Nvidia Q4 Revenue Outlook Slashed

The Santa Clara, Calif.-based chip maker in a statement blamed the extraordinarily revised forecast on "further weakness in end-user demand and inventory reductions by Nvidia 's channel partners in the global PC supply chain."

The revised figures are a far cry from guidance the chip maker gave two months ago when it predicted a sales drop of 5 percent for the fourth quarter ending Jan. 25. The company will report Q4 results on Feb. 10.

In third-quarter results reported in November, Nvidia saw profits drop 74 percent to $61.7 billion from $235.7 billion in the same quarter a year ago, as revenue also fell 20 percent year-over-year. Third-quarter revenue was $897.7 million, falling from $1.12 billion last year.

"The magnitude of the sequential revenue decline is far worse than expected," said Friedman, Billings, Ramsey & Co. Analyst Craig Berger in a research note.

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"Given this steep drop in revenues, we forecast Nvidia to be unprofitable in the fourth quarter and the full year 2009," Berger said.

Just last week, rival Intel slashed its fourth-quarter sales forecast -- for the second time in two weeks -- citing the same reasons as Nvidia.

Intel told investors that it projects its fourth-quarter revenues of approximately $8.2 billion, down 20 percent from $10.2 billion in Q3 and down 23 percent year-over-year. The chip giant already lowered its original Q4 guidance to between $10.1 billion and $10.9 billion in sales on Nov. 12, when the company downgraded that forecast to about $9 billion in expected Q4 revenues.

Intel is set to report Q4 financials on Thursday.

AMD also made headlines last week when it announced that it will report restructuring and impairment charges due to the declining economy, Reuters said, citing a regulatory filing. The company said it will incur additional restructuring charges in fiscal 2008 and 2009.

Damon Poeter contributed to this article.