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Nvidia sees smaller profit

The graphics chip leader reports lower profits for the fourth quarter and full-year 2002, despite a last-minute influx of Xbox money.

Graphics chip leader Nvidia reported lower profits for its fourth quarter and for the 2002 fiscal year, despite an influx of cash from its business supplying chips for Microsoft's Xbox video game console.

Net income for the quarter, which ended Jan. 31, was $50.9 million, or 30 cents a share, compared with $76 million and 43 cents a share in the same period a year ago. Revenue for the quarter totaled $469 million, down from $503.7 million a year ago.

Fourth-quarter revenue figures included $40.4 million that Nvidia recorded as a result of its recent settlement of a contract dispute with Microsoft over the graphics processors Nvidia supplies for the Xbox.

For the year, net profit was $90.8 million, or 54 cents a share, down from $176.9 million, or $1.03 per share, in fiscal 2001. Revenue for the year was $1.91 billion, up from $1.37 billion in 2001.

The company did not offer financial guidance for the current fiscal year.

While Nvidia retains a solid lead in the market for PC graphics chips, its profit margins have suffered in recent quarters from an overall slump in the PC industry and repeated delays in releasing a successor to the company's GeForce4 line of graphics chips. "We experienced one of the most challenging quarters in the history of the company," Michael Hara, vice president of investor relations, said during a conference call with financial analysts.

Nvidia finally announced the launch of the GeForce FX chip last November for wide release late this quarter, meaning rival ATI Technologies will have had at least a six-month performance lead with its Radeon 9700 processor.

Chief Financial Officer Marvin Burkett said during the conference call that Nvidia was confident it would get the GeForce FX to market on schedule and in time to retain the loyalty of gamers and other PC performance buffs.

"Building the right product for the enthusiast is important to us," Burkett said. "We're absolutely committed to regaining technology leadership...(GeForce FX) is a great product. We're committed to it, and we're going to ship the living daylights out of it."