NVIDIA HAS SEEN ITS shares plummet by a massive 40 per cent over the last three months, due mainly to slowing sales in the computer market and skyrocketing expenses.

Nvidia had previously enjoyed high profitability and good market share, but weakness in the desktop computer sector, which makes up nearly 50 per cent of Nvidia's sales, as well as Intel and AMD’s relative successes in the field of graphics chips in Q4 of 2007, was bad news for the company’s stock prices.

According to AP, Nvidia's shares have become 70 per cent more volatile than the average stock in the S&P 500 information technology sector, with shares trading in the last 12 months between $17.31 and $39.67.

Last Friday alone, Nvidia fell 86 cents or 4.3 per cent to $19.11 in afternoon trading. The company also took a hit to it’s market share, falling from Q3's 33.9 per cent to Q4's 31.8 per cent, thanks to its arch rivals Intel and AMD.

Surprisingly, it’s not a drop in sales that has left Nvidia high and dry, but their soaring expenses, according to MarketWatch, which reported that while Nvidia’s net income was up by 57 per cent in the last quarter and its sales were higher than expected, the company’s expenses increased by a crippling 16 per cent. As if that wasn’t enough, the company is also said to be predicting an even bigger hike in its expenses this quarter.

With the state of the global markets recently, Nvidia would do well to make more of an effort to cut its costs, rather than increase them, unless of course it wants its shareholders to suffer even more of a beating from Wall Street and rivals AMD and Intel. µ

L’Inq
MarketWatch