Nvidia slashes revenue guidance up to 50 percent

Due to "further weakness in end-user demand and inventory reductions," graphics chipmaker follows Intel in slashing its fourth-quarter earnings forecast--in its case, by at least 40 percent.

Updated at 12:15 p.m. PST with information from iSuppli.

Nvidia is slashing fourth-quarter revenue guidance 40 percent to 50 percent. This comes on the heels of Intel's revision last week. Both companies are citing collapsing demand from customers.

"Total revenue for the fourth quarter of fiscal 2009 is now expected to decline 40 percent to 50 percent sequentially as a result of further weakness in end-user demand and inventory reductions by Nvidia's channel partners in the global PC supply chain," the largest graphics chip supplier said in a statement Tuesday.

This revises the fourth-quarter guidance provided during its third-quarter financial conference call held November 6.

Based on Nvidia's third-quarter sales of $897.7 million, expected declines of between 40 percent and 50 percent would put fourth-quarter revenue somewhere between $538 million and $449 million. Nvidia will report fourth-quarter earnings on February 10.

The new guidance follows an Intel fourth-quarter warning last week (its second) that revenue will fall $2 billion short of its original forecast, due to PC makers curtailing chip orders.

Most of the major PC chip suppliers, including Taiwan Semiconductor Manufacturing Company (TSMC), have cited a dramatic fall-off in orders from customers. TSMC has said it expects the chip industry to decline by mid to high single digits in 2009, "with very little visibility."

iSuppli, which tracks the PC market, said in its Q4 2008 Market Tracker that shipments of desktop PCs--where most of the high-end, high-profit-margin graphics chips go--are forecast to decline by 6.4 percent in the fourth quarter on a year-over-year basis. And iSuppli expects the desktop PC market to get worse in 2009, with desktop PC shipments falling 5.5 percent to 146.2 million units.

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