Can Nvidia Reverse This Weak Trend?

Nvidia (NASDAQ:NVDA) has a young market that it has to work hard to get traction in, as PC sales decline and it can’t continue to bank so heavily on the strength of its graphics processing units in full computers to stay afloat.

There have been many industry wars — Pepsi (NYSE:PEP) vs. Coke (NASDAQ:COKE), PC vs. Mac, etc. — and as Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), and Microsoft (NASDAQ:MSFT) duke it out in the smartphone war, with many other manufacturers mixed up in the competition as well, there’s another battle going on underneath the surface.

The companies making the processors inside tablets and smartphones are also embroiled. Qualcomm (NASDAQ:QCOM) is the arguably unsung leader of the pack in smartphones, while Nvidia, Intel (NASDAQ:INTC), and Samsung (SSNLF.PK) are all vying for their own shares of the smartphone and tablet market.

Nvidia does show some strength in the mobile processor market with its Tegra mobile chips, which have been showing up most commonly in tablets. Unfortunately, during Nvidia’s shift from the Tegra 3 to the Tegra 4, the company may have slipped slightly, which is dangerous amidst harsh competition…

Nvidia’s fourth quarter saw revenue from the Tegra chips decline 15 percent from the previous quarter, though it was still up 98 percent from the same quarter a year earlier. The decline is dangerous and could show signs of weakness, but Nvidia was coming down from record sales of the Tegra 3 during the third quarter holidays and could come back strong with Tegra 4 this year.

Despite the slip, Nvidia beat expectations for the quarter with a net income of $174 million, compared to $116 million for the same time in 2011, and an expected $1.11 billion in sales, which made for a 16 percent increase from the period a year earlier.

However, for the current quarter, Nvidia’s guidance was for around $940 million in revenue, which shies from analysts’ expected $1.07 billion. The timing of the Tegra 4 may be the reason for this reduced revenue, and in the stiff competition, timing and speed are going to be key to Nvidia staying strong and not seeing those figures slide any further.

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