Nvidia [NVDA] has been building up quite a bit of hype prior to this earnings call as a result of CES and MWC announcements specifically attributed to their Tegra business. CES was a mixture of announcements for Nvidia, but they were primarily Tegra related. There has been no doubt that Nvidia has been doing better in other business units, but as Jen-Hsun himself said there are high expectations for Tegra. As expected, the past month and a half have been very good to NVDA as it is currently up $8.48 or 56%.

Many analysts have been hesitant to keep Nvidia as a buy or to upgrade their expected stock prices any higher. Anyone following Nvidia?s stock can see their hesitance to expect it to keep growing, but many of them do not seem to be confident that Nvidia is capable of sustainable growth in the Tegra division and many of them did not seem to levy many concerns regarding their graphics business which appears to be healthy once again.

Revenue for the 4Q 2011 was up to $886.4 Million up 5% over the previous quarter and down 9.8% from the same quarter the previous year. Nvidia report GAAP net income of $172 Million compared to $131 Million for the same quarter a year ago, up 31%. This also represents a nearly 100% increase in net income from $0.15 EPS to $0.29 EPS over the same quarter last year. They also hit a record gross margin of 48.1% up from 46.5% which has been a steady increase quarter over quarter for the past year. For Fiscal 2011, Nvidia brought their gross margin average up to 39.8% from 35.4% in fiscal 2010.

Nvidia?s business segments reported mixed results, but overall still improved over the previous quarter and year. The GPU business was up 5.5% from the previous quarter and the MCP revenue was down as they wind down operations and shift the MCP team over to Tegra. The professional business was down from the previous quarter as well, but Nvidia did not detail by how much in either case. As expected, Nvidia?s consumer business was up as a result of their Tegra division?s growth which offset any decreases in revenue in the other business segments. On top of that, Nvidia was able to reduce their inventory by 8.5% which indicates that orders are beginning to outstrip supply or Nvidia is at least producing at appropriate levels.

When we look at the fiscal year of 2011 as a whole, we see that Nvidia had revenue of $3.5B up from $3.3B in fiscal year 2010. Meanwhile, profit was up a total of $253M in fiscal 2011 from a net loss of $68M in fiscal 2010. This also reflected an EPS of $0.43 compared to a LPS of $0.12 in the previous fiscal year. Comparing the two years should yield a fairly optimistic outlook for the company considering that it has rebounded from the recession, but many seem to have expected Nvidia to have done better.

Nvidia?s outlooks for all of their business divisions in 1Q 2011 showed that they expect growth of revenue to be up 6-8% over the current quarter. They also expect their gross margins to increase from 48.1% to approximately 48.5-49.5%. Jen-Hsun said that the Tegra business did not surpass the chipset business, but he expects it to do so next quarter. Nvidia also expects business segments like Tesla and consumer divisions to grow which can reflect the fact that their 1Q 2012 earnings expectations have beaten the street?s estimates.

Nvidia’s shares were up 3.68% on the day and are currently down 1.2% in after hours trading.

Source – Nvidia Earnings Report